BULLETIN – MARCH 17, 2017

THE DISAPPEARANCE OF THE JUNTAS DE CONCILIACION Y ARBITRAJE

A little more than three years after the major Federal Labor Law reforms that took effect December 1, 2012 introduced new types of contracts and the limits on back pay (salarios caídos) from a lawsuit, President Peña Nieto introduced in April of 2016 a second package of changes that includes important modifications to the Constitution in order to create a new system of labor justice. The Constitutional reforms were approved in December by the Federal Legislative branch and sent to the State legislatures for their ratification.
I have prepared an updated translation of Article 123 of the Constitution with the original text and the new text, so that the reader can compare the reformed text to the original text. To download this translation at no cost, go to: Article 123 Constitucional

THE PROBLEMS THAT THIS REFORM WAS DESIGNED TO ELIMINATE.

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1. The inadequate use of Conciliation. – Conciliation has to a great extent been detoured by labor attorneys looking for a fast payoff.

When workers with a complaint go to the Junta de Conciliación y Arbitraje they are given an assessment by STPS personnel and a Notice (citatorio) that they deliver to the employer. Both go to the conciliation meeting with the Conciliator and they sit down together and try to work out a solution. Many times there has been a misunderstanding that can be resolved and the worker goes back to work or a settlement is suggested and accepted or rejected. If the offer is rejected, the Advisor presents the lawsuit for the worker and dates are set for the trial (juicio).

However, when the worker goes to the Junta the chances are good that he will be distracted by a labor attorney offering “free” consultation. The worker signs a contract to sue the employer, the attorney presents the lawsuit (demanda) and the Conciliation phase is skipped. The attorney for the employer and the attorney for the worker go to the first hearing and negotiate. Even when the Employer could win the lawsuit, a settlement is less expensive than what he will pay his attorney to go to trial.

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2. The worker abandons his position or resigns without a signed resignation in the worker’s own handwriting.

The worker will win this lawsuit because his statements are evidence and the Employer must have documentation to prove his/her case. Sometimes the worker will just say that the Employer made him/her sign a resignation. It is the Employer that must prove otherwise with documentation. Once the lawsuit is presented, it is still going to be less expensive for the Employer to negotiate a settlement. Remember if the employer loses the case, he/she will pay back wages up to a year.

3. Simulated resignations.

I don’t want to give anyone ideas, but there are employers that within all of the documents a worker has to sign is a blank document or a resignation without a date. When the Employer wants to fire a worker, he/she simply fills out the signed resignation and puts a date on it.

4. Reinstatement of the worker

The employer during the conciliation stage or during the trial (juicio) offers to reinstate the worker with a raise in salary. The worker accepts and then the Employer builds a case against the worker to find a cause for rescission. When the worker accepts reinstatement, the lawsuit is cancelled. Then a short time later the Employer rescinds the contract with cause.

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5. Deliberately prolonging the process

The attorney for the worker has a very good case for a firing without cause. Instead of negotiating, he pays the worker out of his own pocket more than what the worker could expect in a negotiation and then he prolongs the process for up to a year in order to collect a year’s back wages, plus 3 month’s wages, and seniority. The attorney waits a year but he pockets a much larger amount.
These are some of the abuses of the present system and there is no real justice for the worker or the employer. Many labor attorneys have taken advantage of the flaws in the system to exploit both the employer and workers.

These are some of the abuses of the present system and there is no real justice for the worker or the employer. Many labor attorneys have taken advantage of the flaws in the system to exploit both the employer and workers.

OBJECTIVE OF THE CONSTITUTIONAL REFORM

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This Constitutional modification reforms and makes additions to Article 107 and Article 123 of the Federal Constitution in order to modify the process for labor disputes that include 3 basic changes.
1. Labor justice will be imparted by the Federal Judicial branch or the Judicial branches of the States based on the present formula for jurisdiction.
2. The reform creates an OBLIGATORY Conciliation phase.
3. Jurisdiction between federal and state authority is altered to create a new government entity to manage and record collective labor contracts and to guarantee that there is a majority agreement to implement a union. At present, there are “white” unions installed in many companies by the company management that on paper “represent” the workers, but they are paid for by the companies for the specific purpose of preventing strikes. Often the workers do not know that there is a Union in their company. This legislation is intended to eliminate this very common abuse.

LEGAL BASIS FOR THE SECONDARY REFORMS

It is important to remember that this reform is at the Constitutional level and is intended to establish the legal basis for reform. The State and Federal governments have one year from the date of publication (February 24, 2017) to reform the Labor Law and to set up the new Labor Courts under the authority of the Judicial branch. Until the secondary reforms to the Labor Law and the legislation at the state levels to set up the Conciliation Centers and Labor Courts – there will be no effects from this reform.

CURRENT LEGISLATION FOR DISPUTES

HISTORICAL BACKGROUND: The Mexican Constitution that was promulgated on February 5, 1917 contains Article 123 which regulates labor. Mexico with its Article 123 was the first country in the world to establish labor conditions such as a 48 hour work week and overtime pay, maternity leave for women, obligatory paid vacations and the right to organize unions. After the Constitution took effect in 1917 under President Carranza, the secondary labor legislation and enforcement of the rights established in Article 123 were left to the States. This created a very uneven situation in the country, labor enforcement varied markedly from State to State and there were many different labor laws. Because the intent and promise of Article 123 was not being met. From 1917 to 1931, labor law and disputes were handled by the States in civil courts. in 1931 President Pascual José Rodrigo Gabriel Ortiz Rubio (President from 1930 to 1932 enacted the Ley Federal de Trabajo or Federal Labor Law. The LFT established Juntas de Conciliación y Arbitraje (the Boards of Conciliation and Arbitration), made up of representatives of the government, employers and labor unions. This establishment was intended to fulfill the promises of the Revolution (1910 – 1917) in which workers and unions played a pivotal role. Under this system the Juntas de Conciliación do not belong to the Judicial branch but are administered by the Executive branch, under the Secretary of Labor and Social Welfare (STPS).

JURISDICTION

Juntas de Conciliacion y Arbitraje (Boards of Conciliation and Arbitration) Federal and State. Under the present Article 123, part A, section XX the Constitution establishes the Juntas and establishes the jurisdiction of States and the Federal STPS. For example, the following are under Federal jurisdiction: In the industries for textiles, electricity, sugar, mining, hydrocarbons, automotive and chemicals. In industries administered by the Federal government, and industries with collective contracts that cross state lines.

LABOR PROCESSES

The ordinary procedure for individual and some collective conflicts is divided into 2 phases: (Art. 870 – 891 of the Federal Labor Law)

1. Instruction phase:

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• First: the presentation of the lawsuit (Demanda), notifications, etc.
• Second: hearing for conciliation, lawsuit, exceptions, offering and admission of evidence.
• Third: The evaluation of the evidence presented by the parties
• Fourth: close of the instruction phase, certification that no additional evidence exists to be presented.

2. Resolution phase:

• First: The preparation of the project of the laudo (in labor law the final decision or sentence is called a laudo; it is an arbitration decision with no appeal.
• Second: Discussion and voting on the project of laudo.
• Third: Approval and signing of the laudo.

On paper and theoretically the Resolution phase is managed by representatives of the government, employers and labor unions but the reality is more arbitrary and is managed by the President of the Junta who signs the laudo.
There is a Special procedure that handles certain types of conflicts – I won’t go into a lot of detail but those are conflicts related to the following:
• Labor shift
• Housing for workers
• Qualification and training for workers
• Seniority
• Collective labor contracts
• Temporary suspension or termination of the collective labor relations for reason of force majeure or lack of raw materials not attributable to the employer.

STRIKE PROCEDURE

In Chapter XX of the Labor Law, the strike procedure is handled by the Junta. This procedure has various stages.

• First: Presentation of the strike petition (Pliego Petitorio con emplazamiento de huelga)
• Second: Conciliation hearing
• Third: Strike or declaration of the nonexistence of Strike
• Fourth: End of the procedure, a laudo is issued for the existence or nonexistence of Strike, or the legality or illegality of the strike, with the consequences stipulated in the Labor Law.

CONSTITUTIONAL MODIFICATIONS

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The current reform includes modifications to Article 107 and 123 for the purpose of eliminating the Juntas de Conciliación y Arbitraje so that labor justice will be administered by the Judicial Power of the Federation instead of the Executive Power through the STPS. This has the effect of returning the country to the original ideas of Article 123 in the Constitution of 1917 and hopefully not the deficiencies.

1. The reform to Constitutional article 107 removes reference to the Juntas de Conciliacion y Arbitraje from the article that is the basis for Amparo. If you are unfamiliar with the concept of Amparo, “AMPARO is a judicial action to protect from acts or omissions of the authorities that violate the human rights and guarantees protected by the Mexican Constitution”. This is my brief definition, for a detailed explanation review my definition online. Amparo will be the appeal recourse for the new labor courts.
2. The terminology describing class struggle is removed from Article 123, section XX.
3. Section XX of Article 123 has had major changes establishing the labor courts, their integration, how they will be formed, they will be presided over by judges, and the sentences of these labor courts.
4. The entire Article 123 has been adjusted to eliminate the Juntas and replace them with labor courts.

CREATION OF CONCILIATION ENTITIES OR CENTERS INDEPENDENT OF THE COURTS

At present the Juntas de Conciliación y Arbitraje are responsible for resolving disputes between the workers and employers.

The basic changes or adjustments in Article 123 is intended to do the following:
1. The Conciliation procedure before a lawsuit and trial is not part of the judicial process or labor courts and the courts will not be involved in Conciliation. In section XX of Article 123, the necessity of the conciliation phase is indicated. This conciliation phase must be legislated into the civil codes of the States and Federal governments.
2. The creation of administrative entities (Federal and State) that will be responsible for the Conciliation procedures.
3. The Conciliation procedure will be OBLIGATORY and prior to labor trials in labor courts. Before going to a labor court, the Conciliation hearing is obligatory.

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UNION CONTRACTS

The reform which is intended to make unions truly representative of the workers is found in the new section XXII Bis of Article 123 and is intended to assure the free access to collective bargaining and unions that represent the workers (and the intent to eliminate white unions. It includes the following elements:
1. Representation of union organizations.
2. Signing, recording and deposit of the union contracts.
3. The personal vote, free and secret of workers to elect their union directors and representatives.

WHEN DO THE CHANGES TAKE EFFECT?

The reform in its Transitional articles describes the transition to the new system.

1. The Congress of the Union and the State legislatures have 1 year to make the necessary changes in State and Federal laws. For example, this first means a reform to the Federal Labor Law and the Organic Law of the Judicial Power of the Federation in order to implement the changes and create the labor courts.
2. Until the Labor Courts, the Conciliation Centers and the Federal Decentralized Organization (for recording and deposit of labor contracts) begin operating, the Federal or State STPS (Secretary of Labor and Social Welfare) will continue operating. When the new labor courts begin operating, the Juntas must transfer the procedures, files and documents to the new courts.

CONCLUSION

The “DECREE by which various provisions of Articles 107 and 123 of the Political Constitution of the United Mexican States are reformed and added, in matters of Labor Justice” was published in the DOF on February 24, 2017; it took effect the following day with the timetable mentioned in the Transitional articles.

Until the secondary legislation is modified and the new labor courts are set up, there will be no effects from this change. It is my opinion that that the time table may eventually be extended, because of all the changes and legislation that must take place. In the meantime, there could be changes after the Presidential election in 2018 that could alter the course of this reform.

To download a bilingual translation of Article 123 with a comparison of the original text and reformed text go to MEXICAN LAWS - ARTICLE 123

To purchase the Federal Labor law in English go to MEXICAN LAWS

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If you have any questions, please contact Glenn McBride at glenn@mexicanlaws.net or Jairo Ramos at Jairo@mexicanlaws.net or visit our website www.mexicanlaws.com

Regards,

Lic. Glenn Louis McBride

Licensed Mexican Attorney