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New labor law requires IMSS be paid to domestics


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31 minutes ago, SunshineyDay said:

So do we get any options or is this to be just forced on us? This was not part of the original employment situation.

Are you speaking as the EmployER or the EmployEE?

If the first, we employers will have no option but to comply with the new law--unless we have an employee who wants to avoid the law.  I don't see why any employee would want to, though, since the employer is paying the majority of the cost!

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employees would want to because now the government will know how much they earn and they may have to pay taxes , so they will end up with benefits they may or not may want to have and less money. My cleaning lady is covered at IMSS by her husband, now she may have to pay taxes....and wll get a small retirement later on.. 

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13 minutes ago, bmh said:

employees would want to because now the government will know how much they earn and they may have to pay taxes , so they will end up with benefits they may or not may want to have and less money. My cleaning lady is covered at IMSS by her husband, now she may have to pay taxes....and wlll get a small retirement later on.. 

You are absolutely right. And I've thought about this, too.  Because the Mexican government will now have a whole 'nother source of tax revenue.

But right now the way it is, we employers are supposed to pay the state (income) tax.  Although I think the cleaning ladies are going to be leery of anything and everything having to do with the government.  This is totally new for them.  

There are going to be 2 distinct groups:  those who want/need these additional benefits, and those who don't.  I don't think they will be given a choice.  So they will have to comply, or work under-the -table.  And then we, the employers, are going to be at risk for all the liability that goes along with it. 

Personally I think these domestics should become independent contractors and have to provide their own coverage, build it into their rates.  That way they, the domestics, have quite a bit of control over their income, because they can undercut their competition and get more jobs.  But that way of thinking doesn't seem to go over real well here.  

   

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1 hour ago, kimanjome said:

Yes, let me find the documents the seguro agent left with me.  I was so astounded by the rate that I asked her multiple times and wrote it down, showed the numbers to her to verify it.  She said that we, the employers, are supposed to pay both our (employer) share as well as the  vast percentage of  the employee contribution...which makes you wonder why they call it an employee contribution in the first place.

About 2 years ago I communicated on this forum with Sondra Diaz, the attorney out of SMA.  When I expressed my astonishment at the high employer contribution, she confirmed it.  

Not only that, but last year I learned that we are supposed to be paying vacation pay--which we do--but vacation pay, which increases every year based on service, is supposed to have a 25% bonus added to it.  So if your maid makes 500 pesos a week, you are to pay 500 + 125 peso bonus to the vacation wages.  And actually that number is low, because you really are supposed to pay them 6 days of pay the first year, which is more than weekly payment.  

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Okay, I am on Sondra's page;  It is 20%.  http://www.soniadiaz.mx/-employees.html  (I will go back and correct my earlier numbers).  There is no mention of it, but the employer also has to pay the state income tax (there is a small amount charged to the employee which varies by states, usually 1% to 3% of the salary.

 

 

I went to Sonia's page and did not find the 20% (I even page searched for it).  Can you quote it?  And again, what does it include?  The only NEW amount employers are on the hook for is IMSS, as I understand it.  And that remains 9.23%.....so what is in the 20%  We've all been (or should have been) paying vacation and aguinaldo, so adding that to the 9.23% for IMSS is misleading, if that is what Sonia is doing.  

Vacation pay changes with years of service.  Rolly Brook is THE source for that. even though he RIP now.  That 25% is nothing new, it's always been part of formula.  

Vacación (Vacation)

The vacación must be paid in cash, either before the vacation or before the end of the year if no vacation has been taken.

The vacación pay must equal required number of vacation days of salary plus and additional 25% of the amount. To calculate the amount, divide the number of days worked during the year past by 365.  Multiply that figure by number of vacation days times 1.25 to determine the amount of the vacación pay due. 

Examples:

If you have an employee for one year who works one day a week for $50 pesos:
52/365 x 6 x 1.25 x 50 = $53.42 pesos = 
vacación

If the worker is paid $500 pesos per week, convert the weekly rate to a daily rate by dividing by 7.

500/7 x 6 x 1.25  = $535 pesos = vacación

Note:  The 6-day minimum vacation is only for the first year worked.  The basis increases by 2 days each year through the 4th year.  The 5th year it increases 2 days to 14 days.  Thereafter, the time increases by 2 days each 5th year.

For example:  A maid has worked for 5 years, so she is due 14 days vacation.  She works 3 days per week for $760 per week. which is $253.33 per day.  3 x 52 = 156 days worked per year.

156/365 x 14 x 1.25 x 253.33 = $2642.71

If we ignore that she works only 3 days and consider her a weekly employee, then

760/7 x 14 x 1.25 = $1900

Year 1 -- 6 days
Year 2 -- 6 + 2 = 8 days
Year 3 -- 8 + 2 = 10 days
Year 4 -- 10 + 2 = 12 days
Year 5 -- 12 + 2 = 14 days
Year 10 -- 14 + 2 = 16 days
Year 15 -- 16 + 2 = 18 days
etc

 

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When it comes into effect, we will be letting go of our maid and gardener. Do we want to? No. Will we? Yes. Sorry, but we treat them both very well, always give raises at the beginning of the year, give them more than the legal requirements for the Aguinaldo, plus a nice basket, days off with pay, etc. We've done our end, but this is just more than we want to take on. Anyone have any idea when it's planned/scheduled to go into effect?

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1 hour ago, Tingting said:

When it comes into effect, we will be letting go of our maid and gardener. Do we want to? No. Will we? Yes. Sorry, but we treat them both very well, always give raises at the beginning of the year, give them more than the legal requirements for the Aguinaldo, plus a nice basket, days off with pay, etc. We've done our end, but this is just more than we want to take on. Anyone have any idea when it's planned/scheduled to go into effect?

Let them go over 9.23%  Really???  You say you give them a raise every year, maybe it'd be better to offset their next raise against the 9.23% IMSS payment and show them how/why that happened.  Perhaps they'd rather have their current jobs at current pay + health insurance + retirement, rather than no job at all??  At least give them that option. 

And you do realize you will have to pay them their finiquito if you let them go?  

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Again, from Rolly Brook,

Termination Pay:

The labor laws are very pro worker.  Nowhere is this more evident than in the draconian termination law.   When an employee is terminated, he is entitled to termination pay; unless:

1.  The employment was for a specified period of time, such as while building a house, or for house sitting for the winter while the owner is away, etc.  It is best to have the time stipulation in writing.

2.  For just cause.  This is a very complicated issue, and you may need the help of a labor lawyer if the employee appeals to the labor review board.  Just cause is spelled out in detail in the law. 

The termination pay shall include 3-months salary plus 20 days for each year worked plus prorated vacation and Christmas pay. 

20 days means 20 times the daily rate which is 1/7 of the weekly rate.

Example:  A maid worked 2 days per week for $50 pesos per day for 4 years.  That is $100 per week. There are 13 weeks in 3 months.  Her daily rate is not $50.  It is 100/7 = $14.29.  So her termination pay will be (13 x 100) + (20 x 14.29 x 4) = 1300 + 1143.20 =  $2443.20 plus any Christmas and vacation pay that may be due.

If this termination package cannot be paid at the time of termination, regular salary shall continue until the termination is paid in full.

If the employee quits voluntarily, termination pay is not required.  A common tactic to avoid termination pay is to induce the employee to quit.  One must take care with this because the law cited above spells out what an employer cannot do to harass a worker and his family.
 

 
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3 hours ago, Bisbee Gal said:

Let them go over 9.23%  Really???  You say you give them a raise every year, maybe it'd be better to offset their next raise against the 9.23% IMSS payment and show them how/why that happened.  Perhaps they'd rather have their current jobs at current pay + health insurance + retirement, rather than no job at all??  At least give them that option. 

And you do realize you will have to pay them their finiquito if you let them go?  

Yes, really!!!!! Geez, just because we don't agree with your choice doesn't mean ours isn't just as valid. Yes, we always give a pay raise and yes, we know that we have to pay a finquito AND WILL DO SO. We employed them under one set of rules and the rules have changed on us. We choose not to continue under this new rule.  Don't assume the worst of people, or that they're ignorant of the employment laws, just because they choose to do something other than you. We simply don't want to get bogged down in what could be a lot of legal red tape. Hopefully, not, but I don't have a lot of faith in any government implementing a rule with minimal pain.

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I am another one that doesn't want to take on the responsibility of payments for SS, IMSS, etc.

If a worker is an independent contractor, this is, in my opinion, THEIR responsibility, not mine.

I am not going to take on the job of checking that all that is needed is done, done correctly and paid for between 6 people. It's not the $$. I don't want the extra paperwork and hassle.

If she decides to participate, she should set up her own rules, get her own contracts and set her rates of pay to include these expenses. These are not children or incompetent adults we are speaking of here.

Maybe it's time so many people stop treating them as if they "...just don't kmow any better, these poor people."

Don't lecture me about finquitos, either. Again, I've been there and done that. If I couldnt afford a finquito, I wouldn'r have hired someone in the first place.

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1 hour ago, cstone said:

If a worker is an independent contractor, this is, in my opinion, THEIR responsibility, not mine.

As I understand it, your maid and gardener are not considered independent contractors if you actually tell them what to do. In that case, they are considered employees. An independent contractor would be like a plumber who you hire to figure out what's wrong with your drainage system, and fix it. In other words, you aren't telling him what to do, you are assuming he already knows what to do and leave him to it. If you tell your maid what you want her to clean that day, or instruct the gardener as to what you want pruned and transplanted, etc, they are considered an employee. If you use a cleaning service that has a number of employees they send out, the service is an independent contractor and are liable for the benefits paid to their employees.

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a maid or gardener can be an independent contractor or an employee. I would think that the ones who work for several people could pass for contractors when the ones who only work for one person are employees , but I do not know how the law look at it..  am sure we will fnd out eventually...

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Just because I tell someone what I want done on a regular basis doesn't make them my employee.  I don't understand why I have to pay IMSS + +  for the maid, but not for the pool guy. Both come to my home several times a week and provide a cleaning service, as requested by me. 

I'm another one who thinks this is too much, considering the service provided.  I pay really well, I give 5  paid sick days (for part-timers), extra change for refrescos, I pay a month at Christmas instead of the 2 weeks pay, I give a lot of "regalitos" because my cleaning lady is always asking for them.  I share the fruit in my garden, the vegetables I am growing.  I buy the coffee she likes.  I am a good customer.  My maid is supposed to work 5 hours a day, but she always comes or leaves 20 minutes early. She also does with with her other employers.  We finally figured out it is because she is taking her legally-mandated 20 minute break at the start or end of her shift.  She knows her rights.

We like our housekeeper.  She is competent and confident.  She knows more about this house than I do, as I inherited her.  She notices little things that might need repairs before they become bigger issues.   What I don't like is that she also assumes I am a rich, ignorant gringo who doesn't know how to read Spanish, so she will fib about certain things, ie, that she is entitled to a COLA raise every year.  And with this new law coming into affect, and all the negatives involved--I see no benefits for me--I am rethinking our relationship.  

I would like to keep her, ask her if she wants a reduction in hours and wages to compensate for the increase I will have to pay, and the extra work I will have to do.   But she will not understand why the rich gringo won't pay more.  Because it's not only the money, it's the fact that it's more work for me, and I wanted less work when I retired here.When I met with the seguro agent (which was at the urging of my maid, she wanted me to pay for private insurance and a pension plan), the seguro agent told me I would either have to make regular trips into Guad to deposit my contributions with the appropriate agency, or I could hire a local bookkeeping agency here (more money I have to pay) to take care of the required record keeping.  

The terms of our verbal agreement are going to change, and I think I should have the option to renegotiate that agreement. 

WHEN IS THIS LAW GOING TO TAKE EFFECT?

The law states that this will go into effect 18 months from when the law was enacted--December 5, 2018.  So that means June 5, 2020. About a year from now.  

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I can't find a website that cites the actual Mexican labor law, but it has been my understanding that Mexican law specifically defines domestic workers and sets different rules for them.  Here is an excerpt I found at Yucolandia.com that paraphrases the law; is it accurate, still accurate....quien sabe??  

https://yucalandia.com/answers-to-common-questions/labor-law-for-household-employees-in-mexico-what-must-we-pay/#Must domestic workers receive the same benefits as regular employees

 

Quote

 

Must domestic workers receive the same benefits as regular employees?
The labor law defines a domestic worker as those workers who provide services of:   cleaning, home assistance, and anything else within the home of a person of family.   The law goes on to state that anyone that who provides these services for a hotel, bar, hospital, school or other like establishment is not a domestic worker, nor are doormen or concierges servicing multi-unit buildings.

The currently valid labor law has a separate chapter that deals with domestic employees, and mentions that some of benefits that they should receive are different than those given to normal employees.

 

 

 

 

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25 minutes ago, Bisbee Gal said:

I can't find a website that cites the actual Mexican labor law, but it has been my understanding that Mexican law specifically defines domestic workers and sets different rules for them.  Here is an excerpt I found at Yucolandia.com that paraphrases the law; is it accurate, still accurate....quien sabe??  

https://yucalandia.com/answers-to-common-questions/labor-law-for-household-employees-in-mexico-what-must-we-pay/#Must domestic workers receive the same benefits as regular employees

 

 

The date of this article is 2015; in 2019 we have a new administration, new laws going into effect. All the Mexican sources I am trying to follow show that there is a pilot program going on now, that multiple employers of a single domestic will share proportionately in the expenses incurred in registering that person for their Seguro Social benefits. Some sources say that the expense will be divided among the employer, the employee, and the government; others do not give this clarification. It will all shake out soon.

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I understand that Mexican law says the domestic is a different category of worker, because s/he works inside the home.

My question is more hypothetical: what makes her different than the pool cleaner, other than the fact that she works inside my home, as opposed to outside the building? I would assume  it is a cultural issue, because the house cleaner is to be considered more like a family member because s/he is inside the home. 

I would prefer to have her an independent contractor, just like my yard "guy" and pool service and Merry Maids were in the US.

BTW, in answer to your question about the 20%, look at Sonia's page, the top section.  After the paragraph about INFONAVIT: "An employee making for example 1000 pesos a week would cost the employer approx. 800 pesos a month for this coverage. It is important employees are provided Social Security and to be based on full wage. The ramifications are huge."

800 pesos is 20% of 4000.
____________________

We are coming back to the argument, and that of others: this is not what we originally agreed to when we hired our housekeepers.  We were not required to become business owners (been there/done that) who are required to do the  additional bookkeeping involved in a business with employees.

 

 

 

 

 

 

 

 

 

 

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WHEN IS THIS LAW GOING TO TAKE EFFECT?

The law states that this will go into effect 18 months from when the law was enacted--December 5, 2018.  So that means June 5, 2020. About a year from now.  

 

Thanks for that info. While it may change a bit, it gives us a little time to plan and prepare.

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OK I see the 20% now, thanks,  But there is still a question about what Sonia's 20% covers and whether the new law requires employers to only pay that basic 9.23% which is cited as the "social security" contribution.  Since this is a law specific to domestics, it could very well carve them out from a "regular" employee and what is required for them by employers.  Obviously domestic workers were carved out before or there would be no need for this new law.  Interesting to see if they get full benefits or not. 

Vamos a ver!

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14 hours ago, bmh said:

a maid or gardener can be an independent contractor or an employee.

 

16 hours ago, mudgirl said:

As I understand it, your maid and gardener are not considered independent contractors if you actually tell them what to do. In that case, they are considered employees.

Mexican labor law may or may not address this the way you want - and may or may not treat domestic workers different from other workers. And of course it appears that Mexican labor laws may be changing - or not. Lots of different opinions expressed in this thread but they are just that - opinions.

Mexican laws may be different than other jurisdictions but the distinction between an independent contractor versus an employee is pretty clear. In other countries where I have direct experience the determining factor is simple - if I determine when someone works, tell them what to do, determine their wages, etc. they are an employee without any doubt. It is not possible to just say "nope, they are an independent contractor".  It may be referred to as a "facts and circumstances determination". Someone can't simply say I want to call that person an independent contractor. The example of a plumber is a good example. A pool guy that comes once a week (or more) somewhat on their own schedule could be different too. But a cleaner who comes at 10am on Tuesday and does specific tasks that you define is pretty clearly an employee most places. Not really a big deal whether someone works inside the home or not.

So that can differently be different under current and/or new Mexican labor law but I would be surprised if is significantly different than in other countries. I've been surprised before and could be wrong. To me personally nothing to worry about at this moment and if/when this becomes an issue then it will be something we will all need to deal with. For me it doesn't seem to be on overwhelmingly difficult requirement or an unacceptable expense. And Mexico gets to decide how to structure their laws and change them as needed. But from this thread it is clear others disagree. Another one of those things that people will see differently and react differently. YMMV.

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On 5/19/2019 at 4:16 PM, SunshineyDay said:

So do we get any options or is this to be just forced on us? This was not part of the original employment situation.

So let me get this straight.  In the country you  came from,  given any situation (employer, insurance, taxes,   purchases etc.)  that concerned you, if the laws or rules changed and would thereby make your cost for that "service" higher,  did you get to yell "Oh no!  I already had this under the old rules..... so I am grandfathered in and exempt from these changes!"  ??   Pretty much doubt that, but just askin' ........

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