Federal order to shut-down non-essential activities.

On March 31, 2020, the Federal Government published the “Order by means of which extraordinary measures were established to attend the sanitary emergency caused by the SARS-CoV2 (COVID-19) virus” (the “Executive Order”) ordering preventive measures to mitigate and control the risks of contagion of the COVID-19.

For reference purposes, we have prepared this bulletin in a questions/answer format relating to the most common questions that we have received with regard to the Order.

What is the purpose of the Agreement?
The suspension of all non-essential work activity from March 30, 2020, to April 30, 2020.

Are we obligated to close our operations as of March 31?
If your company does not carry out “essential” activities, you will have to shut down your activities.
It is important that the company takes measures and implement the protocols to take care of its facilities and that the production processes are affected as less as possible during the shutdown.

What are the essential activities as defined by the Executive Order?
Among the essential activities are:

  1. Those activities directly necessary to respond to the sanitary emergency, such as labor activities of the medical, paramedical, administrative and support fields that support the National Health System, in addition to those activities relating to the supply and services of same, including the pharmaceutical sector, both production and distribution (pharmacies); the manufacture of medical supplies, medical equipment, and technologies for medical attention; those activities involved in the disposition of biological-infectious hazardous waste (RPBI), and in the cleaning and sanitation of medical units at the different levels of attention;
  2. Those activities of the sectors considered to be essential for the fundamental operation of the economy: financial, tax collection, distribution and sale of energy, gasoline, and gas, generation and distribution of drinking water, food and non-alcoholic beverages industry, food markets, supermarkets, self-service stores, groceries and sale of prepared food; passenger and cargo transportation services; agriculture, fisheries, and livestock production; agro-industry, chemical industry, cleaning products; hardware stores, messenger services, private security guards, daycare and childcare, nursing homes, elderly care homes, shelters and centers for the attention of women who are victims of violence, their children; telecommunications and information media, emergency private services, funeral and burial services, services for the storage and temperature-controlled (cold) supply chain of essential supplies; logistics (airports, harbors, and railroads);
  3. Activities which suspension could have irreversible effects for their continuation;
  4. Those activities necessary for the conservation, maintenance, and repair of critical infrastructure that guarantees the production and distribution of indispensable services, namely: drinking water, electric energy, gas, oil, gasoline, jet fuel, basic sanitation, public transportation, medical and hospital infrastructure, among others that can be listed in this category.

Is the Executive Order a Declaration of Sanitary Contingency?
The Executive Order is not a “Declaration of Sanitary Contingency”. The Executive Order is a “Declaration of Sanitary Emergency”, therefore, the possibility of suspending work in the workplace by paying a general minimum wage for a period of thirty days is not activated.

Is a “Sanitary Contingency” not the same as a “Sanitary Emergency”?
No, it is not the same.

What are the labor effects for companies that are considered to be “non-essential”?
Considering that this is not a health contingency, companies have the obligation to pay full wages to workers.

However, as it is considered a health emergency due to force majeure and the suspension of work activities is not the responsibility of the company, the company may also choose other alternatives, such as initiating a procedure to suspend work collectively, seeking to set the payment of a minor compensation before the labor authority, or, seek an agreement with the workers to pay some compensation less than the full salary that makes it possible to maintain and care for the source of employment when the “health emergency” concludes, and/or avoid incurring in job layoffs.

How can we conclude that the operations of the company are an “essential” activity?
It is important to analyze the manufacturing activities of the company. Classify and analyze the activities and activities of the company’s clients. Document business relationships with customers through contracts, purchase orders, and “essential business” certifications issued by the end-customers. Companies that consider themselves to be “essential” activities must obtain all available evidence to support such a claim.

How can we prove that there is a company with “essential” activities? If we are considered as part of a supply chain of an essential activity in the United States or Canada or some other country, may we continue to operate?
With the manufacturing processes, the essential activity evidences the essential nature of the activity.  We consider that if the company has a letter from the customer confirming that the production process and/or products that the company manufactures are vital in the supply chains of an essential industry determined by a foreign government, the characteristic of “essential” can be justified.

Is there a process before any agency that certifies that my operation is essential?
No. So far, there is no formal process confirming that a company has an essential operation or activity.

The activity of the company is not classified as “essential” as it is not specifically stated, do I have an alternative?
Yes, if the company documents or proves that the suspension of its operations may have irreversible effects for its continuation, then it can continue operating since the companies that are in that situation will be considered to be “essential”.

If the company continues operating, does it need to have something ready?
Yes, we believe that you must have all the evidence to demonstrate that the company is carrying out essential activities. However, unfortunately, the Agreement is not very clear and may also be subject to interpretation by the health authorities.

What are the labor effects for “essential” companies?
They are obligated to continue their operations in compliance with their usual obligations, but they must also comply with the following:

  1. Meetings or congregations of more than 50 individuals are not permitted;
  2. Individuals must wash their hands frequently;
  3. Individuals may sneeze or cough by applying respiratory etiquette (covering the nose and mouth with a tissue or the forearm);
  4. Kissing, shaking hands, or hugging must be avoided (remote greeting); and
  5. All other measures of “social distancing” implemented by the Ministry of Health must be observed.
  6. Avoid having individuals of 60 years or more, pregnant or in immediate postpartum, in addition to individuals who have been diagnosed with arterial hypertension, diabetes mellitus, cardiac or chronic pulmonary disease, immunosuppression, and kidney failure, regardless of whether their labor activities are considered to be essential. Personnel engaged in essential activities of the public sector may voluntarily, present themselves to work.

What are the possible consequences for companies if they do not comply with the Executive Order?
Authorities may apply administrative sanctions such as fines, closings of operations, among others. Under some circumstances, in case of not implementing the correct labor strategies, the risk of individual or collective labor lawsuits could be caused.

Alejandro Pedrín   |   apedrin@tplegal.net
Héctor Torres-López   |   htorres@tplegal.net
Leobardo Tenorio-Malof   |   ltenorio@tplegal.net
Mauricio Tortolero   |   mtortolero@tplegal.net
Daniel Gancz-Kahan   |   dgancz@tplegal.net
Alejandro Ceballos   |   aceballos@tplegal.net
Elio Sánchez   |   ecsanchez@tplegal.net
Iván Curiel-Villaseñor   |   icuriel@tplegal.net
Raúl Escamilla-Sanromán   |   rsanroman@tplegal.net


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