New Implications of the Coronavirus Under Mexican Law

Updated on Monday, April 27, 2020

Due to the increased COVID-19 infection rate in Mexico, Mexican Health Authorities have declared contingency phase 3 this past week. As a result, the Federal Government issued a new Executive Order which extends the previously published shut down order for all non-essential activities until May 30, 2020. 

In accordance with this new Executive Order, "essential activities" are allowed to continue to operate; thus, they must continue to follow restrictions put in place under the prior Executive Order enacted on March 24, 2020, meaning these companies will be under the same restrictions, but for an extended period of time. 
 
The revised Executive Order does not entitle companies to suspend the labor relationships held with their employees, and consequently, they cannot reduce the salaries of their workers. Employees that are not allowed to be present in their workplace will continue to receive full salary; thus, extending the current economic hardship on employers. However, companies are allowed to have employees work remotely from their home without any limitation.

We will continue to monitor and provide updates on this situation and other relevant developments. 

Updated on Thursday, April 9, 2020

The Mexican Minister of Communications and Transportation published today a comprehensive list of activities that are deemed “essential activities” under the Agreement establishing extraordinary actions to attend to the health emergency generated by the SARS-CoV2 virus,” published on March 31, 2020 (the “Revised Executive Order”).

Social distancing and sanitary measures provided under the Revised Executive Order remain applicable in all places, precincts and compounds where essential activities are performed.

The essential activities under the purview of the Ministry of Communications and Transportation are as follows:

1) For infrastructure purposes:

a.  The preservation of federal no-toll highways;
b.  The Program for the Preservation and Rehabilitation of Rural Roads and Feeder Roads.
c.  The operation of the Toll Highway Network, no-toll highways, as well as those roads and bridges delivered to State and Municipal governments for its operation, maintenance, preservation and surveillance.

2) For transportation purposes:

a. Air:

• Safe Flight Certificates
• Export and airworthiness Certificates
• Issuance of Air Services Exploitation Certificates, renewals or their amendments
• Recognition of the Air Services Exploitation Certificates issued by a foreign aeronautics authority, their Renewals or amendments
• Permits for aircraft repair workshops, as well as recognition of foreign workshops that provide services to Mexican registered aircrafts and their amendments
• Sudden repair or maintenance authorizations, as well as work performed abroad
• Flybys authorizations
• Rescue flights authorizations
• Humanitarian flights authorizations
• Airport services
• Complementary services
• Services related to flight navigation assistance
• Assignment and cancelation of public service aircraft registration
• Insurance policy approvals

b. Railroad:

• The provision of cargo and passenger public services, as well as auxiliary and support services related thereto;
• Rehabilitation and maintenance of railways; and
• Work related to the preservation and maintenance of railway equipment

c. Federal Road Transportation:

• Those related to the transportation service-chain listed below:

1. Passenger and cargo federal transportation services
2. Vehicle fleet maintenance services, spare parts supply and related services
3. Cleaning and disinfection services for any type of vehicle, passenger terminals, bus stops, mechanical service stations and sale of gasoline and diesel
4. Cargo and passenger load and unload services
5. Courier services
6. Trailing and rescue tow vehicles, as well vehicle deposits

• Passenger terminals and verification units auxiliary to federal transportation;
• Supervisory duties of the main central bus terminals of the country under the purview of the General Direction of Federal Transportation and SCT Centers, currently focused on the application of sanitary measures issued by such administrative units; and 
• Issuance of provisional authorizations to circulate without metal license plates to allow federal transportation units to circulate and provide services during the referred sanitary emergency, and the conditions that have emerged for the confinement of such virus remain in place

d. Maritime:

• Granting of permits and authorizations to vessels and naval artifacts that provide services linked to passenger and cargo transportation, as well as to the production and distribution of gas, oil, gasoline and jet fuel:

1. Temporary permits for coastal shipping to foreign vessels
2. Permits to provide passenger transportation services in waterways

• Processing and granting of authorization to act as general naval agent or vessel consignee
• Humanitarian bridges
• Port work that is essential to the proper functioning of ports, including private sector port projects, which have the purpose of creating strategic infrastructure for port operation and economic activity stimulation

3) For Port Operation purposes:

• The operations of entrance and exit of vessels, load and unload of cargo or passengers needed to continue the supply of goods, as well minimum/basic port services required for the attention of vessels and their crew, observing all sanitary protocols established;
• Pilotage services, as well as those activities related to the operation of vessels at port that require the immediate attention of the Marine Merchant Services Office dependent of this Ministry; and
• The authorization of amendment and anchoring maneuvers of vessels at port, by the Marine Merchant Services Office dependent of this Ministry

4)  For Communication purposes:

• Actions to guarantee the continuity of telecommunications and radio broadcasting networks so the population may access information media and telecommunication services;
• Actions to safeguard the security of critical infrastructure;
• Continuity of social covered projects;
• Broadcasting to the public about the rational use of telecommunications and radio broadcasting technologies;
• Mail and postal services provided by the Mexican Post Office;
• Satellite services for social coverage by TELECOMM; 
• Telecomm office services, as well as services to disperse the resources for the Wellness social program by TELECOMM;
• Maintain the operation of the private Network of the Federal Government; and
• Assessment of technology development projects.

We will continue monitoring and providing updates as the information continues to flow.

Information as of April 2, 2020

COVID-19 continues to bring a fluid series of challenges and legal issues for companies doing business in Mexico. As expected, the federal government enacted on March 31, 2020, a new set of rules that restrict economic activity for many companies (the “Revised Executive Order”). In that vein, in addition to the restrictions and opportunities referred to in our prior alert, companies should be aware of the following:

1)  As of March 30th (though it was published on March 31st), companies must cease all non-essential activities until April 30, 2020. 

2)  Under the Revised Executive Order, the following activities are deemed as essential and, therefore, permitted to continue:

(i)  Those needed to directly serve the sanitary emergency, such as medical, paramedical, administrative and support personnel of the National Health System. Also, those participating in its supply and services, underscoring the pharmaceutical sector, both in its production and in distribution (pharmacies) capacities; manufacture of healthcare inputs, medical equipment and technologies; those related to the proper disposal of hazardous biological-infectious residues (HBIR), and cleaning and sanitization of medical units at the different attention levels;

(ii)  Those involving public safety and citizen protection; the defense of national integrity and sovereignty; the procurement and delivery of justice; as well as the legislative activity at the Federal and State levels;

(iii)  Those of the fundamental sectors of the economy: Financial, tax collection, distribution and sale of energy products, gas stations and gas, generation and distribution of drinking water, food and non-alcoholic beverages industry, food markets, supermarkets, grocery stores and convenience stores and prepared food stores; cargo and passenger transportation services; agriculture, fisheries and livestock production, agroindustry, chemical industry, cleaning products; hardware stores, courier services, guards in private security services; childcare institutions, senior living and asylum facilities, shelters and attention centers for abused women, their daughters and sons; telecommunications and information media; private emergency services, funeral homes and inhumation services, warehousing services, cold supply chain of essential inputs; logistics (airports, ports and railroads), as well as those activities which suspension may derive in an irreversible effect for its continuity (this issue will be addressed herein below);

(iv)  Those directly related to the operation of government social programs; and

(v)  Those needed to preserve, maintain and repair the critical infrastructure that ensures the production and distribution of essential services; namely, drinkable water, electricity, gas, oil, gasoline, airplane fuel, basic sanitation, public transportation, hospital and medical infrastructure, amongst others that might be listed in this category.

3)  Companies, including those that must cease operations, are not entitled to suspend the labor relationships with their employees.  This means that, at this time, companies cannot reduce the salaries of their workers. Employees that cannot come in to the workplace will continue to receive full salary; thus, imposing an economic burden on employers. However, companies may have employees work remotely without limitation.

4)  Companies that remain open must continue to follow restrictions put in place under the prior Executive Order enacted on March 24, 2020 (the “March 24 Order”). The Revised Executive Order further restricts some of these activities, including reducing the limit on gathering from 100 down to 50.  

5)  All other measures under the March 24 Order that do not contravene the measures set forth under the Revised Executive Order shall continue to be in force (e.g., classes shall be suspended, the set of vulnerable individuals shall be precluded to assist to the workplace, without restriction to remote work).

Practical and Legal Approach

1)  Industries that are not specifically listed as essential within the Revised Executive Order must assess on a case-by-case basis whether they qualify as activities which suspension may derive in an irreversible effect for its continuity. Though the Revised Executive Order does not provide guidelines to assess the preceding, an individualized technical, operational and financial assessment should be performed to determine whether such industry or activity should qualify as an “essential activity”.

2)  Companies whose activities are not expressly listed within the Revised Executive Order but deem their activity as essential and thus decide to continue to conduct their activities, may face the following penalties if the health authorities determine otherwise:

(i)  Imposition of fines that range from USD$7,200 up to USD$21,700. Fines may be doubled for repeat offenses. 

(ii)  Shut down of the facilities.

3)  Any decision imposed by the health authorities is subject of challenge; however, courts currently remain largely closed with a limited scope of operations.

4)  Companies whose activity is deemed as essential, should incur in the following suggested preventive measures in addition to the ones set in the Revised Executive Order:

(i)  Implement a health check-point at the entrance of the facility. At such check-point, all employees as they access the facilities should be subject to temperature screening, use of hand sanitizers and sign a document whereby they attest that they are not aware of being ill, or from suffering any of the conditions described under the Executive Order that would make them part of a vulnerable sector and thus, impeded to attend to the workplace.

(ii)  Post at the workplace in strategic locations the health measures recommended and instructed by the health authorities (e.g., social distancing, 1.5 up to2 meters of distance between people or work-stations).

(iii)  Cause employees to attend to the workplace with staggered arrival times to prevent gatherings or lines of employees accessing the facilities.

(iv)  Have a Notary Public attesting that such measures are being implemented.

5)  Each State and Mexico City government local authorities have also issued or will be issuing their own restrictive provisions due to COVID-19, which should be also regarded on a case-by-case basis, in addition to the Federal provisions or implications mentioned above.

For more information, please contact your Foley relationship partner. For additional web-based resources available to assist you in monitoring the spread of the coronavirus on a global basis, you may wish to visit the websites of the CDC and the World Health Organization. 

Foley has created a multi-disciplinary and multi-jurisdictional team to respond to COVID 19, which has prepared a wealth of topical client resources and is prepared to help our clients meet the legal and business challenges that the coronavirus outbreak is creating for stakeholders across a range of industries. Click here for Foley’s Coronavirus Resource Center to stay apprised of relevant developments, insights and resources to support your business during this challenging time. To receive this content directly in your inbox, click here and submit the form.