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.
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:
c. Federal Road Transportation:
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
1. Temporary permits for coastal shipping to foreign vessels
2. Permits to provide passenger transportation services in waterways
3) For Port Operation purposes:
4) For Communication purposes:
We will continue monitoring and providing updates as the information continues to flow.
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).
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.
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