On November 24, 2025, the Ministry of Labor and Social Welfare (“STPS”, per its acronym in Spanish) issued the “Subcontracting Inspection Protocol” (the “Protocol”) which establishes the guidelines and procedures for monitoring and enforcing labor regulations applicable to subcontracting in Mexico. The Protocol regulates inspection actions, requirements for contractors' registration, information exchange with other authorities, and criteria for detecting improper practices. These measures aim to protect labor rights and ensure compliance with tax and social security obligations.

‍

The Protocol defines three categories of surveillance actions by the authority:
‍

1. Verification visits related to the Specialized Services Providers Registry (REPSE), which involve physical and documentary inspections at the workplace address of entities applying for or holding registration as specialized service providers.
   ‍
2. Inspections related to subcontracting, which entail reviews of the workplaces of contractors and beneficiary companies, including worker interviews and analysis of documentation demonstrating compliance with applicable labor regulations.
   ‍
3. Ordinary and extraordinary inspections concerning General Working Conditions, Occupational Health and Safety, and Training and Instruction, with particular emphasis on subcontracting compliance.
   ‍

The Protocol also establishes that inspections must focus on verifying compliance with obligations related to: (i) registration as specialized service providers (REPSE), (ii) specialized services agreements and the quarterly informational filings before the social security authorities, (iii) labor and social security documentation demonstrating compliance with applicable obligations by the parties, (iv) worker training, (v) the identification of subcontracted workers, and (vi) confirmation that the activities performed do not fall within the corporate purpose or predominant business activity of the beneficiary company, among others.

‍

In addition, the Protocol provides that the STPS must coordinate the exchange of information with the Mexican Social Security Institute, the Institute of the National Housing Fund for Workers, and the Tax Administration Service to schedule inspections and detect potential non-compliance. It further provides that, during inspection visits, inspectors are authorized to conduct interviews with employees and employers on a sampling basis, while ensuring confidentiality.

‍

If any irregularities are identified, the authority may initiate proceedings to cancel the company's registration as a specialized service provider (REPSE) and impose administrative sanctions in accordance with applicable regulations. It is important to note that non-compliance with subcontracting regulations may result in fines ranging from 2,000 to 50,000 times the Unit of Measurement and Update (UMA), and in cases of illegal or simulated subcontracting, may constitute tax fraud crimes punishable by three to nine years of imprisonment.

‍

The Protocol serves as a tool for monitoring and ensuring compliance with labor, tax, and social security regulations in Mexico concerning personnel subcontracting, establishing clear procedures for inspection, registration, and sanctions related to improper subcontracting of specialized services or works.

‍

In light of the above, companies should ensure that their service contracting arrangements are properly classified under the applicable subcontracting provisions and that, where specialized services arrangements are involved, they comply with the applicable legal requirements to avoid penalties.

‍

For any questions or comments, you can contact our expert team.