Mexican whistle-blowing legislation: a work in progress: General legal framework the current Mexican regulation on whistle- blowing has made substantial advances over the last few years, but it is still very limited. Most of the legal development has been for the public sector.
In general, the brand-new anti-corruption legislation introduces the responsibility of private corporations engaged by the Mexican government, as well as the concept of whistle-blowing.
Along with the anti-corruption laws, Mexico has passed some amendments to the Federal Criminal Code to introduce corporate criminal liability, which forces companies, among others, to have in place a comprehensive compliance program in which an effective whistle-blowing mechanism is implemented.
As a complement to the ongoing legislation, the newly revised United States- Mexico-Canada Agreement (USMCA) includes substantial regulation on anti- corruption measures and, consequently, on whistle-blowing.
In fact, the USMCA expressly notes that state parties “shall adopt or maintain measures … to protect, against any unjustified treatment, any person who, in good faith and on reasonable grounds, reports to the competent authorities any facts concerning offenses.”
Considering the current legal framework and the provisions of the USMCA, it is expected that ancillary legislation will be discussed by the Mexican Congress in the upcoming months.
Finally, there is a bill aimed to regulate whistle-blowing within the public sector. Such proposed legislation follows the path of the Model Law to Facilitate and Encourage the Reporting of Acts of Corruption and to Protect Whistleblowers and Witnesses.
In the event that such a bill is passed, it will certainly provide guidance to produce additional legislation related to the private sector.
The Act on Responsibility of Collective From a labor standpoint, the Federal Labor Law (FLL) does not offer specific regulations on whistle-blowing.
There are no significant cases in which whistle-blowing has been under scrutiny, mainly because of the protective spirit of the labor law system.
Since “employment at will” is not a valid form in Mexico, whistle-blower employees are to some extent protected in the event of retaliation or termination of employment.
Per the statute, all employment termination must be subject to just cause. Failure to ground the termination on the limited causes set forth in the FLL will lead the employee to claim for severance or reinstatement.
If the employer imposes a disciplinary sanction as a consequence of a whistle- blower situation, that sanction must comply with internal shop rules registered with the labor board and, in any case, it also can be challenged by the employee.
In a nutshell, it seems that the FLL and relevant precedents somehow provide sufficient protection to whistle-blower employees against termination or retaliation. Further actions, however, must be taken to comply with criminal legislation and the USMCA.
The path of such agenda will probably include enhancing employment-based protection rules, such as (i) providing legal assistance; (ii) shielding a whistle-blower’s identity; (iii) providing mandatory paid leave of absence and (iv) offering transfers to an alternative work location.
For employers, it is essential to start working on a criminal compliance protocol, including whistle-blowing provisions aimed to encourage reporting and rules for the process.
Finally, companies doing business in Mexico and abroad should continue observing the provisions set forth by the Foreign Corrupt Practices Act and the Sarbanes-Oxley Act, along with the relevant extraterritorial- reach provisions.
Country-by-country and EU whistle-blowing rules need to be taken into account in setting the best practices and policies in this growing area of risk, including what an employer must do when faced with a whistle-blower claim, such as whether an investigation is required, protections of the employee who complained of company practices and litigation issues.
Best practice requires companies to take action in advance by creating a hotline and training its employees in ethical behavior.