Mexico: Amendments to the Housing Fund Law “INFONAVIT”
The recent amendment to Article 29 of the Housing Fund Law “INFONAVIT” imposes new financial burdens on employers by requiring them to continue making loan instalment payments to INFONAVIT even when employees are absent or on medical leave. This change could result in significant, unrecoverable costs for businesses.
On February 21 of this year, a Decree was published in the Official Gazette containing significant amendments to the Housing Fund Law “INFONAVIT” Law. Among these, one change has raised serious concerns for companies: the modification of Article 29, which outlines employer obligations. A new paragraph has been added, as transcribed below:
“Article 29.- Employers’ obligations:
I.- to IX.- …
The obligation to make contributions referred to in section II above shall be suspended when no wages are paid due to absences under the terms of the Social Security Law, provided that timely notice is given to the Institute in accordance with Article 31. However, in the case of disabilities certified by the Mexican Social Security Institute (IMSS), the obligation to pay contributions shall remain in force. The obligation to make the deductions referred to in section III shall not be suspended due to absences or disabilities under the terms of the Social Security Law.”
Below is the text of section III of Article 29 of the INFONAVIT Law:
“III.- Make deductions from employees’ salaries, in accordance with Articles 97 and 110 of the Federal Labour Law for the payment of instalments to cover loans granted by the Institute. Employers must also transfer the amount of these deductions to the receiving entities acting on behalf of the Institute, in the manner and terms established by this Law and its regulatory provisions.
The integration and calculation of the salary base for deduction purposes shall be as established in section II of this article. To ensure that the Institute can individualize these deductions, employers must provide information related to each employee in the form and frequency established by this Law and its regulatory provisions.”
The amendment to Article 29 has severe consequences for employers. It establishes that loan instalment payments to INFONAVIT must continue even when the employment relationship is suspended due to absences or disabilities granted under the Social Security Law. This means employers will have to make significant payments to INFONAVIT for the entire period the employee does not receive a salary. As a result, the employee will accumulate a substantial debt to the employer—one that will be nearly impossible to recover from due to the deduction limits set in Articles 97 and 110 of the Federal Labour Law. This will create serious financial burdens for employers due to irrecoverable payments.
We consider this amendment to Article 29 of the INFONAVIT Law to be unconstitutional. Therefore, it can be challenged through an amparo lawsuit, which must be filed promptly to request a suspension order preventing its enforcement while the case is being processed. Due to its nature, we believe this reform is self-enforcing, meaning legal action must be taken within 30 days from its effective date. According to the First Transitory Article of the Reform Decree, this date is February 22 of the current year. Alternatively, the challenge can be filed within 15 days from the first instance of its application, which is expected to be on March 17 of this year.
Given the importance of this matter and its serious implications, our firm is prepared to provide you with all the legal assistance necessary to properly address and defend against these changes.
