U.S. National Administrative Office
Bureau of International Labor Affairs
U.S. Department of Labor
October 12, 1994
Table of Contents
- Summary: NAO Submission #940001
- Summary: NAO Submission #940002
- Conduct of the Reviews
- Initiation of the Reviews
- Objective of the Reviews
- Information from the IBT and UE
- Information from Companies
- Information from the Mexican NAO
- Information from Experts
- Public Hearing
- Other Sources of Information
- Enforcement by the Government of Mexico of Labor
Laws Relevant to Submissions
- State Conciliation and Arbitration Boards
- NAO Submission #940001
- NAO Submission #940002
- Findings and Recommendations
- Mexican Labor Laws
- Federal Labor Law
- International Law
- Implementation of Mexican
- Conciliation and Arbitration Boards
- Procedures of CABs
- Settlement of
- Other Agencies
One of the functions of the U.S. National Administrative Office (NAO or
Office), established under the North American Agreement on Labor Cooperation
(NAALC or Agreement), is to receive, accept for review, and review submissions
on labor law matters arising in Canada or Mexico. This is consistent with
Article 16(3) of the NAALC, which states as follows:
Each NAO shall provide for the submission and receipt, and
periodically publish a list, of public communications on labor law matters
arising in the territory of another Party. Each NAO shall review such matters,
as appropriate, in accordance with domestic procedures.
According to Article 49 of the NAALC, "labor law" means laws
and regulations, or provisions thereof, that are directly related to, inter
alia, freedom of association and the right to organize.(1)
Pursuant to the procedural guidelines of the NAO, which became
effective on April 1, 1994,(2) following a
determination by the Secretary of the NAO to accept a submission for review,
the Office shall conduct such further examination of the submission as may be
appropriate to assist the Office to better understand and publicly report on
the issues raised. Within 120 days of acceptance of a submission for review,
unless circumstances require an extension of time of up to 60 days, the
Secretary of the NAO shall issue a public report, which shall include a summary
of the proceedings and any findings and recommendations.
On February 14, 1994, the International Brotherhood of Teamsters (IBT)
filed a submission with the NAO (Submission #940001) concerning allegations
involving the operation of an employer in Chihuahua, Mexico. On the same date,
the United Electrical, Radio, and Machine Workers of America (UE) also filed a
submission with the NAO (Submission #940002) concerning the operations of an
employer in Ciudad Juarez, Mexico.
- Summary: NAO Submission
The submission by the IBT concerns allegations involving the
operations of Honeywell Manufacturas de Chihuahua, S.A., in the city of
Chihuahua, State of Chihuahua, Mexico. The plant manufactures electronics
equipment, including thermostats, circuit boards, and heating and air purifier
switches. It employs about 480 workers. The allegations of the submission
relate principally to the right of freedom of association and the right to
According to the submission, workers at the Honeywell plant until
recently were paid 15 pesos a day or about $45 or less a week in wages and
bonuses. The IBT claims that these are depressed wages and are exceptionally
low even in maquiladora plants. The submission further alleges that to maintain
these low wages, Honeywell has used illegal threats and firings to keep its
employees from joining a union.
The submission specifically alleges that on November 12, 1993, an
officer of the Union of Workers of the Steel, Metal, Iron and Related
Industries (Sindicato de Trabajadores de la Industria Metálica, Acero,
Hierro, Conexos y Similares, STIMAHCS), a union that is part of the Authentic
Labor Front (Frente Auténtico del Trabajo, FAT), an independent labor
organization, held an organizing meeting in Chihuahua attended by twelve
Honeywell workers. The meeting was not open to the public. One of the workers
who attended the meeting was allegedly the leading supporter of the FAT at the
The submission alleges that in late November, Honeywell fired
approximately 20 production workers, nearly all of whom had expressed an
interest in joining an independent union. The submission further alleges that
the employees were told that they were being fired for their union activities
and that they had to sign resignation forms to collect their severance pay,
thus waiving their ability to file claims against their former employer
protesting their dismissal. The submission also states that in connection with
the firing of the employee who was the leading advocate for FAT in the plant,
coercive measures were used to attempt to gain information about other
Finally, the submission states that one of the fired workers
instituted a complaint against Honeywell before a Mexican Conciliation and
Arbitration Board (Junta de Conciliación y Arbitraje, CAB), which was
pending at the time the submission was filed. According to the submission, CABs
have a reputation for refusing to reinstate workers fired for supporting
independent unions like the FAT.
The IBT submission claims that actions by Honeywell are in
violation of Article 123 of the Constitution of Mexico and that the company has
violated the labor principles set out in Annex 1 of the NAALC. The relief
requested in the submission is that:
the NAO conduct a prompt review of the charges under Article 16
of the NAALC;
the NAO conduct a public hearing either in Chihuahua, Mexico, or
in El Paso, Texas, to take evidence on the charges;
the Government of Mexico require Honeywell to reinstate, with
back pay, the 20 workers dismissed in late November;
the Government of Mexico require Honeywell to comply with
Mexican law and the labor law principles set out in the NAALC;
absent the reinstatement of workers, with back pay, the U.S.
Secretary of Labor request immediate consultations at the ministerial level
pursuant to Article 22 of the NAALC;
if the aforementioned consultations are not successful, the U.S.
Secretary of Labor use all other available remedies to address the matters
being complained of;
the NAO request that the National Labor Relations Board begin
appropriate rulemaking for whatever remedies may be needed to address the
chilling effect of the alleged violations on the rights of IBT members and any
injury to their economic interests;
that the NAO develop standards and guidelines for determining
when U.S. employers in Mexico violate the basic labor norms set out in Annex 1
of the NAALC and inform and publicize these standards or guidelines to U.S.
companies by rulemaking or through other means; and
the NAO develop a program of non-trade sanctions for U.S.
companies operating in Mexico that violate the basic labor norms in Annex 1 of
the NAALC, where these sanctions may include ordering employers to post notices
in U.S. plants that they will comply with the basic norms in Annex 1 of the
NAALC and to bargain in good faith with U.S. unions to ensure that they will
comply with the basic labor norms set out in Annex 1 of the NAALC when doing
business in Mexico.
- Summary: NAO Submission
The submission by the UE concerns allegations involving the
operations of the Compañía Armadora, S.A., a subsidiary of the
General Electric Company (GE), in Ciudad Juarez, State of Chihuahua, Mexico.
Six affidavits from employees of the company were attached to and supported the
submission. The allegations relate principally to the right of freedom of
association and the right to organize.
The submission notes that approximately two years ago, the UE
formed a Strategic Organizing Alliance with the FAT. In order to develop closer
ties between workers in the United States and Mexico, UE representatives
travelled to Mexico in November 1993 to meet with Mexican workers.
According to the submission, at a meeting on November 6, 1993,
between employees of the Juarez facility who were attempting to organize an
independent union at the plant and the delegation from the UE, the Mexican
workers described the company's alleged efforts to suppress their union
activity. Subsequent to the meeting, the submission asserts,
Compañía Armadora continued to engage in activities to curtail
the organizing campaign and punish employees who had become involved. The
submission states that the company's efforts included altering the established
practice of plant entry to prevent employee organizers from distributing
campaign literature, taking campaign literature from employees, and dismissing
several employees, some of whom had taken part in discussions with the UE
According to the submission, as many as 20 union activists were
dismissed by the company. The submission states that under Mexican law, a
dismissed employee has a right to statutory severance pay based on length of
service; in order to challenge a dismissal, however, an employee must agree to
forgo the severance payment. The submission alleges that Compañía
Armadora pressured workers into accepting the statutory severance pay and
relinquishing claims for reinstatement.
The submission additionally charges Compañía Armadora
with several health and safety violations, including failing to give light work
to pregnant women, failing to provide adequate ventilation in work areas and
suitable protective equipment, and failing to test properly employees for
exposure to chemicals. The company is also charged with failing to pay overtime
as prescribed by law.
These allegations demonstrate, according to the submitter, that
Compañía Armadora has violated several provisions of Mexican law,
including Articles 6, 7, and 123 of the Constitution, corresponding provisions
of the Federal Labor Law, international law, and the labor principles set out
in Annex 1 of the NAALC. The UE further asserts that the Government of Mexico
has failed to enforce its labor law. The relief sought in the submission is
the NAO initiate a review pursuant to Article 16 of the NAALC;
the NAO hold a public hearing in Juarez, Mexico, or in El Paso,
Mexico require GE to comply with international and Mexican labor
law, including by: respecting the rights of workers to communicate in
furtherance of their interests; returning to the former practice of letting
workers off the bus outside the company gates; instructing all management
personnel that they stop snatching union leaflets out of the hands of workers;
stopping discharging workers for union activity and without cause; ceasing
pressuring workers into accepting statutory severance pay and relinquishing
claims for reinstatement and immediately offering reinstatement with full back
pay and lost benefits to workers who have been unjustly terminated; paying
overtime properly; providing light work to pregnant women; complying with
requirements regarding health and safety; providing all workers with a copy of
the work contract they signed with the company; providing any worker who may be
discharged with a written statement of the reason for the discharge; posting
notices at all U.S. and Mexican GE facilities setting forth in detail the
corrective actions it is taking and stating its agreement to respect the labor
and human rights of its employees in the future; and sending a copy of said
notice to all individuals and organizations who wrote to GE inquiring about the
fired workers and to whom the company responded stating that the matter had
in the event that the relief requested above of GE is not
satisfactorily obtained, the NAO Secretary request that the Secretary of Labor
request consultations at the ministerial level pursuant to Article 22 of the
if the relief requested above of GE is not satisfactorily
obtained after the ministerial consultations, the NAO recommend that the
Secretary of Labor request the establishment of an Evaluation Committee of
Experts pursuant to Article 26 of the NAALC;
if following the presentation of a final report by an Evaluation
Committee of Experts the relief requested above of GE is not satisfactorily
obtained, the NAO Secretary recommend dispute resolution under Part Five of the
the NAO grant such further relief as it may deem just and
Conduct of the Reviews
On April 15, 1994, within 60 days of their receipt, as required by its
procedural guidelines, the NAO gave notice that Submissions #940001 and #940002
were accepted for review.(3) In the notice
announcing the initiation of the reviews, the NAO stated the rationale for
initiation and the objectives of the reviews. The notice also indicated that
acceptance for review of the submissions was not intended to indicate any
determination as to the validity or accuracy of the allegations contained in
- Initiation of the Reviews
The NAO notice stated that initiation of the reviews was warranted because the
submissions met the criteria for acceptance in Section G.2 of the NAO
guidelines, i.e., they raised issues relevant to labor law matters in Mexico
and a review would further the objectives of the NAALC.
The two submissions dealt primarily with freedom of association
and the right to organize, issues that are clearly within the scope of labor
law as defined by Article 49 of the NAALC.
Reviews appeared to further the objectives of the NAALC, as set
out in Article 1, which include improving working conditions and living
standards in each Party's territory; promoting, to the maximum extent possible,
the labor principles set out in Annex 1 of the Agreement, among them freedom of
association and the right to organize; promoting compliance with, and effective
enforcement by each Party of, its labor law; and fostering transparency in the
administration of its labor law.
Although the specific events (dismissals) raised in the submissions
occurred in 1993, prior to the entry into force of the NAALC, some of the
workers were still pursuing their reinstatement through the CABs at the time of
the submissions. Moreover, under the NAALC, the date that an event occurred is
determinative only in considering whether there exists a "pattern of
practice" required for establishing an Evaluation Committee of Experts.
The labor law matters raised by the submissions (freedom of association and
protections against dismissal because of efforts to organize) are not the basis
for the establishment of an Evaluation Committee of Experts pursuant to Article
23 of the NAALC.
- Objective of the Reviews
Consistent with Section H.1 of the NAO guidelines, the stated objective of the
reviews was to gather information to assist the NAO to better understand and
publicly report on the Government of Mexico's promotion of compliance with, and
effective enforcement of, its labor law through appropriate government action,
as set out in Article 3 of the NAALC. In particular, the initiation notice
stated that the reviews would focus on promotion of compliance with, and
effective enforcement of, labor laws that guarantee the right of association
and the right to organize freely and prohibit the dismissal of workers because
of efforts to exercise those rights.
In conducting the reviews, the NAO gathered information from a
variety of sources, including materials submitted by the IBT and UE, each of
the companies named in the submissions, and the public at large in the context
of a public hearing conducted by the NAO for the specific purpose of gathering
information on the two submissions. In addition, the NAO has used information
provided by the Mexican NAO in response to a request it made for information,
reports prepared by expert consultants, and the available literature on the
relevant topics. As stated above, the focus of the reviews has been on
enforcement by the Government of Mexico of its domestic labor law with respect
to the allegations raised by the submitters rather than on the conduct of
individual companies. Moreover, the NAO is not an appellate body, nor is it a
substitute for pursuing domestic remedies.
- Information from the IBT and UE
addition to the submissions filed with the NAO, the IBT and UE submitted
additional information to the NAO in support of their allegations, including
affidavits from affected workers. Letters from the IBT were received by the NAO
on July 14 and August 1, 1994, and from the UE on March 17, April 8, May 6 and
27, June 29, July 18 and 29, August 16 and 22, and September 2, 1994.
- Information from Companies
The NAO notified Honeywell and GE of the initiation of the reviews and
invited them to provide information on the issues raised. They submitted
written statements for the record.
In a letter to the Secretary of the NAO dated May 24, 1994, a Honeywell
official stated that the elimination of 23 positions that occurred in November
1993 at the company's City of Chihuahua facility was part of a downsizing of
the operation; 22 workers were laid off and received full separation benefits,
in accordance with Mexican law. The letter further stated that the 22 workers
were considered good or satisfactory workers, and were informed that they would
be eligible for rehire in the future if appropriate job openings became
available; one of these workers was rehired when a factory opening occurred as
a result of attrition and increased orders.
According to the Honeywell official, one worker was terminated due
to violations in written workplace rules and did not receive severance pay.
This worker contested her termination with the Chihuahua Conciliation and
Arbitration Board. On March 28, 1994, the Chihuahua Conciliation and
Arbitration Board approved a settlement between the worker and the company. A
March 30, 1994 letter from Honeywell to the Secretary of the NAO included as
attachments a copy of the settlement documents approved by the Chihuahua
Conciliation and Arbitration Board and a press release issued by the company.
The press release stated that although the worker was dismissed because of
workplace rule violations, "the potential costs of continuing to pursue
this case through administrative and legal processes under Mexican law clearly
outweigh the costs of the settlement proposed by [the worker's] ...
In a letter to the Secretary of the NAO dated May 19, 1994, a GE official
restated the company's position (presented in a letter to the Secretary of the
NAO dated April 5, 1994) that the NAO did not have jurisdiction under the NAALC
to initiate a review of Submission #940002. The grounds stated for the
objections were the following: (1) the complaint did not deal with a pattern of
non-enforcement by the Government of Mexico of Mexican labor law; (2) the
complaint did not allege that the UE had made any attempt to resolve the
complaint under Mexican law; and (3) the conduct in question predated the
effective date of the NAALC. Without waiving its position that the NAO
improperly granted review on the matter, the GE official nevertheless presented
factual representations regarding the case.
According to the GE official, the following are the pertinent
The terminations of workers that occurred between October 6,
1993, and December 2, 1993, were for various work rule violations. One worker
was laid off on October 6, 1993.
At the request of the UE, GE management reviewed the
terminations in question in December 1993. Having taken into account the
severity of the work rule violations and the totality of the circumstances,
management concluded that six of the terminations were not warranted.
Management offered reinstatement to the six workers despite having already
reached termination agreements resolving all claims based on their employment
with them. On or about December 20, 1993, management also offered additional
severance pay to the six affected employees in the event they were not
interested in reinstatement.
The employees' representative responded to the company's
attorney that they had elected the severance pay option. A formal agreement was
signed and filed with the CAB and checks issued to all six workers. All six
severance pay checks were cashed. Subsequently, the UE has asserted that the
employees' representative never signed the settlement agreement although a
likeness of his signature appears on documents certified by the CAB. Whether
the signature is a forgery is an issue that is currently before the CAB.
Of the five terminated employees who did not receive
reinstatement offers, three have signed settlement agreements with the company
and two are contesting their terminations before the CAB. The employees claim
that the terminations were motivated by their union activity while the Company
contends that it had just cause for the terminations.
These events taken in their entirety, argued the GE letter, are not
indicative of a pattern of non-enforcement of Mexican labor law since the law
protects the right of employees to form or join unions and provides employees
legal recourse for any instance of wrongful discharge. Thus, asserts GE,
Mexican labor law allows employers and employees to resolve their differences
by means of a settlement agreement. Finally, the GE letter stated that the
cases of the two workers who chose not to accept a settlement will be resolved
by the CAB in the ordinary course of business.
- Information from the Mexican
In gathering information for this review, the U.S. NAO has
consulted with its Mexican counterpart pursuant to Article 21 of the NAALC. On
April 28, 1994, the Secretary of the NAO requested information from the Mexican
NAO with regard to Mexican labor law and practice related to the matters raised
by the two submissions. Specifically, the Secretary of the NAO requested the
following information from its Mexican counterpart: (1) sources for public
information on labor laws, regulations, and procedures, both State and Federal,
including text and commentaries; (2) explanatory material on Federal/State
jurisdiction issues in labor law generally, and regarding CABs specifically;
(3) explanatory material on how the severance pay
("indemnización") system functions, including whether the
government monitors for abuses; (4) CAB practice and procedure, at the State
and Federal levels, including statistics on the number of dismissal cases
brought to the attention of the CABs resolved by severance pay settlements and
by reinstatement; and (5) any publicly available information regarding the
allegations made in the two submissions.
The Mexican NAO responded on July 5, 1994. The response consisted
of written explanations accompanied by source materials, such as the
Constitution of the Republic, the Federal Labor Law, and other labor laws and
regulations currently in effect.
- Information from Experts
The NAO also sought information and analyses from expert consultants on the
matters raised by the two submissions. In particular, the NAO presented a list
of questions to two sets of experts on Mexican labor law in the United States
and contracted with these experts to provide information on labor law
enforcement in Mexico and the role of the Federal and State CABs.(4) The reports prepared by these experts were used
in the preparation of this report.
- Public Hearing
On July 25,
1994, the NAO announced that a public hearing to gather information on matters
related to the review of NAO Submission #940001 and NAO Submission #940002
would be held in Washington, D.C., on August 31, 1994.(5) In the notice announcing a public hearing, the
Secretary of the NAO stated that the reviews of the two submissions would be
consolidated for purposes of a public hearing since the subject matter of both
submissions related principally to the right of freedom of association and the
right to organize. Subsequently, the date of the public hearing was changed to
September 12, 1994.(6)
At the September 12 hearing, which was conducted by the Secretary
of the NAO, 14 individuals presented public testimony. In addition, statements
were received from four individuals or organizations prior to the hearing and
from three individuals or organizations after the hearing. Testimony presented
at the public hearings, as well as pre- and post-hearing statements, were made
part of the record.
Prior to the hearing, the Honeywell Corporation, the General Electric Company,
the U.S. Council for International Business, and Ms. Barbara Eastman, Recording
Secretary, Local 1292, United Auto Workers, Grand Blanc, Michigan, submitted
The statements from Honeywell and GE covered much of the same
ground as earlier correspondence received from the companies. Honeywell
explained its downsizing activities and the reductions in personnel that
occurred. Honeywell further stated that the submitters have not presented
evidence supporting the claim that there has been non-enforcement of labor law
by the Government of Mexico. GE restated its view that the submissions did not
present evidence of a pattern of non-enforcement by the Government of Mexico of
its labor laws relating to freedom of association and the right to organize.
The U.S. Council for International Business stated its view that
the NAO should not have accepted the two submissions for review and, moreover,
should not hold a hearing on the matters raised by the submissions. The U.S.
Council further wrote that allegations by the IBT and UE are directed at the
behavior of individual companies; companies are not parties to the NAALC. At
the time the submissions were filed, the disputes between workers and companies
had either been settled under Mexican law or no charge or complaint for
remedial relief had been filed under Mexican administrative or judicial
Ms. Eastman's statement was related to her participation in a
demonstration held on May 20, 1994, in front of the GE plant in Ciudad Juarez
to protest the firing of workers. She stated that GE management attempted to
stop the passing of leaflets, and management detoured company buses inside the
plant gates so that the organizers could not distribute literature. Her
statement also refers generally to working conditions in maquiladora plants.
Statements were also filed by witnesses that appeared at the hearing; their
views are summarized below.
Hearing: The September 12
hearing was divided into four panels. At the outset of the hearing, the NAO
Secretary made it clear that the hearing was being conducted to gather
information to assist the NAO in preparing its public report, that the purpose
of the hearing was not to adjudicate individual rights, and that it was not an
The first panel consisted of representatives of the two submitters,
namely, Ron Carey, General President of the IBT, and Amy Newell, General
Secretary-Treasurer of the UE. The focus of Mr. Carey's testimony was on broad
issues of labor law enforcement in Mexico. Mr. Carey specifically requested
that the NAO hold field hearings and ask for additional information from the
Mexican government and companies involved in the dispute raised by the
submission. Ms. Newell criticized the NAO for not holding a field hearing on
the submissions, disallowing cameras in the hearing, and not accepting
testimony on the recent election held at the GE plant in Ciudad Juarez.(7)
The second panel consisted of a representative of the UE, two
Mexican workers, and a representative of the Mexican union STIMAHCS. The UE
representative, Ms. Robin Alexander, summarized the major issues raised by the
UE submission, including allegations of violations of the Mexican Constitution,
Mexican Federal Labor Law, and international labor laws to which Mexico is a
party. The violations related principally to freedom of association and the
right to organize. Ms. Alexander also discussed what relief she thought should
be obtained under the NAALC.
The second panelist, Mr. Fernando Castro Hernández, a former
Compañía Armadora employee in Ciudad Juarez, discussed his
experience of being dismissed from the Compañía Armadora plant
because of organizing activities and for what he described as "causing
problems." Among the acts that Mr. Castro said may have prompted the
company to dismiss him were his insistence that workers be provided with proper
protective equipment for dealing with chemicals and his desire not to be
transferred from one department to another. Mr. Castro said he was still
waiting for a decision from the CAB regarding his dismissal from the company.
The third panelist, Ms. Ofelia Medrano, a former employee of the
Honeywell plant in Chihuahua, discussed her experience of being dismissed from
Honeywell for participating in union organizing attempts. Ms. Medrano, a
production operator at the plant, stated that she started to organize meetings
at her home after failing to resolve safety and health issues with company
supervisors. After being fired by the company, Ms. Medrano said she filed a
complaint with the CAB seeking reinstatement, but later accepted severance pay
due to personal financial reasons.
The NAO Secretary inquired of Mr. Castro and Ms. Medrano whether
they had contacted government officials about safety and health concerns at the
plants where they worked. Both responded that they had not.
The fourth panelist, Mr. Benedicto Martínez, discussed some
of his experiences as an organizer for STIMAHCS. He discussed the difficulties
of forming an independent union in Mexico, and the alleged monopoly that
official unions have over the system. He also discussed what he called
"mechanisms" used by companies and Mexican authorities to intimidate
workers who wish to form independent unions, including delaying the processing
of complaints before the CABs so that workers will be forced for financial
reasons to accept severance payments; accusing the employees of theft if they
do not agree to resign; using "blank sheets," which are blank sheets
of paper employees are forced to sign as a condition of employment, that can
later be completed by management to support the dismissal of a worker or force
a resignation; delaying the registration of independent unions by Mexican
authorities; and using "black lists," i.e., lists containing the
names of workers who have left a plant because of a labor dispute, which are
distributed to other companies to warn them about these workers.
The third panel was made up of four Mexican labor lawyers who
testified about different aspects of the practice and enforcement of Mexican
labor law. The first panelist, Mr. Arturo Alcalde, discussed the difference
between the written Mexican labor law and how it is actually enforced, a
concept he termed "simulation." One practice that he said takes place
in companies is the formation of official unions before any workers request a
union, so that any employee wishing to organize is forced to join the official
union. Another practice is deliberate delays by Mexican authorities in
registering independent unions.
The second panelist, Mr. Jesús Campos, discussed problems
encountered by independent unions attempting to organize workers at a plant and
government preference for and support of official unions. Mr. Campos described
union registration procedures required by law, which although seem simple on
their face to satisfy, in reality are difficult and cumbersome because Mexican
authorities are linked to official unions. Thus, independent unions are often
The third panelist, Mr. Jorge Fernández, also discussed the
differences between Mexican labor law and how it is enforced. Mr.
Fernández cited several deliberate delaying techniques, often involving
technicalities, used by Mexican authorities and official unions to thwart the
formation of independent unions. He also discussed how Mexican authorities have
decreased the use of strikes as a bargaining technique by declaring strikes
"nonexistent" if the strike was not previously approved.
The fourth panelist, Mr. Gustavo de la Rosa, discussed the use of
"black lists" and "blank sheets" to intimidate workers who
might otherwise complain to Mexican authorities. He also described the
maquiladora culture in the state of Chihuahua and characterized it as being
The fourth panel was made up of three labor lawyers representing
the IBT and a representative of the Ontario Federation of Labor. The first
panelist, Ms. Judy Scott, presented several recommendations with regard to how
the NAO should handle the submissions. The recommendations ranged from
requiring the two companies involved in the submissions to reinstate workers,
to asking companies to adhere to a code of conduct on worker rights for their
operations in the maquiladora sector and elsewhere in Mexico that could serve
as a model for companies engaged in NAFTA trade in the United States, Canada,
and Mexico. In addition, Ms. Scott recommended sustained consultations among
the NAOs to develop cooperative activities on associational and organizing
rights. They include: conferences for employee representatives explaining the
NAALC and its principles and educating them about the different labor laws that
cover the principles; similar conferences for representatives of employers;
joint conferences where representatives of labor and management can discuss
these issues; consultations between representatives of labor organizations from
the United States, Canada, and Mexico representing employees from the same
multinational employer along with representatives from management; development
of "plain language" guides to worker and employer rights and
responsibilities for widespread distribution; and conferences for field agents
and labor inspectors for education and the exchange of ideas on the enforcement
of labor laws.
The second panelist, Mr. Earl Brown, recommended that the NAO
communicate to the companies involved in future submissions the importance of
taking part in the hearings. The third panelist, Mr. Thomas Geoghegan,
concentrated on whether the "evidence" presented at the hearings
required the triggering of ministerial consultations under the NAALC. Mr.
Geoghegan argued that the use of severance pay seriously limits the number of
complaints brought before Mexican CABs regarding the right to organize. He
argued that because the workers are not organized, they are not able to defend
themselves from health and safety violations. For this reason, Mr. Geoghegan
suggested that the NAO recommend ministerial consultations on health and safety
issues in addition to freedom of association issues. The fourth panelist, Mr.
Chris Schenck, described labor law in the Canadian province of Ontario, in an
attempt to provide a comparative context for the current submissions.
A post-hearing statement by the IBT dated September 19 dealt in considerable
detail with four issues: (1) rebutting the companies' interpretation of the
NAALC concerning the scope of NAO review and of NAO-requested or
NAO-recommended consultations; (2) drawing the attention of the NAO to key
evidence elicited in the hearing regarding the enforcement issue; (3) arguing
for giving greater weight to the oral testimony of witnesses than to written
statements of the companies; and (4) pointing out the direct relevance of
testimony on comparative information related to U.S. and Canadian labor law,
and of suggested recommendations and cooperative consultations.
The UE post-hearing statement elaborated on the allegations with
respect to the Government of Mexico's failure to protect the organizational and
associational rights contained in Mexican and international law and on the more
specific allegations of labor law violations against the two companies. The
statement also discussed the indemnification (severance pay) system, which the
UE argues deprives the vast majority of Mexican workers of access to the legal
system and to the protection of laws designed to safeguard their rights. The UE
requested that the public report to be issued by the NAO reaffirm the
importance of freedom of association and protection of the right to organize
under the NAALC, as well as respect for, and compliance with, all Mexican and
international labor laws and requirements. More specific requests of the NAO
related to corrective actions that should be taken by the two companies,
cooperative activities that should be undertaken with Mexico and Canada, and
materials that should be prepared summarizing the rights accorded Mexican
workers under Mexican and international law.
Finally, in a statement dated September 19, Honeywell stated that
it supported passage of the NAFTA and has cooperated fully with the NAO in
voluntarily providing factual information on the submission presented by the
IBT. According to the statement, Honeywell has complied with all applicable
Mexican laws in handling the downsizing of employment at its Chihuahua plant.
The Honeywell statement set out that with respect to the one employee who was
terminated, the settlement agreement that resolved her complaint before the CAB
was proposed by the employee's attorney, not by the company. Finally, Honeywell
argued that there are no matters pending before any Mexican governmental
authority concerning the application or alleged violation of Mexican law in any
matter relating to Honeywell. Honeywell concluded that since no Mexican labor
law was violated and there are no unresolved complaints before Mexican
authorities, there is no reason to conclude that there was any failure by the
Government of Mexico to enforce its labor laws in this matter.
- Other Sources of
The NAO has also relied on information from the
available literature regarding Mexican law and practice related to freedom of
association and the right to organize, including government reports,(8) law review journals,(9) and other sources of information.(10)
Enforcement by the Government of Mexico of
Labor Laws Relevant to Submissions
Part II of the NAALC sets out the obligations that Parties to the
Agreement undertake. Two key obligations relate to levels of protection
(Article 2) and government enforcement action (Article 3). These articles
Article 2: Levels of Protection
Affirming full respect for each Party's constitution, and
recognizing the right of each Party to establish its own domestic labor
standards, and to adopt or modify accordingly its labor laws and regulations,
each Party shall ensure that its labor laws and regulations provide for high
labor standards, consistent with high quality and productivity workplaces, and
shall continue to strive to improve those standards in that light.
Article 3: Government Enforcement Action
Each Party shall promote compliance with and effectively enforce
its labor law through appropriate government action, subject to Article 42,
appointing and training inspectors;
monitoring compliance and investigating suspected violations,
including through on-site inspections;
seeking assurances of voluntary compliance;
requiring record keeping and reporting;
encouraging the establishment of worker-management committees
to address labor regulation of the workplace;
providing or encouraging mediation, conciliation and
arbitration services; or
initiating, in a timely manner, proceedings to seek
appropriate sanctions or remedies for violations of its labor law.
Each Party shall ensure that its competent authorities give due
consideration in accordance with its law to any request by an employer,
employee or their representatives, or other interested person, for an
investigation of an alleged violation of the Party's labor law.
Thus, in accord with Article 3 of the NAALC, the issue at hand in the
review of the two submissions is whether the Government of Mexico is enforcing
its labor laws. A brief commentary on Mexican labor laws guaranteeing workers
freedom of association and the right to organize, and providing protections
against dismissal of workers because of their exercise of the right to
organize, is given in Appendix 1. A similar commentary on how the Government of
Mexico implements its labor laws, particularly those laws relevant to the
current review, is given in Appendix 2.
The two submissions that are the subject of this review are based on
alleged incidents that occurred at maquiladora plants located in the State of
Chihuahua. Under the Mexican system of labor law administration, jurisdiction
for the enforcement of labor laws in maquiladoras rests with state labor
authorities. Thus, the CABs of the City and State of Chihuahua--rather than the
Federal CABs--are the proper authorities with jurisdiction for enforcement of
the applicable labor law.
- State Conciliation and Arbitration
The State of Chihuahua has a state CAB; in addition, there
are five other state CABs in the major cities of the State of Chihuahua. A
claim can be brought by a plaintiff either where he or she works, where the
contract was executed, or where the defendant is domiciled (Federal Labor Law,
Article 700). The relevant board for the case involving workers at the
Honeywell plant is the City of Chihuahua CAB; the corresponding board for
Compañía Armadora workers is the Ciudad Juarez CAB.
According to a consultant's report, over the period June 1993 to
June 1994, the City of Chihuahua CAB reportedly handled 1,862 complaints,
resolving all but 173 (9 percent) through conciliation. Over the same time
period, the City of Chihuahua CAB decided 650 pending cases, thereby
significantly reducing its workload. The average length of time in the City of
Chihuahua CAB between the filing of a complaint and the rendering of a judgment
is 7.3 months. This is reportedly much shorter than with regard to other state
CABs, where the time from filing of a complaint to a final judgment may be over
one year (e.g., 1.4 years in the Hermosillo, Sonora, CAB).(11)
The Ciudad Juarez CAB reportedly handles more complaints than the
four other boards of the State of Chihuahua combined. Nevertheless, the Ciudad
Juarez CAB has been able to reduce the average adjudication time to 8.0 months,
compared to 7.3 months for the City of Chihuahua CAB. From January through May
1994, 1,249 complaints were filed with the Ciudad Juarez CAB. Unlike the City
of Chihuahua CAB, the Ciudad Juarez CAB does not engage in conciliation
activities because of lack of personnel. Nevertheless, 1,050 of the 1,249
complaints (84 percent) were settled by the Ciudad Juarez CAB.(12)
According to a consultant's report, the Chihuahua CABs have been
effective in improving the quality of decision making and reducing the time of
handling cases.(13) Another consultant's report
concluded that CABs generally, including the Chihuahua CABs, are known to be
fair, impartial and unbiased, especially regarding their role in matters
dealing with the rights of individuals; in collective matters, however, their
activity is deemed to be more controversial.(14) One of the labor attorneys who participated
in the NAO hearing stated, however, that the labor courts in Ciudad Juarez
specifically, and in Mexico generally, are biased in favor of companies,
especially in matters of collective bargaining.(15)
- NAO Submission #940001
sources that the NAO consulted regarding the submission filed by the IBT are in
agreement that, in November 1993, Honeywell Corporation terminated 23 workers
from its Chihuahua plant. Twenty-two of the workers--laid off from their jobs
because of a company cost reduction plan, according to Honeywell; fired because
of union activities, according to the UE--accepted full severance pay pursuant
to applicable Mexican law and terminated their relationship with the company.
There are no claims of improprieties in the City of Chihuahua CAB's approval of
these severance arrangements.
Also in November 1993, Honeywell dismissed one worker claiming that
the dismissal was justified because the worker had repeatedly broken work
rules. The IBT claims that this worker was fired because she was one of the
leaders of the drive to unionize the plant. The worker in question filed a
complaint with the City of Chihuahua CAB disputing the dismissal and requesting
reinstatement. The City of Chihuahua CAB accepted her complaint and began the
appropriate proceedings. This case was pending before the City of Chihuahua CAB
at the time the submission was filed by the IBT.
On February 28, 1994, the worker and Honeywell presented to the
City of Chihuahua CAB an agreement they had reached to settle the outstanding
dispute; in return for a monetary settlement, the worker agreed to relinquish
her claim for reinstatement. Subsequently, the worker testified at the
September 12 hearing held by the NAO that financial needs prompted the
acceptance of the monetary settlement.(16) No
allegations have been made that the City of Chihuahua CAB acted improperly in
approving the settlement of the dispute.
- NAO Submission #940002
sources that the NAO consulted regarding the submission filed by the UE are in
agreement that, between October 6, 1993 and December 2, 1993,
Compañía Armadora, S.A., a subsidiary of the General Electric
Corporation, terminated several workers from its Ciudad Juarez plant.
Apparently, 11 workers were dismissed; the company claims that the dismissals
were for work rule violations, while the UE alleges that they were motivated by
activities of the workers in trying to establish a union at the plant.
Six of the workers accepted full severance pay pursuant to
applicable Mexican law and terminated their relationship with the company.
Subsequently, GE offered these workers the opportunity to be reinstated in
their jobs, but the workers elected not to be reinstated and accepted an
additional monetary settlement. The agreement between the company and the
employees was filed with the Ciudad Juarez CAB and accepted by the latter.
Five other workers were not offered reinstatement by the company.
Three of these workers have reached settlement agreements with GE and two have
filed a petition with the Ciudad Juarez CAB seeking their reinstatement. The
latter two cases are pending before the Ciudad Juarez CAB. In all of the cases
where settlements were approved, there are no allegations that the Ciudad
Juarez CAB acted improperly.
The UE submission also raised allegations of violations of Mexican
health and safety laws and regulations by the company. At the September 12
hearing, when asked directly by the NAO Secretary, a former
Compañía Armadora worker who had voiced such complaints indicated
that the alleged violations had not been brought to the attention of Government
of Mexico authorities with jurisdiction over safety and health laws.
Findings and Recommendations
As stated in the Federal Register notice announcing the
commencement of the review of Submissions #940001 and #940002, and restated at
the beginning of this report, the NAO review has focused specifically on the
Government of Mexico's promotion of compliance with, and effective enforcement
of, labor laws that guarantee the right of association and the right to
organize freely and prohibit the dismissal of workers because of efforts to
exercise those rights. As such, the NAO review has not been aimed primarily at
determining whether or not the two companies named in the submissions may have
acted in violation of Mexican labor law. Moreover, the NAO is not an appellate
body, nor is it a substitute for pursuing domestic remedies. Rather, the
purpose of the NAO review process, including the public hearing, is to gather
as much information as possible to allow the NAO to better understand and
publicly report on the Government of Mexico's promotion of compliance with, and
effective enforcement of, its labor law through appropriate government action,
as set out in Article 3 of the NAALC.
The review of the two submissions reveals disagreements about the
events at each of the plants. On the one hand, the two unions filing the
submissions, as well as witnesses who testified at the September 12 hearing,
suggest that the separations were motivated by the desire of the companies to
impede the formation of unions. The two unions further allege that workers were
dismissed for these activities. Moreover, in their view, workers were coerced
by the employers or compelled by personal economic hardships to accept
settlement payments, rather than seek reinstatement. On the other hand,
statements by the two companies suggest that the separations (terminations or
layoffs) of workers that occurred were the result of either company downsizing
or failure on the part of workers to perform their duties according to
established rules. Further, the companies assert that they complied with
Mexican labor law in the separations and paid the required severance payments.
During the review, a number of other relevant issues regarding
enforcement of labor law in Mexico, particularly in the maquiladora sector,
were brought to the attention of the NAO. They include the difficulties in
establishing unions in Mexico, the hurdles faced by independent unions in
attaining legal recognition, company black listing of union activists, the use
of blank sheets, and government preference for and support of official unions.
Another such issue was the very high percentage of Mexican workers
dismissed from their jobs who elect to take severance pay rather than seek
reinstatement--which is their right under Mexican labor law. Apparently,
workers generally do not have the financial resources to pursue reinstatement
before the CABs, often opting for the settlement of their complaints in return
for money. In a post-hearing brief, the UE asserts that the lack of an
unemployment insurance system in Mexico contributes to the very high percentage
of cash settlements. Thus, according to this line of argument, the right of
workers whose employment has been terminated because of their exercise of the
right to organize is de facto limited by their inability to survive
economically until the process of reinstatement works its course.
A related problem articulated by the workers who provided information
to the NAO is their perception of impediments in obtaining legal remedies.
These impediments include the delays that are common in receiving decisions
from CABs and the related economic hardship caused by having to wait while not
earning an income. It appears, however, that dismissed workers were aware of
their options under the law and chose to take severance over reinstatement.
Therefore, it is very difficult to ascertain whether there has been a violation
of freedom of association when severance is preferred over a review of the case
by a CAB. However, the NAO notes that the timing of the dismissals appears to
coincide with organizing drives by independent unions at both plants.
The NAO acknowledges and understands that the economic realities facing
these Mexican workers may have made it very difficult to engage the proper
Mexican authorities in addressing labor law violations. However, since workers
for personal financial reasons accepted severance, thereby preempting Mexican
authorities from establishing whether the dismissals were for cause or in
retribution for union organizing, the NAO is not in a position to make a
finding that the Government of Mexico failed to enforce the relevant labor
laws. Even in those instances where one of the companies publicly admitted that
its local managers went too far in dismissing certain workers and offered them
reinstatement, the workers (who had already accepted a cash severance to settle
their cases) chose not to be reinstated and again accepted a larger cash
severance. While such an about-face by one of the companies suggests that
management may not have acted properly in the dismissals, the dismissed workers
neither accepted reinstatement nor challenged management's actions before the
CAB. The very few workers in the two submissions who chose to challenge their
dismissals have availed themselves of due process under Mexican law and a
judgment is pending.
The NAO also finds that there is a dearth of practical knowledge in
each of the three signatory countries to the NAALC about legislation in the
other countries that guarantees the right of freedom of association and the
right to organize. The practical availability of these rights is an issue of
concern to Mexican workers, as demonstrated by the two submissions. Freedom of
association and protection of the right to organize, the right to bargain
collectively, and the right to strike are among the labor principles that each
of the signatories to the NAALC has committed to promote, subject to each
Party's domestic law.
In this regard, the NAO recommends that the three countries work
together to develop cooperative programs regarding freedom of association and
the right to organize pursuant to Article 11 of NAALC. For example, the three
countries might initially consider a government-to-government trinational
seminar or conference on freedom of association issues (law, enforcement
authorities, enforcement record) with participation from state/provincial
authorities. This could be followed-up in the future with other events that
involve the business and labor communities in each of the three countries.
Finally, the NAO finds that there could be improved efforts to
communicate to the public details about the NAALC and its operation: the labor
principles that it covers; the laws in each country that concern these rights;
the obligations undertaken by the signatories; the mechanisms to provide
oversight of enforcement; and the role of the NAOs. For this reason, the NAO
recommends that each of the three countries undertake a public information and
education program to make their public aware of the Agreement, how it works,
the institutions it creates, the oversight mechanisms that it provides, and the
remedies that are available. Along this line, the three countries might
consider holding one or more conferences for worker and employer organizations
regarding the NAALC and additional conferences bringing together individual
workers and employers. The Secretariat of the Commission for Labor Cooperation,
once that institution is operational, should be requested to prepare
explanatory materials on the NAALC, its institutions and its implementation,
for wide distribution in the three countries.
In conclusion, the NAO does not recommend ministerial consultations on
these matters under Article 22 of the NAALC. The information available to the
NAO does not establish that the Government of Mexico failed to promote
compliance with or enforce the specific laws involved. However, the NAO shares
the submitters' concerns about the vital importance of freedom of association
and right to organize and the implications for workers of the failure of
governments to protect such rights. Accordingly, the report makes several
suggestions for cooperative activities under Article 11 of the NAALC on the
issues of freedom of association and the right to organize and for public
information and education programs regarding the NAALC.
Secretary, National Administrative Office
* * *
Based on the foregoing report, I accept the NAO's recommendation not to
request ministerial consultations under Article 22 of the NAALC on NAO
Submission #940001 or NAO Submission #940002.
Robert B. Reich
Secretary of Labor
1. Article 49 of the NAALC states: "`[L]abor law'
means laws and regulations, or provisions thereof, that are directly related
to: (a) freedom of association and protection of the right to organize; (b) the
right to bargain collectively; (c) the right to strike; (d) prohibition of
forced labor; (e) labor protections for children and young persons; (f) minimum
employment standards, such as minimum wages and overtime pay, covering wage
earners, including those not covered by collective agreements; (g) elimination
of employment discrimination on the basis of grounds such as race, religion,
age, sex, or other grounds as determined by each Party's domestic laws; (h)
equal pay for men and women; (i) prevention of occupational injuries and
illnesses; (j) compensation in cases of occupational injuries and illnesses;
(k) protection of migrant workers.
2. 59 Fed. Reg. 16660-2 (1994).
3. 59 Fed. Reg. 18832-4 (1994).
4. National Law Center for Inter-American Free Trade,
Labor Law Enforcement in Mexico and the Role of the Federal and State
Conciliation and Arbitration Boards, Report Submitted to the United States
Department of Labor, U.S. National Administrative Office, North American
Agreement on Labor Cooperation (July 26, 1994), henceforth Labor Law
Enforcement in Mexico; Paul A. Curtis, Esq., Questions on Labor Law
Enforcement in Mexico and the Role of the Arbitration and Conciliation
Boards (September 7, 1994), henceforth Questions on Labor Law
Enforcement in Mexico.
5. 59 Fed. Reg. 38492-3 (1994).
6. 59 Fed. Reg. 41511 (1994).
7. On August 24, 1994, a union representation election
was held at Compañía Armadora. The election used a secret ballot
procedure. The conduct of the election is the subject of a submission that was
filed by the UE with the NAO on September 12, 1994.
8. E.g., A Primer on Mexican Labor Law
(Washington: U.S. Department of Labor, Bureau of International Labor Affairs,
1991); A Comparison of Labor Law in the United States and Mexico
(Washington: U.S. Department of Labor, 1992); and Country Reports on Human
Rights Practices for 1993 (Washington: U.S. Department of State, 1994).
9. E.g., Ann M. Bartow, "The Rights of Workers in
Mexico," Comparative Labor Law, Vol. 11 (Winter 1990); Amy H.
Goldin, "Collective Bargaining in Mexico: Stifled by the Lack of Democracy
in Trade Unions," Comparative Labor Law, Vol. 11 (Winter 1990);
David L. Gregory, "The Right to Unionize in the United States, Canada, and
Mexico: A Comparative Assessment," Hofstra Labor Law Journal, Vol.
10, no. 2 (Spring 1993); Oscar de la Vega Gomez, "Settlement of Labor Law
Disputes in Mexico," Inter-American Law Review, Vol. 21, no. 1
(1989); Susanna Peters, "Labor Law for the Maquiladoras: Choosing Between
Workers' Rights and Foreign Investment," Comparative Labor Law,
Vol. 11 (Winter 1990); Mark Zelek and Oscar de la Vega, "An Outline of
Mexican Labor Law," Labor Law Journal, Vol. 43, no. 7 (July 1992).
10. E.g., Francisco Breña Garduño,
Mexican Labor Law Summary (Mexico City: Breña y Asociados, 1991);
Néstor de Buen L., Derecho del Trabajo, Seventh Edition
(México: Editorial Porrúa, 1989); Néstor de Buen L.,
Derecho Procesal del Trabajo (México: Editorial Porrúa,
1990); Dan LaBotz, Mask of Democracy: Labor Suppression in Mexico Today
(Boston: South End Press, 1992).
11. Labor Law Enforcement in Mexico, op.
cit., pp. 38-39.
12. Labor Law Enforcement in Mexico, op.
cit., p. 39.
13. Labor Law Enforcement in Mexico, op.
cit., p. 47.
14. Questions on Labor Law Enforcement in
Mexico, op. cit., p. 44.
15. Testimony of Gustavo de la Rosa, NAO Hearing,
September 12, 1994. Tr. at 70.
16. Testimony of Ofelia Medrano, NAO Hearing, September
12, 1994. Tr. at 38.