Chihuahua, Chih., March 5th, 2020.

Dear Clients and Friends,

Regarding such an important topic as outsourcing, we hereby inform you the following.

Recently, the federal and state authorities have taken more rigorous steps to assure the compliance of the labor and social security regulations.

The labor authority’s inspections often involve matters related to the outsourcing of employees, meaning the subcontracting personnel from a third party Company, or the insourcing of employees, which means the subcontracting personnel from parties of the same Corporate Group.

Thus, in order for your Company or Work Center to duly comply with its obligations and pursuant the current labor legislation we strongly suggest to take preventive measures. Hence, if your Company is ever subject to an extraordinary inspection regarding either labor, fiscal, or corporate matters, you will have an updated record, sufficient to support the compliance of the corresponding obligations. We suggest to take the following measures:

• Constantly update the labor contracts, regardless of their modality, either outsourcing or insourcing; always stating that the contracting party has sufficient economic means to comply with its labor obligations.

• Keep additional documents to the labor contract, as evidence that the outsourced services were truly rendered; stating its description, as well as the time and place where said services were rendered.

• Have administrative personnel that is duly trained and knows how to conduct a labor inspection, as well as the principal rights and duties of an employer during said inspections.

• Duly comply with the provisions of article 15-A of the Federal Labor Law, which states that outsourcing will not be applicable for activities that are equal or similar to those carried out in the work center; outsourcing must be for specialized activities, that are not similar to those carried out by regular employees, if so the Company may be consider as an employer of the outsourced personnel, including social security obligations.

It is important to note that the labor authorities are able to impose fines that go from 50 to 5,000 units (a unit equals $86.88 Mexican pesos) for each uncompelled obligation.

The herein is issued pursuant the current labor legislation, thus the conclusions may vary or be modified pursuant the Courts’ criteria. If the case may be, we gladly offer our support regarding any corresponding update.

For any related doubts or inquiries, please don’t hesitate to contact us.