Labor Law in Mexico
Learn about the different labor laws that protects the employees in Mexico, as well as what employment contracts should address...
Labor law in Mexico generally favors employees. Termination of employees is sometimes very difficult except in a few statutorily defined circumstances, and the concept of “at will” termination does not exist. Additionally:
- there is no legal obligation to work “efficiently” unless the labor agreement has well-drafted benchmarks, or in case of trial agreements
- outsourcing is limited by specialty and not for all the employees
- employees are always right until proven otherwise by the employer
- mandatory severance payments are steep
- profit sharing at 10% is mandatory
- labor unions claim title to union agreements regardless of the employees’ will
Employers should have well-drafted agreements that clearly define and limit the rights and obligations of employees.
In Mexico there are two main types of employment contracts:
- Temporary employment contract (Por tiempo determinado)
- Permanent employment contract (Por tiempo indeterminado)
Contracts also exist for specific jobs. This type of contract generally arises if someone is hired for an assignment, and the contract ends when the assignment is complete.
Agreements should address the following:
- the name and address of the employer and employee
- the employee's nationality, gender, age and marital status
- the location of the workplace
- the employee's title and a description of their role
- the date the employee starts work
- the type of employment: temporary or permanent
- terms of notice
- holiday entitlement
- the agreed salary, including any allowances or pension contributions
- the payment date for the salary
- whether the position is for a qualified worker (capacitado) or trainee (adiestrado)
- standard working hours
- training periods
- schedules, scope of employee's activities
- confidentiality obligations
- information, if applicable, on collective agreements (contrato colectivo) that determine working conditions
Given the difficulty of terminating employees, in addition to comprehensive agreements, it may be advisable to obtain employment screening reports or background checks before hiring, particularly for positions of trust.
- The Ley Federal del Trabajo (PDF in Spanish)
- Visit the Business Directory to find Investigation and Security Consultants in Mexico City
Foreign Employers of Employees Residing in Mexico
Mexico’s labor laws apply equally to non-Mexican employees as long as they are employed in Mexico.
When a foreign national resides in Mexico for more than 183 days within a 12-month period he or she becomes solely responsible for registering with the Mexican tax authorities, obtaining a tax ID, and filing monthly and annual tax returns. The foreign or Mexican employee who fails to comply with such registrations and tax filings will be subject to penalties and surcharges. The foreign employer residing abroad will not be jointly liable.
Deemed Labor Relationships
It is very important to be aware that, regardless of any written agreement to the contrary or the will of the parties, a “labor relationship” is deemed to exist if one or both of the following elements are present: subordination and/or economic dependency. Subordination exists when the employee is following the directions and engages in the activities of the employer, while economic dependency exists if more than 50 percent of the employee’s income comes from the employer. Domestic employees (for example, maids, gardeners, child-care providers and drivers) are protected by the provisions of Mexico´s labor laws even if there is no formal contract.
Specific Protections Enacted by Mexico’s Labor Law
Once a labor relationship is established the employee is protected against discrimination based on ethnic background, nationality, gender, age, social status, health status, religion, migratory status and sexual preferences. Mexican labor law:
- prohibits requesting certificates of non-pregnancy when hiring women, prohibits firing pregnant women and provides women who adopt a child the right to a six-week leave with pay
- defines all employee/employer relationships as "indefinite" unless it can be established that the work performed was for a defined project or a defined term (for example, to build a particular wall, or to replace another employee for a specific amount of time). Exceptions are made for employees who are hired seasonally, for trial periods to ensure that the employee has the required skills, or for training and teaching periods
- stipulates a maximum work week of 48 hours work week and defines allowable shifts (day shifts, night shifts, or mixed shifts)
- defines allowable overtime in terms of hours and remuneration
- provides for a minimum general daily wage as defined annually by the National Commission of Minimum Daily Wages (Comisión Nacional de los Salarios Mínimos) (in Spanish)
- regulates hourly payment for work as being at a minimum equivalent to a full daily wage, and requires that an employee be paid for 8 hours even if he or she worked fewer hours
- recognizes and regulates existing forms of salary payments such as bank deposits, debit cards, wire transfers or payments by any other electronic means