Hiring in Mexico

Individuals employed under an indefinite employment contract or a fixed-term agreement lasting a minimum of 180 days may undergo a probationary period of up to 30 days. This probationary period can be extended by up to 180 days if the employee is recruited for executive, managerial, or directorial roles or assumes an administrative position.

As per the Federal Labor Law (FLL), employees are granted one day of rest for every six days worked. The law acknowledges three distinct types of work shifts:

• Eight hours a day for daytime work (totaling 48 hours a week).
  2. Seven hours for night-time work (totaling 42 hours a week).
  3. 7.5 hours for a mixed work shift (totaling 45 hours a week).
• While the official standard is a 48-hour workweek, a 40-hour workweek has been implemented in many private sector employment arrangements across Mexico. Additionally, the FLL mandates that employees are entitled to at least 30 minutes of rest or mealtime during their shift, and this duration is considered part of the employee’s working day.

Workers may be required to work on public holidays, and there is no centralized legislation restricting this practice. Instead, different state-level acts (e.g., the National and Festival Holidays Act) stipulate that employees who work on official holidays are entitled to receive wages at a premium rate of 200% of the normal hourly wage rate. Similarly, employees working on weekly rest days are entitled to premium pay at a rate of 200% of the normal wage rate.

If a worker is required to work on a public holiday, they may be provided with either twice the wages or a substitute holiday with pay. Likewise, a worker required to work on a rest day must be compensated at overtime rates, which is twice the rate of normal wages.

An employee should not be compelled to work beyond three hours beyond the statutory workday duration in a given shift (or more than nine hours in a week). If an employee works overtime on a particular day, they are entitled to double compensation for each overtime hour. Should the employee exceed nine hours of overtime in a week, they have the right to triple compensation for each overtime hour.

Despite common practice, all employees are legally entitled to receive overtime pay. Some employees in managerial roles may choose not to claim overtime pay, presuming their salary encompasses the additional time required for their responsibilities. However, it should not be assumed that they are not eligible for overtime pay, as per the Federal Labor Law (FLL), employees can rightfully claim overtime compensation.

Eligibility for annual leave varies by location, and workers may carry over their annual leave; however, the accumulation of earned leave is typically capped at a maximum of 45 days.

If an employment contract expires before a worker can take their annual leave, compensation for the leave is calculated proportionately based on the number of months worked and the number of working hours per week.

In adherence to the Federal Labor Law (FLL) guidelines, employers are required to create work environments that prioritize the principles of worker safety and health. It is incumbent upon all employers to proactively mitigate work-related stress by consistently assessing the organizational environment and implementing any necessary control measures.

Employees are entitled to a Christmas bonus, known as ‘Aguinaldo,’ amounting to at least fifteen days of their daily base salary. This payment must be made no later than December 20 each year.

**Termination Grounds**

An employer is legally permitted to terminate an employment relationship without incurring liability only under specific justified causes outlined by law, including:

• Use of false documentation for employment acquisition
• Dishonest or violent behavior against the employer or their family
• Dishonest or violent behavior against co-workers disrupting work discipline
• Acts of harassment or sexual harassment in the workplace
• Sabotage of the workplace
• Negligence posing a threat to workplace safety and other workers
• Carelessness jeopardizing workplace safety
• Immoral acts within the workplace
• Disclosure of trade secrets
• More than three unexcused absences within a 30-day period
• Insubordination
• Failure to adopt preventive measures or follow procedures to prevent accidents or illnesses
• Reporting to work under the influence of alcohol or narcotic drugs
• Incarceration

Strictly adhering to Mexican labor law, termination without cause is not allowed. Nevertheless, the law emphasizes the mandatory expectation of “integrity at work” from employees, characterized by diligent effort, care, and attention in fulfilling work obligations within the agreed-upon time, place, and manner. “Lack of integrity” serves as a generic cause for dismissal in Mexico.

In practical terms, exposure to unlawful termination lawsuits is generally confined to statutory termination payments. Consequently, most terminations can be executed through employee resignations or mutual terminations with severance.

**Restricted or Prohibited Terminations**

Terminating an employee during a suspended employment relationship, such as during maternity leave, is considered a restricted or prohibited termination under Mexican labor law.

**Notice Period and Termination in Mexico**

In Mexico, there is no statutory minimum notice period for terminating an employment relationship. When an employer dismisses an employee, the termination becomes effective immediately. However, the employer is required to provide written notification to the employee, specifying the cause or causes for the dismissal.

If an employer terminates an employee based on the justified causes outlined in Article 47 of the Federal Labor Law (FLL), the employer must notify the employee within 30 days, elucidating the cause or causes of the termination.

The concept of garden leave is not widely practiced in Mexico, given the employer’s ability to terminate the employment relationship promptly.

**Severance Payment Calculation in Mexico**

The computation of severance payment in Mexico is contingent upon the reason for termination:

**Voluntary Resignation:**
In the case of voluntary resignation, the employer is obligated to remit all accrued benefits, including sales incentives, prorated until the termination date. If the employee boasts a tenure of at least fifteen years, they are entitled to a seniority premium equivalent to twelve days’ salary per year of service, capped at twice the minimum daily salary in effect.

**Termination with Cause:**
For terminations with cause, the employer is required to pay all outstanding benefits, including commissions, prorated until the termination date. Additionally, the seniority premium of twelve days’ salary for each year of service applies, capped at twice the minimum daily salary.

**Termination without Cause:**
Employees terminated without cause are legally entitled to a lump sum severance, comprising:

• Three months of the employee’s daily aggregate salary
• 20 days of the employee’s daily aggregate salary for each year of service
• A seniority premium of twelve days’ salary for each year of service, capped at twice the minimum daily salary
• Any outstanding benefits due

**Freedom of Work in Mexico and Non-Compete Provisions**

The Mexican Constitution upholds the fundamental principle of “freedom of work,” ensuring that individuals cannot be impeded from engaging in work or lawful activities unless a competent court issues a contrary judgment. Consequently, the prevailing interpretation holds that post-termination non-compete obligations and restrictive covenants, in general, lack enforceability in Mexico. This stance remains consistent even when such obligations are confined to specific periods, territories, products, or identified competitors.

Post-termination non-compete clauses, customer non-solicitation, and employee non-solicitation provisions are, therefore, not legally enforceable. Nevertheless, these clauses are commonly included in employment agreements, as they may act as deterrents and instill a sense of moral obligation among employees.

**Labor Unions in Mexico**

Trade unions hold prominence in specific sectors, notably the sugar, railway, automotive, and mining industries, along with the public sector, particularly in education and energy. The formation of a union requires a minimum of 20 employees within a workplace. Moreover, employees associated with an existing union have the right to request, through that union, the negotiation of a collective bargaining agreement with their employer. It’s important to note that Mexico does not have works councils or other forms of employee representatives.

The issuance of payslips to employees in Mexico follows a comprehensive electronic procedure. All payroll documentation must undergo a series of steps before being presented to the employee. This involves the submission, validation, and electronic signature by the Mexican Tax Authority.

The payslip itself is required to encompass various details, such as the employee’s personal and job information, bank account number, tax ID (RFC), citizen ID (CURP), social security number, position, and cost center. It should delineate each wage type, encompassing payments, earnings, taxes withheld, additional deductions, and the net amount to be disbursed. The stipulated amount on the payslip must align with the transfer from the employer’s account to the employee’s bank account.

Every employee is entitled to vacation periods, starting at a minimum of 12 days per year during the initial year of employment. Subsequently, this entitlement incrementally rises by 2 working days for each consecutive year until it reaches a maximum of 20 vacation days. Beyond this point, the vacation period increases by two days for every five years of continuous service.

The upward trend of increasing vacation days persists, growing by two days every five years.

Additionally, in numerous states, employees are eligible for a vacation bonus, amounting to a minimum of 25% of their salary earned during the holiday period.

Employees are granted statutory sick leave based on the nature of the illness and the extent of disability. In cases of illness or injury, employees must secure a medical certificate. During the leave period, it is the Mexican Social Security Institute (IMSS) and not the employer, that provides the employee’s income.

Mexico’s legal framework does not stipulate mandatory unpaid medical leave. If an employee requires such leave for a condition not acknowledged by the IMSS, the employer holds the discretion to approve the absence.

Economic benefits disbursed by the IMSS for illness equate to 60% of the employee’s registered salary. These benefits commence from the fourth day of absence and extend up to 52 weeks.

There is no specific legal framework governing bereavement leave, though provisions for such situations may be outlined in the individual employment contract.

Generally, if termination is not due to justifiable causes like non-performance or misconduct, mutual agreement is sought for termination, with the terms documented. In such cases, a termination payment, such as redundancy pay, may be made.

Termination of employees is not uncommon in other sectors as well.

Maternity Leave: Women are entitled to six weeks of paid leave before and six weeks after childbirth. They have the flexibility to allocate up to four of the pre-birth weeks to the post-birth period. The salary during this time is covered by the IMSS. Additionally, during the six-month nursing period, new mothers are granted two additional thirty-minute rest periods each day.

Paternity Leave: Male employees receive five paid business days as paternity leave following their spouse’s childbirth or adoption of a child.

Adoption Leave: In the case of adoption, women are granted a paid maternity leave of six weeks from the date of gaining custody of the adopted child. Fathers are entitled to a paid paternity leave of five days upon the adoption of a child.

Mexico observes nine national public holidays annually. These include December 1 every six years, aligning with the national presidential inauguration, and the designated election day according to federal and local electoral laws.

In the event employees are scheduled to work on a mandatory holiday, they are entitled to receive double pay.