Mexico’s Employment Law

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Mexico’s employment law protects the rights of workers and promotes social justice. In recent years there has been a big push towards modernizing and updating Mexico’s employment laws to align with international standards and to promote economic growth.

Did you know that Mexico was the first country in the world to recognize and make provisions for labor rights in its constitution in 1917?

Mexico’s employment laws have inspired progressive reforms in other Latin American countries. Balancing worker protections with economic growth, Mexico’s employment law strives for fair wages, safe workplaces and social justice in a dynamic globalized environment.

Mexico's Employment Law Objectives

Mexico’s Employment Law

Currently, full-time work consists of 48 hours per week, less if you work on a mixed or night shift. The Mexican legislative body is in talks to reduce the maximum working hours per week to 40, in line with other developed countries. Employers can invite workers to earn overtime wages under strict guidelines.

Mexico’s employment law entitles employees to a minimum wage payment, adjusted annually. The current minimum wage in Mexico is approximately $4 dollars per day. However, many employers pay their workers significantly higher wages and benefits than the minimum mandates described in the law.

Mexico's Employment Law - Minimum Wage Mandate

Mexico’s employment law also provides for some minimum benefits. Employers provide additional benefits often in markets where labor competition is high and employee retention is key.

Mexico's Employment Law Mandatory Benefits

International companies in Mexico often seek a highly skilled workforce. They increase both the primary benefits as well as add additional perks. Among them:

  • Employee-Employer Matched Savings Fund
  • Cafeteria or Daycare Services
  • Private Transportation or Bus Vouchers
  • Private Health and Life Insurance
  • Grocery Coupons
  • Flex Time or Additional Holidays

Mexico’s employment law also provides a social security package for all formalized workers. It includes:

  • Medical and Surgical Services
  • Pharmaceutical and Hospital Needs
  • Work Risk Insurance
  • Disability and Life Insurance
  • Retirement and Unemployment Insurance
  • Old Age Pensions
  • Social and Childcare Services
  • Low-Interest Home Loans

Employment Standards

Employees enjoy 7 statutory holidays plus Election Day, when applicable. They also earn 12 days of paid time off after the first year of work, increasing with more seniority. Working parents receive paid leave – 12 weeks for the mother and 5 days for fathers.

Mexico's Employment Law - Holidays and Voting

Additionally, there are 41 official Mexican NOMs in health and safety material in the workplace. Employment in Mexico is regulated by various federal and state agencies, including:

  • Secretary of Labor and Social Welfare
  • Federal Center for Conciliation and Labor Registration
  • National Institute for Statistics, Geography and Informatica
  • Social Security Institute & INFONAVIT
  • Office of Labor Inspection
  • Secretary of Public Education
  • Secretary of Treasury
  • National Minimum Wage Commission

Other agencies regulate specific requirements for companies that fabricate food/beverage or other consumable products. Employers in Mexico must create a Health and Safety Commission to oversee the related activities and propose safety measures. These and other employment obligations are enforced by the Office of Labor Inspections with associated fines and penalties for non-compliance.

Employment Modalities

There are two main types of employment agreements in Mexico. There is no “employment at will”. That means that an employer must have just cause to terminate an employment relationship. Otherwise, they will need to compensate the contract termination with severance.

  • Indefinite Employment Contracts – without an end date; continues until terminated by one of the parties
  • Definite Employment Contracts – a temporary or probationary contract reflects a specific time period and set of activities (ex: maternity leave coverage)

An employer may choose to terminate an employment contract. In certain cases, the law does not require them to pay severance. In all other circumstances, the employer pays severance to the employee upon employment termination.

Employment Contract Severance Requirements in Mexico
*For employees with more than 15 years of service

Mexico’s employment law is strict about the justified reasons for employment contract termination that do not obligate a severance payment. The burden of proof lies on the employer. Sufficient evidence is required, and the authorities will determinate if there is adequate proof for the justification.

Employment Contract Justified and Unjustified Causes for Termination in Mexico
*Labor Authorities will determine if there is adequate proof

Teleworking is a new modality under the Mexican employment law since 2021. If more than 40% of work is done remotely, the employer must meet additional obligations. Employers must provide compensation support for the home-office infrastructure. Both employer and employee are subject to newly established labor practices and responsibilities, including strict documentation of compliance.

Employment Unions

In Mexico, unions typically represent hourly employees. Strictly speaking, no one can be forced to join a union in Mexico. If workers wish to do so and they can muster up 30% of the workforce support, they can take it to a vote. If majority rules, the company would be required to sign a Collective Bargaining Agreement following the labor procedure.

There are many types of unions in Mexico, but collectively they have the same functions:

  • Initiate a Collective Dispute on Economic Issues
  • Communicate to Employees
  • Oversee Operations of the Training System
  • Negotiate Annual Salary Increases
  • Participate in Drafting Work Rules
  • Deal with Occupational Health & Safety
  • Among Other Things

The Mexico’s employment law underwent an overhaul in 2019, focused on the freedom of association. The law upholds and incorporates key international labor standards as well as USMCA trade obligations. The compliance standards promote fairness in international trade which helps to attract foreign investment by providing certainty and transparency in employment regulations.

Employment Culture

The top priorities among Mexican employees tend to be family, religion and money. The people are generally proud of their country and look with pride at their cultural heritage. These factors influence the behavior, preferences and attitudes of Mexican employees in the workplace.

  • While dedicated employees put in long hours, family remains sacred. A management style that respects and acknowledges the central position of family within the Mexican culture is more likely to succeed in promoting productivity.
  • Traditionally, hierarchy takes center stage, with respect for superiors being key. When supervisors promote care over their employees in a more personal level, they tend to foster relationships, which are very important in Mexico.
  • Communication may be more passionate than what some are used to. Directness is not always favored. Building trust and rapport is essential. Leaders are encouraged to establish boundaries and seek mutual respect in expressing appreciation and expecting loyalty.
  • Mexicans tend to live in a more collective society compared to other developed nations. The labor culture requires managers to be “hands-on” in the management of employees. When supervisors establish collective goals and define the right incentive, they often succeed in reaching them.
  • The management of time tends to differ greatly with other cultures. With Mexicans, the importance lies on the completion, not so much the timeline. Creating additional levels of prioritization can help bridge the gap and clarify expectations in the workplace.

Prodensa defines a system of best practices called Employer of Choice. It is aimed at increasing employment competitiveness in the labor market.

Employment Culture Pillars

Download the full e-book, “Mexico’s Employment Law Summary” for detailed information. Reach out for support in navigating Mexico’s employment law or other compliance issues.

Disclaimer – I have distilled the essence of Mexico’s employment law in this blog post. However, for specific guidance and tailored solutions, don’t hesitate to contact our employment law experts.

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