Labor laws were first institutionalized in the Mexican constitution in 1917 in response to widespread calls for the protection of workers' rights. The 1917 Constitution was born out of years of revolution and was the first of its kind in Mexico to legislate socio-economic rights to the workforce. It established Mexico as a trailblazer on the global stage, being the first country in history to include workers' rights in its Constitution.
Article 123 of the 1917 Constitution established the basis for labor rights by announcing that labor laws would be formulated. These proposed laws granted Mexican employees the right to form labor unions, strike, and bargain collectively.
Article 123 also introduced the eight-hour workday, seven-hour overnight shift, minimum wage, and a mandatory day of rest following six days of work. It also recognized the rights of women and children, access to a range of benefits, and even essential workplace protection policies.
It wasn’t until 1931 that these labor laws were formally enacted, with the advent of the Ley Federal de Trabajo, or Federal Labor Law (FLL). The Juntas de Conciliación y Arbitraje, or Boards of Conciliation and Arbitration, were established by Federal Labor Law and granted the authority to oversee employees' and employers' disputes.
In 1970, the new Mexican Federal Labor Law came into effect, repealing the laws that were established in 1931. However, the foundational values remained the same, and Article 123 continued to guide Mexican labor law, just with a heavier emphasis on the welfare of employees.
Amendments increased benefits for employees, such as the Christmas Bonus in Mexico, commonly known as Aguinaldo. Provisions were also added that strengthened employee protections, including regulations on occupational risks and illnesses, which weren’t previously protected under the 1931 labor laws.
Following 1970, a range of provisions were added to Mexican labor law to elevate employee well-being and adapt to the changing marketplace conditions. In 1980, Mexican labor law allowed employers more freedom to hire outside of union labor organizations.
2012 saw the inclusion of regulations on outsourcing talent, remote work, and rights for foreign nationals working internationally. Provisions were also added that included sexual harassment as grounds for termination.
Five years later, Mexican Federal Law was reformed again. Judicial courts were granted jurisdiction over employer-employee conflicts. However, it took until 2019 for this law to see the light of day. In 2021, the right for employers to outsource subcontracted employees was withdrawn.
Mexican labor laws are continuously evolving, with the primary focus remaining on the well-being of employees.
Who Falls Under Mexican Labor Laws?
Before we delve into the complexities of Mexican labor laws, it’s important to clarify who they protect.
Mexico is made up of professionals in a variety of working relationships, mostly in informal labor. However, Mexican labor law only works to protect formal employees. Independent contractors in Mexico fall under civil or mercantile legislation and are not entitled to employment rights.
Who is Considered a Mexican Employee?
Individuals are considered employees if they meet the following criteria:
- They provide a personal service continuously
- Are paid a salary
- Are subordinate to an entity or another individual
The Mexican government allows for both Mexican citizens and foreign nationals to be considered employees.
Mexican nationals working abroad can also qualify if they meet particular requirements, which include being hired in Mexico or recruited via a system with the approval of both Mexico and a foreign government.
Every Mexican employee is entitled to the rights outlined in the Federal Labor Law. That means that every employer, regardless of their location, is required to uphold these obligations. International companies hiring Mexican employees must comply with every facet of employment laws outlined in the Federal Labor Law. Failure to do so may result in serious fines, reputational damage, and sanctions.
What Do Employers Need to Provide to Mexican Employees?
Employers hiring Mexican employees need to ensure they follow Mexico’s Federal Labor Law. Mexican labor laws are heavily regulated, and courts tend to favor employees, so employers must comply with all legal requirements.
Employee Contracts
Article 24 of the Federal Labor Law states that every employer hiring Mexican employees must issue a written contract.
Article 25 of that same labor law also states that every employment contract must contain the following terms:
- Name, nationality, age, sex and marital status
- Tax ID number
- Physical addresses of both the employee and employer
- The location where the employee will carry out their duties
- Nature of employment
- Description of role
- Length of employment
- Probation period
- Work schedule
- Salary amount or hourly wage
- Benefits
- Method and deadline of payment
- Amount of rest and vacation days
Collective Bargaining Agreement
When employers enter into an employment agreement with labor unions, a Collective Bargaining Agreement (CBA) must be signed. Collective Bargaining Agreements must include the following:
- Names and addresses of a representative of the employer and the union
- Physical addresses of the work location
- Nature of employment
- Length of employment
- Work schedule
- Rest days and holidays
- Salary amount or hourly wage
- Training
- Integration and operation of the employee-employer committees following legal requirements
Types of Contracts
There are three types of contracts that employers can issue Mexican employees, depending on the nature of work.
- Indefinite contracts: These are used when the date of termination is unknown and only prohibited if both parties mutually agree or one fails to uphold their end of the contract.
- Definite contracts: Used for projects with a definite date of completion.
- Seasonal contracts: Used for fixed or temporary work that occurs seasonally.
Special Rights and Conditions for Certain Employees
The following types of Mexican workers are entitled to special rights and conditions distinct from the standard rights every employee is entitled to.
Unionized employee: In the case of profit sharing, employers are required to favor unionized employees, with the higher-salaried employees receiving a greater share.
Definite-term employees: Temporary workers receive a different severance package than employees hired for an indefinite term.
Trust employees: Trust employees (for example: a trustee, director or partner) are not entitled to the following:
- Reinstatement to their jobs following termination
- The freedom to join unions with non-trust employees
- Striking
Employers hold the right to cap the salaries of trust employees (ie: employees in trustee positions) when it comes to profit sharing. Employers can also terminate trusting employees if they violate any aspects of their responsibility and can reasonably justify it.
A trust employee is a person who holds and administers assets for the benefit of a third party. And if they fail to fulfill their duty then they can rightfully be terminated from their position.
What Rights and Benefits Are Mexican Employees Entitled To?
The Federal Labor Law stipulates that Mexican employees are legally entitled to many statutory rights and benefits. These rights and benefits include maternity and paternity leave, Sunday bonuses, weekly rest days, severance payments, and much more.
However, these aren’t the only rights and benefits employees in Mexico are entitled to. There are several more factors to consider when ensuring you stay compliant with the local Mexican labor laws:
General Minimum Wage
As of January 1st, 2023, the general minimum wage in Mexico currently stands at 207.44 pesos per workday. If employees are working along the United States and Mexico border, they are then entitled to 312.41 pesos per workday.
Did you know that the United States and Mexico border is known as the Free Zone of the North Border?
Professional Minimum Wage, if Applicable
Working from Mexico means certain job titles can receive a professional minimum wage, which is equal to or higher than the general minimum wage. Employees who work in these roles are entitled to it regardless of their industry, age or experience level. The wage employees receive depends on their role. Professional minimum wage is applicable exclusively to the 43 municipalities that integrate the Free Zone of the Northern Border.
Christmas Bonus
Commonly referred to as the Aguinaldo, or the 13th-month salary, the Christmas bonus is an annual bonus. It has a minimum payment of 15 days of salary, prorated based on the amount of time worked. The deadline for payment is Dec. 20th of every year. However, employers commonly pay Aguinaldo in installments.
Training
Employee training is generally required not to exceed 90 days. However, it can extend to a maximum of 180 days if employees fall under the following categories:
- Employees in managerial or directorial roles.
- Employees that carry out general administrative and directing tasks.
- Employees with a specialized technical or professional role.
Mexico - Work Hours
The maximum amount of hours employees can work depends on the time of day an employee is working. Work shifts are defined as such:
- Daytime shifts: The daytime shift falls between 6 a.m. and 8 p.m. Workers can not work more than eight hours per shift and 48 hours per week.
- Night-time shifts: The nighttime shift falls between 8 p.m. and 6 a.m. These workers cannot work more than seven hours per shift or 42 hours per week.
- Combined shifts: Combined shifts include both day and night shifts. This is only applicable if the work period considered a part of the night-time shift doesn’t exceed three and a half hours. Working time cannot exceed seven and a half hours per shift and 45 hours per week.
Overtime Pay
Every employee who puts in extra hours that exceed the suggested shift durations is entitled to overtime pay. Both employers and employees must comply. Overtime pay must be paid at a rate of:
- Twice their regular hourly rate if they work up to nine overtime hours a week.
- Three times their regular hourly rate if an employee works more than nine overtime hours a week.
However, specific restrictions apply to shift workers. If an employee does not exceed their maximum weekly hours, the maximum duration of each daily shift can exceed the working hours noted above. The intention behind this is to provide shift workers with an additional rest period on Saturday evenings.
Rest Breaks
Employers are required to grant employees a thirty-minute rest break during each shift worked. If employers allow employees to take a longer rest break, it won’t be counted as part of their shift.
Nightshift Restrictions
Pregnant or nursing women and minors are restricted from working night shifts. The law recognizes that women need more rest during pregnancy and while nursing.
Vacation
Employers must provide their employees with a minimum vacation period. The amount of vacation time employees are eligible to receive depends on the worker’s length of service with their current employer.
If employees in Mexico have worked for at least one year, they are entitled to six vacation days.
If the employee has worked for two years, they are entitled to eight vacation days.
Employees with over three years of service are legally eligible to receive ten vacation days.
Working for four years results in twelve vacation days.
And finally, when an employee works for over four years, their vacation time increases by two days for every additional four years worked.
Employers must pay employees their full salary and provide benefits during their leave. They are also required to pay employees a vacation premium equalling 25% of their base salary, which is due during their vacation time.
Public Holidays
In Mexico, employers are required to provide the following public holidays as paid time off:
- January 1st: New Year's Day
- The first Monday of February: Constitution Day
- The third Monday of March: Commemoration of March 21st
- May 1st: Labor Day
- September 16: Independence Day
- The third Monday of November: Revolution Day
- December 25: Christmas Day
Every six years, employees are entitled to an additional public holiday when a new Mexican president is elected to office. In some cases, electoral legislation allows for more than one day off.
Illness and Injury
In the unfortunate event that an employee is injured or suffers from an illness, they are entitled to receive paid time off.
To apply for paid time off, the illness or injury needs to be verified by the medical authorities of the Mexican Social Security Institute (IMSS), commonly referred to as Instituto Mexicano del Seguro Social. Employees can take a maximum of 52 weeks off.
If they require more time off, the IMSS will provide one of the following, depending on the severity of the illness or injury:
- Total or partial permanent disability if the illness or injury is related to work
- Disability for non-occupational illness/injury status, if the illness or injury is not related to work
Employees who are classified as disabled by the IMSS receive a lifelong pension based on their salary and specific circumstances.
Unpaid Time Off
Apart from the usual paid time off, employees can opt for unpaid time off if they need additional leave. However, employees must meet the following requirements to receive approval for unpaid time off:
- The employee has caught a contagious illness.
- They have a temporary impairment brought on by an illness or injury that is unrelated to their job
- They’re placed in preventive custody before being found not guilty.
- They are detained.
- They’re performing their constitutionally required public services and obligations.
- They’re designated as a representative before government labor agencies or labor tribunals.
- They don’t have the necessary documentation to do their job, as required by law. This is only applicable if the employer needs to provide it.
Maternity and Paternity Leave
New mothers receive twelve weeks of maternity leave in Mexico, which commences six weeks before their due date. If a female employee adopts a baby, they receive six weeks of maternity leave, beginning on the day of adoption. Fathers, on the other hand, only receive five days of paternity leave for both the adoption or birth of their child.
Protection from Harassment and Discrimination
Employers are prohibited from discriminating against their employees or subjecting them to harassment. However, this battle is still ongoing in Mexico. In fact, in 2020, the Ministry of Labor announced that 26% of female employees have faced a form of workplace violence or discrimination.
If employees face discrimination or harassment in the workplace, they can take the following measures:
- Go before civil courts to seek the payment of damages
- In the case of discrimination, workers can file a complaint with the National Council to Prevent Discrimination (CONAPRED)
Termination
In Mexico, both the employee and employers are not required to give advance notice of their termination, unless stated in their employment contracts. When an employee resigns from their job, they are not legally bound to give a two-week notice, which is common in countries like Canada.
Severance
Terminating an employment relationship with a permanent employee without reasonable cause results in the employer having to offer a severance package.
The severance package can consist of the following terms:
- 90 days of daily total compensation: Daily base salary + daily amount of benefits
- For every year an employee has worked with the employer: 20 days of daily total compensation
- For every year an employee has worked with the employer: 12 days of daily base salary (this cannot exceed twice the amount of the daily minimum wage).
- Any salaries and benefits the employee has accumulated: Paid vacation, vacation premium, Christmas bonus, etc.
Employees who are hired for a definite term and terminated without a valid reason receive a severance package dependent on the length of time outlined in their contract. It is generally higher than the severance indefinite-term employees receive.
It is also important to note that employees who are terminated with a just cause are only entitled to the salary and benefits they’ve accumulated up to their dismissal.
Other Benefits and Rights Mexican Employees Are Entitled To
Employees are entitled to a range of benefits and rights outlined in the Federal Labor Law and other statutes, including but not limited to:
- Social Security rights
- Freedom to unionize, strike, lockout and collectively bargain
- Workplace safety
- Profit-sharing
- Diversity, inclusion, and equality
Borderless Has Your Back
Now that you have a solid understanding of Mexican labor laws, you can start thinking about hiring local talent from Mexico. With an employer of record like Borderless, you can streamline your hiring, onboarding and payroll processes with our all-in-one platform.
From hiring software engineers to considering the overall cost of hiring in Mexico, you’ll be equipped to start the onboarding process in no time.
Speak to our team today and learn more about how you can get started!
Disclaimer: Borderless does not provide legal services or legal advice to anyone. This includes customers, contractors, employees, partners, and the general public. We are not lawyers or paralegals. Please read our full disclaimer here.
