Before starting a business in Mexico, it is important that the future business owner has a grasp over the benefits that are granted to Mexican workers based on the Mexican labor and social security laws. Mexico grants many more rights to its workers than the United States and the penalties incurred by employers who don’t follow these rules are very strict.
It should be noted that there are special rules for domestic workers, such as gardeners, maids and nannies working in a private home. Some of the benefits mentioned in this article are not given to domestic workers by law.
LABOR BENEFITS (According to the Mexican Labor Law)
Individual labor contracts can include as many labor benefits as the employer wishes; however, they cannot bestow any fewer benefits than the law allows. Before initiating a labor relationship, it is important to keep these benefits in mind:
Shift (number of hours in the work day)
Time off (rest periods during the work day and days off)
Vacation bonus (a bonus for the worker during their vacation days)
Year-end bonus (a payment at the end of the year additional to the salary)
These benefits are obligatory for all employers and cannot be waived or transferred by the employee. All of these benefits are mentioned in and based on the Federal Labor Law.
In accordance with the law, shifts can be designated day shift (during the period between 6:00am and 8:00pm), night shift (during the period between 8:00pm and 6:00am) or mixed. The maximum of hours that can be worked on day shift is 8 hours and for night or mixed shift the maximum is 7 hours. The shift cannot be modified except by mutual agreement and in cases of extreme hazard.
In continuous shifts a break of at least 30 minutes should be granted with pay. For every 6 days of work the employee should receive at least one day off, preferably Sunday. In the case that the employee works Sunday, he or she has a right to an additional 25% of his pay. In addition, the legally mandated holidays are:
The first Monday in February
The third Monday in March
The third Monday in November
December 1st is a holiday every sixth year when the President of the Republic takes office, as well as the dates that are stipulated in State or Municipal laws for local election days.
The minimum vacation period given to a worker is six working days, once they have completed their first year of work and this period will be increased by two days every subsequent year of work, until reaching a maximum of 12 days. Vacation must be granted within the six months following the date in which the employee completed a year of work.
The additional payment of 25% of the wages that correspond to vacation pay must be paid when the employee takes their vacation.
YEAR END BONUS
This is a payment additional to wages that must be made at the latest the 20th of December of each year and must be at least the equivalent of 15 days of wages proportionate to the number days that the employee worked during the year (if the employee only worked 30 days then they receive 30/365 * 15 days wages).
Training is obligatory and must be carried out during working hours and in accordance with certain programs. The law is not clear as to what the minimum training must be.
In addition to all this, employees have a right to profit sharing, referring to a part of the profit that the employer received during the year and that must be distributed between the workers based on each worker’s wages and days worked.
As well, there are benefits such as seniority and the seniority bonus that each employee receives based on the amount of time that they have worked for the same employer and that must be paid at the moment that the employment relationship is terminated work or upon the death of the employee.
The employer also must, in addition to wages, pay every month into the fund for employee health care and pension (IMSS), every two months into the Federal Government’s fund for employee housing (INFONAVIT) and pay into a separate investment fund for the employee’s retirement(AFORE).
About the author Gustavo Calderón:
Gustavo Calderón, is a Lawyer and University Professor in Playa del Carmen, Mexico, with more than 10 years of experience in Corporate Law and Real Estate Law. Mr. Calderón focuses his practice towards serving the expatriate population of the Riviera Maya.