Labor Relations in Mexico: a brief synopsis
Labor Relations in Mexico
The Mexican Federal Labor Law (Ley Federal de Trabajo) and the Mexican Social Security Law (Ley de Seguro Social) provide the statutory framework that governs labor relations in Mexico in accord with Article 123 of the Mexican Constitution.
Mexican Federal Labor Law
The Federal Labor Law governs labor relations in Mexico in that it spells out specific rules and regulations concerning terms of employment, functions of labor courts and roles of labor unions. Included in the rules and regulations of the law is a specified listing of minimum wages pertaining to different types of work which vary according to the country’s different economic regions.
In Mexico, there is nothing such as “at will” employment. “Just cause” is required to terminate an individual. If a worker feels that he or she has been unfairly dismissed, that person has the right to take the case to the country’s labor court. The labor court can rule to either reinstate the worker to his or her previously held position or can order that compensation be paid.
Causes for dismissal that are deemed as being “just” under Mexican labor relations include:
- Death of the worker or the employer
- Worker mental or physical disability
- Mutual consent between company officials and worker
- Completion of contractually defined work
- Depletion of the resource in an extra active industry
- Company bankruptcy
Additionally, the Federal Labor Law in Mexico spells out other protections that are not applicable to workers in the United States. These include specific directives related to:
- Severance pay;
- Vacation premiums;
- Profit sharing;
- Collective (Union) securities.
Labor relations in Mexico stipulate that work contracts be established with individuals and/or collectives (unions) and that they are written. There are four broad types of contracts. These include measurable contracts, training (or trial period) contracts, contracts for seasonal work, and indefinite term contracts.
- Measurable contracts –This type of contract is used to govern labor relations in Mexico for individuals that are hired for a specific period, or who are hired to deliver certain finite services.
- Training/trial period contracts -This class of agreement is used when contracting a worker for an initial training period. Under such an agreement, a worker gives his or her consent to be given an opportunity to acquire the skills that would lead to subsequent full-time employment. Under Mexican labor relations, training contracts can last up to a period of thirty days.
- Seasonal employment -This type of contract is used in situations in which work is discontinuous, or when the required services are for a specifically defined period and duration.
- Indefinite-term contracts – Indefinite term agreements are the most common type of contracts in Mexico. They must be implemented when an individual is going to work for an employer for a period of more than 180 days. These contracts can be preceded by a month-long training contract. Unless otherwise stated it is presumed that an employee that works for a month for an employer is presumed to be a permanent employee. It is also important to remember that the training period agreement can be extended for up to 180 days.
The Mexican Federal Labor Law also defines the shifts and hours in the country’s work day. Labor relations in Mexico have established that there are three shifts. They are day, evening and mixed.
- The day shift is between 6 am and 8 pm. The maximum amount of time that a worker can labor during the day is for 8 hours.
- The night shift takes place between the hours of 8 pm and 6 am. A worker can be on duty for seven hours during the night.
- A mixed shift includes hours that are day and night shift hours and cannot exceed seven and one-half hours in duration.
Under the rules of Mexican labor relations, it is also mandated that employers provide their employees with one day of rest. The preferred day is Sunday. If, however, a worker is required to labor on a Sunday, he or she must be paid twenty-five percent more than the regular daily salary. Even if employees do not work on Sunday they are paid their regular daily wage. This means that although Mexican workers are required to work a forty-eight hour work week, they are paid for the full week, or for fifty-six hours.
Mexican labor relations as spelled out in the Federal Labor Law include provisions related to employee vacations. Under the law, each worker is entitled to:
- Six days of paid vacation after one year of work;
- An additional two days annually for every year of service until the end of the workers fourth year with the employer;
- Two days of paid vacation for every additional five years with a company;
- A bonus of twenty-five percent of weekly salary.
Under the rules that govern labor relations in Mexico, companies are also required to provide Christmas bonuses to their employees. This consists of fifteen days salary paid prior to December 20 of each year. Special bonuses are also sometimes paid. These extra payments may be awarded for work factors such as punctuality, attendance, and productivity.
Mexican Social Security
Also governing Mexican labor relations is the Ley de Seguro Social or the Social Security Law. Mexico’s state social security agency, known by its Spanish acronym IMSS, is the largest social security institution in Latin America. IMSS’s services, insurances and provisions are divided into five units: work-related risks; illnesses and maternity; disability and life; retirement, unemployment at an advanced age and old age; nurseries and social provision. Founded in 1943, it also publishes statistics and reports.
According to Wikipedia, the Institute of Mexican Social Security or (IMSS) exists for the following purposes:
- To provide medical assistance;
- To protect basic necessities of subsistence;
- To provide social services necessary for individual and collective well-being;
- To establish worker pensions.
For additional information on labor relations and such legal issues in Mexico the reader is encouraged to view our blog at https://www.tecma.com/ and review Tecma’s Shelter Services that discuss specifics of how companies foreign to Mexico are operating factories successfully in Mexico.
The United States-Mexico-Canada Free Trade Agreement will boost the North American auto industry and will affect labor relations