Labor laws in Mexico are mainly covered in five documents. Included here are Social Security Law, the Federal Law, the Mexican Constitution, the Immigration Law, and the National Workers’ Housing Fund Institute’s Law. It is important to understand these rules if you don’t want to get into legal issues with the government. Labor laws in Mexico are quite different from what you will find in many other countries, especially the USA.
What You Need to Know Regarding Labor Laws in Mexico
Mexican labor laws don’t include a flat minimum wage. Instead, the minimum wage depends on the industry, occupation, and the geographical location of a company. As from the start of January 2016, the minimum wages were raised by 4.2 percent. Irrespective of that, labor laws in Mexico make finding workers very easy and cheap. Employers are also required to review the wages of their employees every year.
Working Hours in Mexico
Working hours as per the labor laws in Mexico vs USA are very different. In Mexico, employees can work for 7 to 8 hours daily, depending on the shift. Those in the day shift work between 6 am and 8 pm. On the other hand, night shift employees work from 8 pm to 6 am. Employees can also be in mixed shifts, meaning they work during the day and in the evening. The total number of working hours for mixed shift employees is seven and a half hours. Mixed shift employees are allowed to work a maximum of 3 and a half hours during the night. The rest of the period should be spent working during the day.
Employees can work six days a week. Anything beyond the above hours is considered overtime and is paid at 25 percent above the normal hourly wage.
Categories of Employees
The Mexican Federal Labor Laws describe different employment agreements. Basically, there are two types of employee relationships: individual and collective. An individual employee relationship is one where a single person gets hired to perform specific duties. On the other hand, collective employees are represented by a labor union.
The employment can be for a specified period or a permanent position. In the absence of an employee or for whatever reason, you can choose to find a replacement worker for a period. This will fall under fixed-term contract employment. Mexican laws also provide for specific task work. Such employees can keep their job only for as long as the company or individual requires their services.
Contractors and Consultants
An employer can also hire a contractor or a consultant. Such people will not necessarily be considered employees, given that they are not subordinated by the company.
There is an exception, however, in cases where they are subjected to a work schedule, and only offer their services to a single company. If you wish to employ contractors and consultants, it is best to go for those with their own establishments. They should also be hired through service agreements. The nature of the working relationship and the contract is what will determine whether or not the contractor is entitled to employee benefits.
Probation Periods and Employee Training
Mexico employment law also provides for a probation period during which an employer can decide whether to keep the employee or to fire them. For the first 30 to 180 days, you can assess a worker and decide if you want them to work for you indefinitely. Once an employee gets into an indefinite working relationship with an employer, they cannot be laid off without reason, as per the labor laws in Mexico.
If the nature of the job demands for specific training, employers are not allowed to exceed 90 days with this. That being said, those hired into managerial or technical positions in a company can be trained for six months. During this period, the employees are still entitled to the same compensation and benefits they would receive if they were already working permanently.
All employees in Mexico are entitled to vacation time of at least six working days. Every year, the employer is required to add two working days to the vacation time of the employees. After four years of working, an employee will gain an extra two days of vacation after every five years. The minimum vacation premium allowed is 25 percent, and employers are required to pay for the accrued vacation time.
Holidays in Mexico
Legal holidays in Mexico are official resting periods for employees. The employer is still required to pay the employees for the time spent during the holiday. In cases where an employer needs their employees to work during the holidays, they will have to pay overtime.
These are the legal holidays that are recognized by the labor laws in Mexico:
- New Year’s Day on January 1st.
- Constitution Day on February 5th.
- Benito Juarez’s Birthday on March 21st.
- Labor Day on May 1st.
- Independence Day on September 16th.
- Change of Federal Power Day on December 1st of election years.
- Christmas on 25th December.
On top of these holidays, it is possible for employees and labor unions to negotiate for extra paid holidays such as Mother’s Day.
Employers are required to pay their workers a 15 day salary by the 20th of December. It will depend on the number of days worked by an employee during the year.
Profit Sharing in the Company as Per Labor Laws in Mexico
In Mexico, employers are required to split a minimum of 10 percent of the company’s annual profits among the employees. This bonus must be paid 60 days before they have to pay their income taxes. A half of this amount should be paid to employees based on the number of hours worked, and the other half should be split with regard to the workers’ salaries.
Labor laws in Mexico vs USA are quite different, and it is not difficult for employers to get inconvenienced by small details. This guide covers most of what you will need to know before employing people in Mexico.