Penner & Associates - Mexico Law Firm and Business Consulting for Mexico

For professional assistance & information on legal & business matters regarding Mexico and Latin America, please contact:

ATTORNEYS AT LAW FOR MEXICO
Please contact us at our Mexico offices located at:
Apartado Postal No. 9
San Miguel de Allende, Guanajuato, Mexico
TEL. US.: (800) 856-5709
Local Phone (415) 152-3648

e-mail E-MAIL

 

BUSINESS CONSULTANTS FOR MEXICO
REAL ESTATE BROKERAGE ASSISTANCE FOR MEXICO
At our Phoenix or Mexico Offices
P.O. Box 42773
Phoenix, Arizona 85080
Tel: (623) 242-7442

e-mail E-MAIL

OUR MEXICO CITY OFFICES
Montecito no. 38 Piso 37 Oficina 37
Edificio World Trade Center
Colonia Napolis C.P. 03810
Mexico, Distrito Federal

Tel: (55)5351-0438

e-mail
E-MAIL

   

LABOR RELATIONS IN MEXICO

                                                                                                           

LABOR MATTERS PUBLICATION , FEDERAL LABOR LAW , LABOR UNIONS ,
SOCIAL SECURITY , INFONAVIT , PROFIT SHARING , DISMISSAL PROVISIONS
 
BOOK titled "Labor Law of Mexico and Business" ,
                                   

                

LABOR MATTERS PUBLICATION

Mr. Vernon Penner has written a book on labor matters in Mexico titled "LABOR LAW OF MEXICO AND BUSINESS". It is possible to acquire a copy by contacting him #Mr. Penner. If you wish to see a listing of the Book's Index please see the end of this page.

FEDERAL LABOR LAW

There are basically two federal laws that govern over labor issues in Mexico. One is the federal Labor law and the the other is the federal Social Security Law. 

There is a federal Labor law of Mexico, which sets forth the rules and regulations regarding labor relations, labor unions and labor courts (Board of Conciliation and Arbitration).

There is a federal listing of minimum wages for general and specific categories of work. These categories minimum wages may vary depending upon the economic region of the country (geographically identifiable).

There is ample protection provided labor in Mexico. Employers are not permitted to dismiss employees without just cause. If they do so, the employee has a right to file suit for re-instatement or indemnification. The labor courts will presume that the person stating he was your employee is in fact your employee and that you dismissed him without cause. As well the labor courts will require proper representation of the employer (proper power of attorney if an agent represents the employer in labor court) (I have have seen labor suits lost by employers in Mexico due to improper representation).

If resolved in favor of the employee, he has the right to reinstatement plus all back wages that were incurred while the court process was going on. If the employee decides not to seek reinstatement, then he may receive three months salary, all back wages, plus other items that were owed him/her prior to the dismissal (such as unpaid vacations, year end bonuses, profit sharing, seniority pay, maturity leave, and others).

The employer may chose not to reinstate the employee for unjustified dismissal when: a) the employer has been an employee for less than a year, b) the employee and employer are constantly in direct contact and the Board of Conciliation and Arbitration deems that the two can not work together, c) when the employee was an "of confidence" employee (entrusted with confidential administrative or management type activities), when the employee was arrested, d) when the services provided were the rendering of socially oriented public services imposed by law or order issued by authority, or e) the employee was working as an occasional ("eventual" - sporadical or odd jobs) worker.

The labor relationship may terminate by: a) mutual agreement (employer/employee) (employees can not be obligated to work at a specific job for more than one year, however they may continue if they wish), b) by death of the employee, c) by termination (completion) of the job performed or by expiration of the time for which the employee was hired (in order for a job to be of a determined time period, it should not be of a type that is normally considered as ongoing or have some circumstance that makes it so), d) by mental or physical incapacitation of the employee or by resolution of the Conciliation and Arbitration Board.

The employer may terminate the labor relationship due to: a) deceit or fraud by the employee with his fellow workers, relative to the employees capabilities, b) misconduct, threats or injuries by the employee, c) bad conduct by the employee with his follow workers, which causes a brake in the discipline, d) bad conduct by the employee outside the work place which effects the employer, the administrative personnel or their families, e) intentional damages or prejudice to the employer or his assets while working, f) grave damage or prejudice to the employer caused by the employee due to his unintentional negligence, g) imprudence or inexcusable carelessness by the employee placing the establishment or personnel therein in an unsafe situation, h) immoral acts at the place of business by the employee, i) revealing trade secrets of the employer, j) having more than 3 absences from work within 30 days, without justification or the employer's permission, k) unjustified disobedience by the employee relative to his employment, l) refusal by the employee to adopt preventive measures to avoid accidents or illness, m) drunkenness or drinking of intoxicants at the place of work, save by medical prescription and notification thereof to the employer, n) imprisonment of the employee, and o) other grave similar cases.

As well, there is justified suspension of the labor relation (usable by the employer and the employee), when: a) the employee has a contagious illness, b) there is temporary incapacitation of the employee due to an accident or illness, which does not constitute a work related risk; c) preventive (temporary) imprisonment of the employee, followed by an absolving judgment (if the employee has acted in defense of the person or interest of the employer, then the employer is obligated to pay the employees wages during his imprisonment), d) the arrest of the employee, e) rendering of socially oriented public services imposed by law or order issued by authority, f) rendering of services as representative of labor related posts, such as members of Conciliation and Arbitration Boards and others, and g) when the employee does not have certain documents required by law to work ( e.g. sanitation cards, driver's license ).

The Work Week. The federal Labor Law of Mexico sets forth a maximum of 48 hours per week as the amount of hours a laborer can work without going overtime. Even so, most companies only run the work week at 40 to 45 hours

The Work Day. For every 6 days of work ( Monday through Saturday ), employees are entitled to one day of rest with full pay. Therefore, when hiring in Mexico please keep in mind that you are hiring per week and not per day, when deciding on the salary.

Work Shifts. There are 3 work shifts, consisting of the day shift ( eight hours ), the night shift ( seven hours ) and the mixed shift ( 7 1/2 hours ). The mixed shift is part day shift and part night shift. Those hours that are worked over these periods are considered to be overtime ( paid as such - double the hourly rate ) and can not go over 9 hours per week.

 Overtime. In that case the hourly wage can be double or even triple the normal hourly wage, depending on how many hous overtime are work In the event that the overtime is on a holiday, the hours are paid at triple the normal hourly wage.

 Salary. The law sets forth a minimum daily wage for each category of services to be provided in a given geographical area. The law also sets the requirement for an annual review of the salary being paid, which salary increase should not be less the minimum set by law. 

Employee vs. Independent contractor. The rights and obligations between the two types of work relationship is very different and if the work relation states independent but the relationship is employee, the Labor Court will view it as employee.

Work related risks suffered. The employer should register and maintain his employees with the Mexican Institute of Social Security (medical care). If he does not, then he will be liable for the medical care and will also still owe Social Security.

Holidays. The official holidays in Mexico are: January 1 ( New Year's Day ), February 5 ( Constitutional Day ) , March 21 ( Juarez's Birthday ) , May 1 ( Labor Day ) , September 16 ( Independence Day ) , November 20 ( Revolution Day ) , December 25 ( Christmas Day )

Vacation Time.

Employees have the right to a yearly vacation, which is not to be less than 6 working days. For every year the employee continues to work for the employer, he/she will receive an additional 2 working days. After four years, the employees vacation period will increase only 2 working days for every additional five years he/she works for the employer. As well, the employee will have a right to not less than a 25% vacation premium calculation on his/her salary for the vacation period. 

Dismissal or Willing Departure

In the event of being fired from one's employment without just cause (as stated in the Federal labor Law), the employer will pay the employee three months salary (calculated on the last salary paid prior to firing, plus 20 days for each full year of employment with the employer that fired him/she.

If the employee resigns, then the employer will pay the employee the proportionate part of his/her vacation premium and year end bonus. If the employee has worked there for more than 15 years, without interruption (working with someone else and then returning), then the employee shall receive an additional sum equivalent to 12 days salary (calculated on the last salary received prior to resigning) for each year he/she will have worked for the employer.

Labor Contracts

There are two types of  employment contracts. One is collective (the same for several people), then the clauses are determined between the employer and the labor union. The other is an individual contract, where the individual negotiates his/her own employment contract.

Retirement

The employer is to periodically deposit in a banking account, for the employee, a sum equivalent to 2% of his/her salary, as a savings account for the employees' retirement (SAR). At this writing, the deposits are to be made in an "AFORE" account that individually idetnified by each employee. There is also to be a periodical  payment to INFONAVIT (federal housing authority for workers) of a sum equivalent to 3% of his/her salary. 

 

LABOR UNIONS

Labor unions are recognized under the Federal labor Law as a means of the employees uniting to protect their common employment rights. There are large labor unions existing in Mexico. As a result of the labor unions, collective labor contracts are signed between the employer's representative and the representative of the labor union. Labor union collective contracts are reviewed every two years. A labor union is permitted in a place of employment provided that at least 20% of the employees belong to it. Even so, the registry process is slow and complicated. 

 

SOCIAL SECURITY

The Mexican Federal Social Security system is funded by a mandatory charge paid by the employer, calculated on the salary paid to the employees. This money is to create social security hospitals and staff them , in order to provide full medical coverage to the employees that are registered as employees (being paid for by their employers).

The employer is required to make contributions to the Mexican federal Social Security (IMSS), the Living Quarters Fund (INFONAVIT) and the Retirement Savings System (SAR), as well as payments for vacations, vacation premiums, and year end bonuses. These benefits represent an average of 29% of the salary that is paid. Thus, the salary is 129% of what you state as the base salary.

 

INFONAVIT

(Instituto Nacional para el Fomento a la Vivienda para Trabajadores).

The National Institute for the Development of Living Quarters for Workers, was created in the early 1970's today it is known as the National Living Quarters Fund). It places a small tax on the employer, calculated on the salary paid to the employees. This money is used to create "social" living quarters (small housing) for the working populous. The employees are to qualify for a loan through INFONAVIT to purchase (repair or debts related to) a house, a monthly sum is automatically subtracted form the employee's salary and then used to make the monthly payment foe the mortgage of the house.

Per the National Living Quaters Fund, employers are to give 5% of their employees' salaries to INFONAVIT.

      

PROFIT SHARING

Employees are to participate in the earnings of their employees, based on the percentage determined by the National Commission for workers' Participation in their Employers' Earnings.

This earning is to be distributed among the employees of the employer (that are working for the employer or worked for the employer for 60 days or more during the period corresponding). the distribution is to be made within 60 days following the date in which they are to pay their annual income taxes.

This profit sharing is in the sum of 10% of the earnings for the fiscal period (calendar year) and is to be divided in equal shares among: (1) the first half to all employees, taking into consideration the aggregate number of employees that worked for the employer during the year, without taking into account the salary they earned; and 92) the second half is to be divided to the employees in proportion to the salaries they earned during the year.

Those  business that are of recent creation are exempt for this profit sharing for the first year of their business activities. The company/business directors, administrators and general managers of the employers are excluded form sharing in this participation, even those it is common to see that they get an automobile, year end bonus and assistance in the purchase of a home. This profit sharing is not used as part of their salaries in order to determine the amount of their participation in this profit sharing.  

 

DISMISSAL PROVISIONS 

When the employee is dismissed without just cause, he/she is to receive three months salary (payable upon dismissal). If the compensation is not paid when the employee is dismissed (like when there is a labor lawsuit), then the employer is to pay all salaries that would have been earned during the period in which this delay took place (assuming that the employee won the labor lawsuit), up though the date of the payment. 

When the employee has worked for the employer for less than one year, the employee will be compensated (indemnified) in a sum equal to one half of the salaries of the period he/she worked for the employer. If this period is greater than one year, then the compensation is to be equal to a sum equal to six months salary of the first year and twenty days per year for each of the following years. 

In the case that the employment is for an undetermined period of time, then the indemnification will be 20 days for each year of services given. 

In order to determine the amount payable for compensation (indemnification), they are to use the base salary of the employee corresponding to the date on which the right to receive this payment occurs. 

 

The Index of the Book titled "Labor Law of Mexico and Business" is as follows: ( It is on sale through Mr. Vernon Penner for the sum of $35.00 plus shipping and handling. Updated 2002 with 70+ pages. See the Information at Books and Forms.

(This book will be available in the future via E-Mail attachment and via secured page on this site)

1.1 Labor Relations
1.1 Quantity of Foreign Laborers vs. Mexican Laborers
1.2 Those Over 16 Years Old
1.3 Waivers by Workers
1.4 Duration of the Labor Relation
1.4.1 Specific Job
1.4.2 A Specific Period
1.5 An Indefinite Period
1.5.1 Indefinite Period Contract Form
1.6 One Year Maximum for the Employee
1.7 Employer Substitution
2. Means of Termination of the Labor Relationship
2.1 Justified Termination of the Labor Relation
2.1.1 Causes of Justified Termination by the Employer
2.2 Justified Suspension of the Labor Relation
2.3 Unjustified Dismissal by the Employer
2.3.1 Reinstatement of the Worker
2.3.2 Non-Reinstatement of the Worker
2.3.3 Employer's Option in Certain Cases
2.3.3.1 Indemnification in Cases of Employer's Option Not to Reinstate
2..4 Cases of Justified Termination by the Employee
2.4.1 Period of Enforcement
2.5 Incapacitation of the Employee
2.6 Causes for Termination in General of the Labor Relation
3. Working Shifts or Periods
3. 1 Day Shift
3.2 Night Shift
3.3 Mixed Shift
3.4 Maximum Duration of a Shift
3.5 Resting Periods
3. 6 Overtime
3.7 Quota for Overtime
4. Rest Days
5. Vacations
6. Salary
7. Participation in the Employer's Earnings
8. Obligation "To Do" of the Employer
9. Prohibitions of the Employer
10. Obligations "to Do" of the Employees
11. Prohibitions of the Employees
12. Obligatory Housing of Employees by the Employer
13. Capacitation and training of Employees
14. Preferences, Seniority and Promotion
15. Female Employees
16. Minor Employees
17. "Trusted" Employees
18. Special regulations for Special Types of Work
19. Labor Unions
20. Contracts with Labor Unions
21. Changing a Collective Labor Contract to a "Contract Law"
22. The Employee Work Policies
23. Lay-Offs
24. Labor Strikes
25. Employee Labor Risks
26. Mexico's Labor Authorities
27. Disclaimer

Site Disclaimer