Mexico

Key Facts at a Glance

Constitutional and Statutory Framework

Mexican employment law is among the most protective in the Americas, grounded in the constitutional labour rights of Article 123 of the Mexican Constitution (1917) and codified in the Federal Labor Law (Ley Federal del Trabajo - LFT). The system is unitary - labour law is exclusively a federal matter and applies uniformly across all 32 states.

Article 123 of the Constitution

Article 123 was a revolutionary innovation when adopted in 1917, establishing constitutional labour rights including:

• Maximum 8-hour day shift, 7-hour night shift, and 7.5-hour mixed shift
• One mandatory paid day of rest per week
• Equal pay for equal work, without distinction of sex or nationality
• Right to organise, collective bargaining, and strike
• Right to a minimum wage sufficient to meet workers' basic needs
• Right to housing, medical assistance, and social security
• Profit sharing (PTU) as a constitutional entitlement
• Severance for unjustified dismissal as a constitutional remedy

Article 123 is divided into Section A (private-sector workers, governed by the LFT) and Section B (federal government workers, governed by the Federal Workers' Service Law).

Principal Statutes

2019 Labour Reform - A Watershed

Reforma Laboral 2019: The constitutional and LFT reforms of 2019 were the most significant overhaul of Mexican labour law in decades. Driven in part by the labour obligations of the United States-Mexico-Canada Agreement (USMCA / T-MEC), the reforms: - Eliminated the historic Conciliation and Arbitration Boards (Juntas de Conciliación y Arbitraje - JCAs) and replaced them with Labour Tribunals within the federal and state judiciary - Created the Federal Conciliation and Labour Registration Centre (CFCRL) to manage mandatory pre-trial conciliation and the registration of unions and collective bargaining agreements - Required secret-ballot democratic elections for union leadership and ratification of collective bargaining agreements (legitimación) - Strengthened protections against employer interference in union activity - Phased implementation 2019–2022, complete in all 32 states by 2022

Secretaría del Trabajo y Previsión Social (STPS)

Federal Labor Law (LFT) - Working Conditions

The LFT establishes the minimum statutory framework for individual employment. All terms more favourable to the worker prevail over less favourable contractual or collective provisions (the principle of in dubio pro operario).

Employment Contract (Article 24)

• Employment contracts must be in writing and contain mandatory information including the parties, the nature of work, the workplace, the duration, the hours, the wages, the rest days and vacation, and other conditions.
• Where the contract is not in writing, the employer bears the entire burden of proving the agreed terms.
• Indefinite-term employment is the default presumption. Fixed-term contracts are permitted only where the nature of the work justifies it (project work, seasonal work, replacement of an absent worker).

Working Hours (Article 60)

• Day shift: Maximum 8 hours per day (between 6 a.m. and 8 p.m.)
• Night shift: Maximum 7 hours per day (between 8 p.m. and 6 a.m.)
• Mixed shift: Maximum 7.5 hours per day (combining day and night periods, with no more than 3.5 hours of night)
• Maximum weekly hours: 48 hours (day shift), 42 hours (night shift), 45 hours (mixed shift), with one mandatory paid day of rest per week
• Rest break: A 30-minute break must be granted during the working day.

Overtime (Article 66)

• Overtime is permitted only in extraordinary circumstances and may not exceed 3 hours per day, 3 days per week (i.e., 9 hours per week).
• Premium rates:
• The first 9 weekly overtime hours are paid at 200% (double the regular rate)
• Overtime in excess of 9 hours per week is paid at 300% (triple the regular rate)
• Any time worked in excess of the lawful overtime cap is itself a violation; the worker is entitled to triple pay regardless.

Minimum Wage

• Mexico has a general national minimum wage, plus a higher minimum wage for the Northern Border Free Zone (Zona Libre de la Frontera Norte).
• Set annually by the National Minimum Wage Commission (CONASAMI) and published in the Diario Oficial de la Federación.
• Recent increases have been substantial: the general minimum wage roughly doubled between 2018 and 2024 in real terms. Verify the current rate via CONASAMI publications.
• Profession-specific minimum wages apply to certain occupations (chauffeurs, journalists, etc.).

Annual Leave (Article 76 - 2023 Reform)

Major 2023 Reform - "Vacaciones Dignas": The LFT reform of January 2023 substantially increased statutory annual leave entitlements (previously 6 days for the first year). The new schedule is:

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| Years of Service | Annual Leave Days | |---|---| | 1 year | 12 working days | | 2 years | 14 days | | 3 years | 16 days | | 4 years | 18 days | | 5 years | 20 days | | 6–10 years | 22 days | | 11–15 years | 24 days | | 16–20 years | 26 days | | 21–25 years | 28 days | | 26+ years | 30 days |

Workers are also entitled to a vacation premium of at least 25% of the wages earned during the vacation period (Article 80).

Aguinaldo - Christmas Bonus (Article 87)

• Mandatory annual bonus of at least 15 days' salary, payable by 20 December each year.
• Workers with less than one year of service are entitled to a proportional amount.
• Many employers grant 30 days' aguinaldo (or higher) by contract or collective agreement.

Public Holidays (Article 74)

Mexico has 8 mandatory paid public holidays: 1 January, first Monday of February (in commemoration of 5 February), third Monday of March (in commemoration of 21 March), 1 May, 16 September, third Monday of November (in commemoration of 20 November), 1 December every six years (presidential transmission), and 25 December. Holy Week is not a statutory holiday but is widely observed.

Federal Labor Law (LFT) - STPS

Termination and Severance

Mexican termination law is highly protective. There is no "at-will" employment: an employer may terminate an indefinite-term employee only for one of the specific causes listed in Article 47 of the LFT. Termination without cause - or termination on grounds that cannot be proved - entitles the employee to substantial constitutional severance.

Termination With Cause (Article 47 LFT)

An employer may terminate without notice and without severance only for one of the closed list of causes in Article 47, which include:

• Deception by the employee about credentials or capacity at the time of hiring
• Acts of dishonesty, violence, threats, or harassment against the employer, fellow employees, or clients
• Damage to the employer's property, intentional or with gross negligence
• Sexual harassment
• More than 3 unjustified absences in a 30-day period
• Disobedience to the employer regarding contracted work
• Breach of safety rules
• Reporting to work intoxicated or under the influence of drugs
• Conviction of a crime that prevents continued employment
• Other equivalent causes set out in Article 47

Notice of Dismissal (Aviso de Rescisión)

Critical Procedural Requirement: The employer must give the worker a written aviso de rescisión stating the date and the specific facts giving rise to the dismissal, on the day of the dismissal or, if the worker refuses to accept it, the employer must inform the Labour Tribunal within 5 working days so that the Tribunal can deliver the notice. Failure to follow this procedure renders the dismissal automatically unjustified, regardless of the underlying cause. This is the most heavily litigated procedural requirement in Mexican employment law.

Severance for Unjustified Dismissal (Article 48 / Constitutional)

An employee who is unjustifiably dismissed (or whose employer cannot prove cause in court) is entitled to constitutional severance:

The total package for a long-tenured worker can be very substantial. "Integrated salary" (salario integrado) includes base pay plus all regular benefits (aguinaldo, vacation, vacation premium, etc.) on a daily basis.

Reinstatement vs. Severance

• An employee who claims unjustified dismissal may seek reinstatement (reinstalación) instead of severance - though in practice the great majority of cases settle for severance.
• The employer may, in some circumstances, refuse reinstatement and pay the employee severance plus an additional 20 days' pay per year of service.

Mutual Termination & Resignation

• Resignation: An employee may resign at any time. There is no statutory resignation notice; the worker is only entitled to accrued benefits (proportional aguinaldo, vacation, etc.).
• Mutual termination (convenio): The most common method to end employment in Mexico. The parties sign a settlement agreement (convenio) before the Federal or local Conciliation and Labour Registration Centre, which ratifies the agreement and provides legal certainty. Convenios are widely used to manage exits with negotiated payments.

Profit Sharing (PTU)

Profit sharing - Participación de los Trabajadores en las Utilidades (PTU) - is a constitutional entitlement (Article 123(IX)) and one of the distinctive features of Mexican employment law. It is administered through the LFT (Articles 117–131).

Calculation

• Employers must distribute 10% of their pre-tax profits (with certain adjustments) to eligible employees each year.
• Half is distributed equally based on days worked during the relevant year.
• Half is distributed in proportion to wages earned during the year.
• Distribution must be made within 60 days of filing the corporate income tax return (typically by 30 May).

2021 Reform - PTU Cap

Important Cap: The 2021 outsourcing reform introduced a cap on PTU distributions. The PTU per worker may not exceed the higher of: (a) 3 months of the worker's salary, or (b) the average PTU received by the worker in the last 3 years. This cap was a significant relief for employers in profitable sectors where PTU could otherwise exceed annual salary.

Excluded Workers

• Directors, administrators, and general managers of the company
• Domestic workers
• Workers with less than 60 days of work in the relevant year
• Workers of newly created companies during their first year of operation

Maternity, Paternity and Family Leave

Family leave is provided by the LFT (private-sector workers) and the Social Security Law (income replacement during maternity leave).

Maternity Leave (Article 170 LFT)

• Duration: 12 weeks (84 days) of paid maternity leave: 6 weeks before the expected date of delivery and 6 weeks after.
• The worker may transfer up to 4 of the pre-natal weeks to the post-natal period, with medical authorisation, allowing up to 10 weeks post-natal.
• Pay: 100% of the worker's salary, paid by IMSS (the Mexican Social Security Institute) provided the worker has paid the requisite contributions. If contributions are insufficient, the employer must cover the difference.
• Adoption: Mothers who adopt a child are entitled to 6 weeks of leave from the date of placement.

Paternity Leave (Article 132(XXVII Bis) LFT)

• Duration: 5 working days of paid paternity leave, on the birth of his children or in the case of adoption.
• Paid by the employer at full salary.

Nursing and Breastfeeding

• Working mothers are entitled to two extraordinary 30-minute breaks per day for breastfeeding (Article 170(IV)) for up to 6 months after birth, taken in an appropriate workplace area.
• Some employers extend this period or provide on-site lactation rooms by collective agreement.

Protection Against Dismissal

• It is prohibited to dismiss a worker because of pregnancy, change in marital status, or having children.
• Dismissal during pregnancy or maternity leave is automatically unjustified and triggers full constitutional severance plus damages for discrimination.

Outsourcing Reform 2021 (REPSE)

The Outsourcing Reform of 2021 (effective 23 April 2021, with grace periods extending to 1 September 2021) was the most significant change to Mexican labour law since the 2019 reform. It fundamentally restructured the use of third-party labour and effectively banned the outsourcing of core activities.

Key Changes

• Prohibition on subcontracting personnel for core activities: A company may no longer subcontract workers to perform activities that constitute its "corporate purpose" (objeto social) or its "preponderant economic activity". This was the most radical change.
• Permitted: subcontracting of specialised services. Companies may still contract for specialised services or specialised works that are not part of their corporate purpose or preponderant economic activity.
• REPSE registration: Service providers offering specialised services must register with the Padrón Público de Contratistas de Servicios Especializados u Obras Especializadas (REPSE) maintained by the STPS. Registration is valid for 3 years and renewable.
• Joint and several liability: The contracting party is jointly and severally liable with the service provider for unpaid wages, social security contributions, and PTU obligations.
• Insourcing transition: Many large employers responded by "insourcing" their previously outsourced workforce, transferring employees onto the operating company's payroll. This created complex transitions and significant compliance work.

PTU Cap (Companion Reform)

To offset the increased PTU obligations from insourcing previously outsourced workers, the same reform introduced the PTU cap of 3 months' salary or 3-year average (see Profit Sharing section). This cap is one of the most important practical effects of the reform.

Penalties

• Engaging in prohibited subcontracting attracts fines of 2,000 to 50,000 UMA per affected worker (the UMA - Unidad de Medida y Actualización - is updated annually; verify the current value).
• Tax consequences: payments to non-REPSE-registered providers are non-deductible for income tax purposes and the related VAT is non-creditable.
• Administrative penalties from STPS, IMSS, INFONAVIT, and SAT (the tax authority).

REPSE Portal

Trade Unions and Collective Bargaining

Mexican collective labour law was fundamentally reformed in 2019 to align with the labour obligations of the USMCA. The reforms ended the era of so-called "protection contracts" (contratos de protección) negotiated without genuine worker participation, and introduced mandatory democratic procedures for union representation and collective bargaining.

Union Registration and Recognition

• Trade unions must be registered with the Federal Conciliation and Labour Registration Centre (CFCRL), which manages the National Registry of Unions and Collective Bargaining Agreements.
• Registration requires a written act of constitution, statutes, and a list of members.
• To bargain collectively at a workplace, a union must obtain a Certificate of Representativeness (Constancia de Representatividad) from the CFCRL, evidencing the support of at least 30% of the workers in the bargaining unit.

Legitimisation of Existing CBAs

Legitimación: Under the 2019 reform, every collective bargaining agreement (CBA) in force at the time had to be ratified by a secret-ballot vote of the workers it covered, by 1 May 2023. This was a massive exercise: hundreds of thousands of CBAs were submitted to vote. CBAs that failed to obtain ratification were terminated. The legitimisation process is now part of the lifecycle of every new CBA: a freshly negotiated agreement must be ratified by the covered workers within a specified period.

Rapid Response Labour Mechanism (USMCA)

Under the USMCA labour chapter, the United States may invoke the Rapid Response Labour Mechanism (RRLM) to challenge denial of workers' rights at specific Mexican facilities. Several RRLM cases have been brought against major Mexican employers since 2021, requiring quick remediation, union elections, or settlements. RRLM enforcement is now a significant compliance consideration for cross-border manufacturers and exporters.

Major Trade Union Confederations

Strikes

• The right to strike is constitutionally protected (Article 123(XVII)) and regulated in detail by the LFT.
• A strike must follow specific procedures: notice to the employer, attempted conciliation, and a strike call (emplazamiento a huelga) filed with the appropriate Labour Tribunal.
• The minimum notice period before a strike commences is 6 days (10 days for public services).
• Lawful strikes immobilise the workplace; the employer cannot operate during a strike, including by employing replacement workers.

Federal Conciliation and Labour Registration Centre

Social Security: IMSS, INFONAVIT and AFORE

Mexican social security is administered through three principal institutions: the Instituto Mexicano del Seguro Social (IMSS), the Instituto del Fondo Nacional de la Vivienda para los Trabajadores (INFONAVIT), and the retirement savings system administered by private fund managers (AFOREs) under SAR.

IMSS - Mexican Social Security

• Provides health care, maternity, work-risk, disability, and old-age benefits.
• Employers must register their workers with IMSS within 5 days of hire.
• Contributions are calculated on the worker's integrated daily salary (SDI - salario diario integrado), subject to an upper limit (UMA-based).
• Total combined IMSS contributions are approximately 30–36% of integrated wages, with the great majority (~25–30%) borne by the employer and the remainder by the worker.
• Phased pension reform: The 2020 pension reform is phasing in significant increases to employer retirement contributions, rising from approximately 5.15% to 13.875% by 2030. Verify the current rate each year.

INFONAVIT - Housing Fund

• Mandatory employer contribution of 5% of integrated wages to the workers' INFONAVIT account.
• Workers may use accumulated balances for home purchases, construction, or housing improvements.
• Administered by INFONAVIT, a tripartite institution.

SAR - Retirement Savings System

• Each worker has an individual retirement account (Cuenta Individual de Ahorro para el Retiro) administered by an AFORE (Administradora de Fondos para el Retiro) of the worker's choice.
• Contributions are split between IMSS retirement (~6.5% rising to 13.875% under the 2020 reform), INFONAVIT (5%), and worker voluntary contributions.
• On retirement, the worker may choose between programmed withdrawal and an annuity.

IMSS · INFONAVIT

Anti-Discrimination and NOM-035

Mexican anti-discrimination law operates at three levels: Article 1 of the Constitution; the Federal Law to Prevent and Eliminate Discrimination (2003); and Article 3 and other provisions of the LFT. The framework is enforced by CONAPRED (the National Council to Prevent Discrimination) and through the labour tribunals.

Prohibited Grounds (Article 1 of the LFT)

The LFT (Article 1 and 3) prohibits discrimination on the grounds of:

Ethnic / National Origin · Sex / Gender · Pregnancy · Marital Status · Race / Skin Colour · Age · Disability · Social Status · Health Status · Religion · Migrant Status · Sexual Orientation · Political Opinion

NOM-035-STPS-2018 - Psychosocial Risk Factors

Mandatory Standard: The Mexican Official Standard NOM-035-STPS-2018 requires all employers to identify, analyse, and prevent psychosocial risk factors at the workplace, including stress, harassment, workplace violence, and traumatic events. Compliance obligations vary by employer size: - Up to 15 workers: Establish and disseminate a workplace violence and psychosocial-risk policy - 16–50 workers: Above + identify and analyse psychosocial risk factors - 50+ workers: All of the above + complete environmental risk assessment, medical examinations, and reporting

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STPS inspectors actively verify compliance with NOM-035; non-compliance attracts substantial fines.

Sexual Harassment

• The LFT (Articles 3 Bis, 47(VIII), 51(II)) defines and prohibits sexual harassment in the workplace.
• Sexual harassment by the employer is grounds for the worker to terminate the employment with full severance (rescisión by the worker, Article 51).
• Sexual harassment by the worker is grounds for justified dismissal (Article 47(VIII)).
• STPS has issued protocols on the prevention and management of sexual harassment in workplaces.

CONAPRED

Data Protection (LFPDPPP 2010)

Mexican private-sector data protection is governed by the Federal Law on Protection of Personal Data Held by Private Parties (LFPDPPP), in force since 5 July 2010, and its Regulations of 2011. The law was historically enforced by the National Institute for Transparency, Access to Information and Personal Data Protection (INAI), although the future of INAI is undergoing constitutional reform discussions.

Scope

• Applies to any private party (individual or legal entity) that processes personal data, with limited exceptions for personal/household activities and credit reporting agencies.
• Employee data is fully covered.

Principles of Processing

Eight principles drawn from international data protection frameworks: legality, consent, information (privacy notice), quality, purpose, loyalty, proportionality, and accountability.

Privacy Notice (Aviso de Privacidad)

• Every data controller must make a comprehensive privacy notice available to data subjects at or before the time of data collection.
• The notice must specify: the controller's identity; the purposes of processing; the means to exercise ARCO rights; and information on data transfers.

ARCO Rights

Data subjects have four core rights, known by the Spanish acronym ARCO:

• Acceso (Access)
• Rectificación (Rectification)
• Cancelación (Cancellation / Deletion)
• Oposición (Opposition)

Sensitive Personal Data

The LFPDPPP designates certain categories as "sensitive personal data" (datos personales sensibles), including data on race, ethnic origin, religious beliefs, philosophical and moral convictions, union membership, political opinions, sexual preference, health, and genetic information. Processing of sensitive data requires explicit and written consent.

Penalties

Enforcement: Penalties for breach of the LFPDPPP range from administrative fines (typically 100 to 320,000 days' minimum wage / UMA, doubled for sensitive data) to criminal sanctions of up to 10 years' imprisonment for the most serious offences. Verify the current UMA value (updated annually). INAI has imposed several substantial fines on private-sector controllers since 2015.

INAI Reform

As of 2024-2025, the future of INAI as an autonomous constitutional body is the subject of pending constitutional reform. Some of its functions are being transferred to other federal agencies. Verify the current institutional structure when planning compliance.

Telework (Article 330-A through 330-K LFT)

The LFT was reformed in January 2021 to introduce a comprehensive framework for telework (teletrabajo). The reform applies where the worker performs at least 40% of work activities outside the employer's premises using information and communication technologies.

Key Requirements (Articles 330-A to 330-K)

• Written agreement: Telework must be set out in writing in the individual employment contract or in an addendum, specifying the equipment, costs, supervision arrangements, working hours, and reversibility.
• Voluntary and reversible: Telework must be voluntary for both parties, and either party may revert to in-office work in accordance with the agreed reversibility procedure.
• Equipment and costs: The employer must provide and maintain the equipment necessary for telework and bear a proportionate share of internet and electricity costs.
• Right to disconnect: Workers have the right to disconnect from work outside agreed working hours, and the employer must respect this.
• Health and safety: The employer must ensure compliance with occupational health and safety standards adapted for the home workplace, including the application of NOM-037-STPS-2023 (the specific Mexican Official Standard on telework safety, in force from 2023).
• Equal treatment: Teleworkers must enjoy the same rights and treatment as on-site workers, including in pay, training, and promotion.

NOM-037-STPS-2023

The Mexican Official Standard NOM-037-STPS-2023 (effective 1 December 2023) sets out specific health and safety obligations for teleworkers, including ergonomic requirements, training, and a list of equipment that must be provided. Compliance is verified by STPS inspectors.

Employee Thresholds - Quick Reference

Most LFT obligations apply from the first employee. Mexico does not generally tier statutory protections by employer size; instead, the same statutory minimums apply to all employers, with NOM-035 providing the principal threshold-based obligations.

Practical Timelines

Planning Advice: The 2019 reform's mandatory pre-litigation conciliation has significantly compressed dispute resolution timelines for parties willing to settle. Many cases now resolve at the CFCRL within weeks. For litigated cases, the new Labour Tribunals (which replaced the JCAs) target faster timelines than the old boards, though variation by state and tribunal remains substantial.

Key Challenges and Risk Areas

Outsourcing Compliance: The 2021 reform substantially restricted the use of subcontracted labour. Companies must verify that any third-party service providers are REPSE-registered, that the services are genuinely "specialised" and not part of the contracting party's corporate purpose, and that all joint and several obligations are met. Tax deductibility is at stake.

Termination Procedures: The aviso de rescisión is a strict procedural requirement. Many dismissals are deemed unjustified solely because the notice was deficient or untimely, regardless of the underlying cause. Robust documentation of disciplinary procedures and the timely delivery of avisos is essential.

USMCA Rapid Response Labour Mechanism: Cross-border manufacturers (particularly in automotive, aerospace, and electronics sectors) face the risk of RRLM cases brought by US authorities or unions. RRLM cases require swift remediation, typically including secret-ballot union elections and back-pay arrangements. Employers should ensure full compliance with the 2019 union democracy reforms.

NOM-035 Compliance: Many small and medium employers underestimate the obligations of NOM-035. STPS inspections actively verify documentation of psychosocial risk policies, training records, and incident reporting. Non-compliance attracts fines.

Pension Reform Phasing: The 2020 pension reform is gradually increasing employer retirement contributions toward 13.875% of integrated wages by 2030. Employers should incorporate this rising cost into long-term workforce planning.

Vacation Reform 2023: The doubling of statutory annual leave from 6 to 12 days in the first year (with corresponding increases for longer service) has substantially increased leave costs for many employers. Update HR policies, payroll systems, and accruals accordingly.

Federal Workers' Service Law: Federal government workers (Section B of Article 123) are governed by the Federal Workers' Service Law, not the LFT. State government workers may be governed by state-specific public-sector laws. Mixing the regimes is a common source of error in cross-public/private workforce design.

Resources and Links

Government Departments and Regulators

• Secretaría del Trabajo y Previsión Social (STPS)
• Federal Conciliation and Labour Registration Centre (CFCRL)
• PROFEDET - Federal Worker's Defence Office
• IMSS - Mexican Social Security Institute
• INFONAVIT
• CONASAMI - National Minimum Wage Commission
• CONAPRED
• REPSE Portal
• SCJN - Supreme Court of Justice

Legislation

• Federal Labor Law (LFT) - STPS
• Orden Jurídico Nacional - Federal Statutes

Trade Unions and Employer Organisations

• COPARMEX - Mexican Employers' Confederation
• CONCAMIN - Confederation of Industrial Chambers
• CANACINTRA - National Chamber of the Transformation Industry

See also

• Americas
• United States
• Canada
• Brazil