Employment law in Mexico involves a set of regulations that may not be familiar if you previously ran a business in another country. Here are 10 things that are important to know about hiring and firing employees in Mexico:
- Always check the employee’s references. Business relationships in Mexico work within a strong social network that will help you learn about the performance of an applicant in his or her previous jobs.
- Sign a labor contract with your employee that includes the work conditions agreed between you as the employer and the employee. If there is no written labor contract, the employee’s rights take priority and the employer must prove their case.
- Full-time employees work six days a week (Monday through Saturday). These employees have the right to rest one day with full pay. That means you will pay your employee for seven days each week not six. When establishing an employee’s salary, always keep in mind that you are hiring them on a weekly basis, not per day.
- The employer is required to make contributions to social security (IMSS), the housing fund (INFONAVIT) and the pension system (SAR), as well as payments for vacations, vacation bonuses, and a Christmas bonus called aguinaldo. These benefits represent an average of 29% of the salary that is paid to the employee.
- If an employee works more than 48 hours during the week, they must be paid overtime.
- Always establish a written agreement with your employee that describes the conditions of termination and the amount that you will pay him or her when they leave. This payment is called a finiquito.
- Once you have established an agreement with the employee, it is recommended to take the them to the Labor Court and register the agreement and amount of payment.
- If you are not able to establish an agreement with your employee then the employee has the right to file a lawsuit for re-instatement or indemnification. If you are sued by an employee, you will require a labor lawyer to represent you.
- The Labor Courts require proper representation of the employer (proper power of attorney to represent the employer in Labor Court). So keep in mind that you need to have a legal representative in your company with “powers of attorney” for labor matters.
- If an employee resigns, you have to pay the proportional parts of vacations earned and not taken, as well as the Christmas bonus earned but not paid, for the period the employee worked for you. Seniority bonuses are paid only if the employee has worked for you more than 15 years without interruption). Receipt for payment is recommended in all cases, stating the amounts paid and that the labor relation is ending without further obligations for the employer or employee.
Don’t Try This At Home
The advice of an experienced labor lawyer is always recommended for hiring and firing an employee. For a consultation or to contract the services of a labor lawyer in Yucatan, please contact YES.
For further information on Labor Law matters, please refer to the Employment Guide on the Knowledge Store.
One of the unwritten rules of Mexican labor relations is the fact that as the patron, or boss, you are most often the bad guy. In labor law cases, the employees’ version is the correct and prevailing one and it is up to you to prove otherwise. This retrograde attitude stems from abuses committed against workers throughout Mexicos’ long, colorful and violent history and shapes much of current labor policy today.
Do not assume that your fair and/or superior treatment of your employees (as compared with other, less enlightened, bosses out there) will guarantee you goodwill in the event of a dispute. It won’t. In fact, extra monetary compensations can backfire as this will be considered a form of income and will have to be included in any settlement with a determined disgruntled employee.