Because of the type of domestic help we hire, most of us do this “under the table”, really not adhering to Mexican Law. We then suggested how to handle these “under the table” employment issues. We have since had a number of inquiries on the actual labor law, and would like to now provide this information.
First of all, the Federal Labor Act regulates employment and labor in Mexico, and sometimes it gives more benefits to the workers than to the employer, but if you pay attention and follow the Mexican rules, you may also get the benefits that the law gives you or your company. In Mexico, the presumption is that an employee has been hired permanently after the first month that he or she has been working for you. It is necessary to have a written contract specifying the temporal character of the working relationship and the lasting period of the employment. In this period of time, you may have a clear idea if the employee is the appropriate person to develop such work; if he doesn’t, you may finish the labor relationship (only if you have a contract), and must be careful of not going over the 30 days because you lose the right to do so.
After this time, you may fire the employee only by a justified cause, which is defined by the law and includes: Not exhibiting proper behavior, theft, violent acts, inappropriate language, consumption of alcohol or drugs, or by four unexcused absences in a one month period. An employer’s work force must be at least 90% Mexican, not counting management, officers and directors.
Maximum Labor Hours – The maximum labor hours that can be worked by an employee on a normal schedule are 48 hours per week, with schedules of 8 hours during the day. The night schedule is for only 7 hours and 7.5 if it’s mixed. Employees must be 18, or 16 years old with parent consent.
Overtime – Overtime is 3 hours per day for no more than 3 days per week and no more than 9 hours per week. This overtime is paid double, and if the employee works more than this time, he must be paid triple time.
Statutory Holidays – The Mexican law indicates that the employee should receive six holidays per year, these being January 1st, March 21st, May 1st, September 16th, November 20th, and December 25th. December 1st every six years when the new President of the Republic takes over.
Vacations – At the end of the first year, there will be a minimum of 1 weeks vacation. Up to three years, an additional day is added for each additional year. After being employed for three years a table is used to determine the days for vacation (The table will be provided in a future column). It is important to make the employees take the days for vacation because according to the vacation law, vacations should not only be paid, but also enjoyed. Part-time employees should have their vacation entitlement calculated based on the ratio of their hours per week in relationship to full time employment (48 Hours – EG. 24 hours per week would then equal 50% of the full entitlement.)
Wages – The best recommendation is to establish the salaries according to the average salaries in the area, that way you will be able to find more people willing to work and provide a better service.
Employee’s participation in the Company Profits – According to Mexican legislation, the employer has the obligation to pay approximately 10% of the net income of that year and should distribute that amount among all the employees. Only during its first year of operations is a company exempt from this.
Termination and Severance – If you decide to fire an employee without reasonable cause, and without having a temporary working contract, then you are obligated by law to pay the employee 3 months salary plus 20 days for each year of service to the company, the proportional Christmas bonus and vacation.
Christmas Bonus – The employer is obligated to pay the equivalent amount of 15 days salary that the employee receives per year for the Christmas bonus concept. In case of having seniority of less than a year, then the proportional amount is paid.