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Labour and Employment Requirements

A. EMPLOYER POLICY REQUIREMENTS

The applicable legislations for Labour law in Mexico derive from the Constitutional provisions on social rights for workers in Article 123.

Article 123 of the Mexican Constitution provides protection for the collective interests of workers by establishing general employee rights that seek a balance in the employer-employee relationship; including but not limited to the following:

  1. setting maximum limit of working hours per week;
  2. equality rights;
  3. weekly rest days;
  4. mandatory rest days in the year (holidays or long weekends);
  5. employees’ right to profit sharing;
  6. maternity leave;
  7. limitations on work of minors;
  8. limitations on work of pregnant and breastfeeding mothers;
  9. paid vacation periods;
  10. right to unionize, to strike and lockout, and right to collective bargaining;
  11. minimum salaries;
  12. limitations on work shifts;
  13. overtime;
  14. social security rights (such as the establishment of a housing fund for workers);
  15. Christmas bonus;
  16. mandatory training;
  17. labour authorities (competence and jurisdiction); amongst others.

Furthermore, the following Mexican laws govern all labour relationships in Mexico, regardless of whether or not the workers are Mexican citizens:

  • Federal Labour Law (FLL), 1970.
  • Social Security Law, 1997.
  • National Workers Housing Fund Institute’s Law, 1972.

The FLL is the most important employment legislation in Mexico. It defines a labour relationship as the rendering of a subordinated personal service by one person to another, in exchange for a wage. The main element of any labour relationship is subordination, which the Mexican Supreme Court has defined as the employer’s legal right to control and direct the employee and the employee’s duty to obey the employer. Once a labour relationship exists, the rights and obligations provided for by the FLL automatically enter into legal force; regardless of how the agreement is defined by the parties.

FLL entitles employees to the following minimum mandatory fringe benefits:

  1. a year-end bonus equivalent to at least 15 days’ wages, payable prior to December 20 of each year;
  2. a yearly vacation period, the length of which depends on the employee’s seniority;
  3. a vacation premium of 25% of the salary payable to the employee during the vacation period; and
  4. mandatory paid holidays on January 1, the first Monday of February to commemorate February 5, third Monday of March to commemorate the birth of Benito Juarez, May 1, September 16, third Monday of November to commemorate November 20, December 1 (every six years when a new President is elected), December 25, and any other holidays established by federal or state law.

Additionally, the Social Security Law is the legislation that contains the stipulations intended to provide further social benefits for the collectivity; specifically aimed for the employers and the employees. The Social Security Law covers the various rights and duties of both employee and employer with respect to retirement funds and healthcare
benefits provided for by the authorities.

The National Workers Housing Fund Institute’s Law was created with the purpose of providing support for the employees in order to acquire their own homes. A National Housing Fund was created for employees in order for them to have access to a government run mortgage (credit institution) and acquire their own homes. There is an obligation from the employer to deposit the corresponding portion of the employee’s salary to the National Housing Fund in order for the employee to qualify for the mortgage option (amongst others).

B. EMPLOYEE TRAINING REQUIREMENTS

Among the labour and social security obligations that must be complied with in Mexico, every employer must integrate and formalize the collegiate organisms named “mixed committees” (composed by employer and employee representatives, which shall be incorporated in the work centres.

Of course, the Integration, registry and operation of the mixed committees is mandatory and is a matter of inspection by the federal and local labour authorities.

The mixed committees which mandatorily should be integrated are:

  1. Health and Safety at the Workplace Mixed Committee;
  2. Teaching, Training and Productivity Mixed Committee;
  3. Mixed Committee for the Preparation of the Internal Work Regulations;
  4. Mixed Committee for the Preparation of the General Seniority Chart; and
  5. Mixed Committee to Determine the Workers’ Share in the Company’s Profit.

Teaching, Training and Productivity Mixed Committee

Pursuant to the FLL, every employer has the obligation to provide training to its employees and these are bound to take the training that may allow them to improve their life style, labour competence and productivity.

The Teaching, Training and Productivity Mixed Committee finds its legal basis on Section 153E of the FLL, which establishes that it shall be incorporated in those companies having more than 50 employees.

When so agreed between the parties and considering the needs of the company due to the number of premises, its technological characteristics and the number of workers, more than one committee may be integrated, or mixed subcommittees may also be incorporated.

Integration: Teaching, Training and Productivity Mixed Committees must be integrated with the same number of employer and employee representatives, and the number of said representatives will be determined by mutual agreement between employer and employees or, as the case may be, by the employer and the union holding the Collective Bargaining Agreement.

Purpose: These mixed committees are the group responsible for monitoring, implementing, operating and improving the teaching and training systems and programs, as well as taking actions trending to increase productivity in each company.

Formalization: The committee should be incorporated through format DC-1 (“Report on the Incorporation of the Teaching, Training and Productivity Mixed Committee”).

It is not necessary to file said format before the Ministry of Labour and Social Welfare, because together with the Teaching, Training and Productivity Plans and Programs (Format DC-2), as well as with the Skills Certificates (Format DC-3), they should be kept in the company’s files and be shown to the labour authority when so required, in exercise of its faculties of inspection.

C. EMPLOYMENT AGREEMENTS

Written employment agreements in Mexico are mandatory. Every employee must enter into an individual employment agreement with the employer and set out the terms and conditions of the employment (in Mexico, there’s no ‘employment-at-will’). An employer must have justified cause (as defined by the FLL) in order to terminate the employment relationship, if not, employer must compensate the unjustly terminated employee accordingly (FLL stipulates the amount for severance payments). Notwithstanding the previous statement; in the given case that an employment relationship exists and there is no written agreement; the employee’s constitutional and statutory rights are not waived or affected by this omission.

Article 24 of the FLL provides that working conditions must be established in writing, and each party must be provided with a copy of the employment agreement. According to Article 25 of the Federal Labour Law, an employment agreement must contain:

  1. the employee’s and the employer’s name, nationality, sex, civil status, Unique Population Registry Code (“CURP”) and address;
  2. whether the employment agreement is executed for an indefinite term, for a specific job or term, for initial training and/ or for season, and/or subject to a probationary period;
  3. a description of the services to be provided;
  4. the place or places where the work is to be performed;
  5. the length of the work shift;
  6. the salary and day and place of payment;
  7. that the employee will undergo training pursuant to the procedures and programs established by the employer as required by the Federal Labour Law, and
  8. other terms and conditions of employment, such as days off and vacations agreed upon by the employee and the employer.

The employer is responsible for the execution of the agreement. The fact that there is no signed employment agreement does not deprive the employee of his or her rights under the law.

In the case of Unions, there is an additional agreement that is negotiated and entered into by the Union and the employer in order to promote the creation or improvement of the labour conditions for the employees as a collectivity and in turn the employer obtains a loyal and solid workforce. The Collective Bargaining Agreement (CBA) is renewable and cannot contain provisions that stipulate the waiver of the basic constitutional and statutory rights or benefits for the employees as a collectivity. It can always be more favourable than the constitutional and statutory requirements but never less than the latter.

CBAs must also be in writing and contain the following information:

  1. names and domiciles of the parties executing the CBA;
  2. the address of the facilities where the CBA will be applicable;
  3. duration or whether it is for an indefinite term or specific job;
  4. work schedules;
  5. rest days and holidays;
  6. salary amounts;
  7. employee training;
  8. initial training for new hires;
  9. integration and operation of the Employee/Employer Committees as established by law;
  10. other conditions agreed upon by the parties.

CBAs must be filed in the Local or Federal Conciliation and Arbitration Board, depending on competence and jurisdiction. Competence and jurisdiction of the Conciliation and Arbitration Boards is determined by the employer’s main business activities in accordance with the applicable FLL provisions.