The social security system in Mexico is governed by the Social Security Law (LSS) of 1995, which went into effect on July 1st, 1997, and is responsible for administering social security programs. The IMSS is a quasi-official entity, under tripartite (government-worker-employer) management, whose executive director is appointed by the President of the Republic. In general, social security coverage is compulsory for all workers, including members of production cooperatives, worker-run and joint worker-management-run companies, traditional agrarian communities of common ownership (ejidatarios), joint property communities (comuneros), small farmers (colonos), small property owners organised in groups, and local societies or credit unions covered by the Agricultural Credit Law. The social security system is financed from contributions by workers, employers, and the government. The contributions are based on salary levels.
Healthcare and Insurances
The social security system protects workers in the following matters: 1) Occupational accidents and illnesses (old-age, retirement, and survivor pensions; disability; sickness; medical benefits; maternity; and day care for children of insured workers) and 2) Social services.
The FLL provides for 9 mandatory holidays. Workers who are required to work on a mandatory holiday are entitled to double pay in addition to their regular pay.
Workers are entitled to 6 vacation days after being employed for one year, and to 2 additional days for each subsequent year, up to a maximum of 12 days. As of the fifth year, the worker is entitled to 14 workdays’ vacation; for each additional group of five years, two more vacation days are added. Employers must pay workers a vacation premium equivalent to 25 per cent of the salary earned during the vacation days. Vacations must be taken on the date indicated by the employer, within 6 months following the worker’s anniversary with the employer.
Working mothers are entitled to forty-two days after childbirth as maternity leave, with the IMSS paying them 100% of their registered salary. Statutory maternity leave may be extended as necessary if work is not possible because of the pregnancy or the delivery. During the maternity leave, the employee receives her regular salary. During the nursing period of 6 months, the new mother is entitled to two additional thirty-minute rest periods per day to feed the child, in an adequate and hygienic place set aside by the employer. When returning from maternity leave, the employee is entitled to reinstatement, provided that not more than one year has passed since the date of delivery. Maternity leave is included in the length of service.
Moreover, working mothers may request the employer transfer up to four weeks of pregnancy leave in order to enjoy them after childbirth.
Male employees are entitled to enjoy a paid paternity leave of five days when the child is born or in case of adoption, as of the placement of the child.
An employee is entitled to sick leave depending on the type of illness and degree of disability. The IMSS, not the employer, pays the employee’s income during the leave. There is no mandatory unpaid medical leave of absence in Mexico. If the employee needs an unpaid medical leave of absence due to a condition not recognised by the IMSS, then the employer has the discretion to grant the leave.
The FLL provides leave due to:
- Occupational Injuries: defined as any accident or disease to which the employees are exposed in the course of their employment, or any consequences thereof;
- Industrial Accident: defined as any organic injury, functional disturbance (whether immediate or subsequent) or death, occurring suddenly in the course of the employment or as a result thereof (i.e., the place where or the time when the accident occurs is related to the employment); or
- Occupational Diseases: defined as any pathological condition arising out of the continued action of a cause that has its origin or motive in the employment or in the environment in which the employee is obliged to render his services.
The SSL establishes the periods of leave depending on the division of the compulsory social insurance plan.
Pensions: Mandatory and Typically Provided
For disability benefits, the IMSS retains responsibility for the management and collection of contributions, but private insurance companies provide benefits.
Normal retirement benefits are available to both men and women who have reached age 65 and who have at least 1,250 weeks of social security contributions. An early retirement benefit is available at age 60.
The first pillar of the Mexican pension system, the minimum pension guarantee is equal to the minimum wage on July 1st, 1997, indexed for inflation. The second pillar is based on defined contributions and individual accounts. The IMSS collects the contributions and places them in the worker’s account, but the accounts are managed by private retirement fund administrators (AFOREs). At retirement, the worker has two options:
- receive periodic payments or a lump sum directly from the AFORE; or
- transfer the account balance to an insurance company and buy an annuity.
Other Required or Typically Provided Benefits
Survivor benefits are payable provided that the deceased worker was a pensioner and made at least 150 weeks of contributions at the time of death. Survivor benefits are payable to a surviving widow or a permanently and totally disabled widower in an amount equal to 50 per cent of the pension that would have been paid to the worker. Each surviving child under age 16 receives a benefit equal to 20 per cent of the worker’s pension, or 30 per cent if the child is an orphan. If there is no eligible spouse or child, a benefit equal to 20 per cent of the worker’s pension is paid to each person. Survivor benefits may not exceed 100 per cent of the pension that would have been paid to the worker. Upon the death of a covered worker, the social security system pays a funeral benefit to the family equal to two months of the worker’s salary.