The social security system in Mexico is governed by the Social Security Law (LSS). The Mexican Social Security Institute (IMSS) (a quasi-official entity, under tripartite (government-worker-employer) management, whose executive director is appointed by the President of the Republic) is responsible for administering social security programs.
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, joint property communities, small farmers, 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. Within the minimum/maximum range, employee contributions are 2.00 per cent of earnings for retirement benefits, plus 3.15 per cent of earnings for disability and survivor benefits. For employers, the contribution rate is 5.15 per cent of covered payroll for retirement benefits. Government contributions amount to 7.43 per cent of covered earnings, plus an average flat rate of MXN$4.07 (depending on salary range) for each day a worker contributes for retirement benefits, and .125 per cent of covered earnings for disability and survivor benefits.
Healthcare and Insurances
The social security system protects workers in the following matters: Occupational accidents and illnesses (old-age, retirement, and survivor pensions; disability; sickness; medical benefits; maternity; and day care for children of insured workers); and Social services.
Holidays and Annual Leave
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.
Maternity and Paternity Leave
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.
Sickness and Disability Leave
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.
Pensions: Mandatory and Typically Provided
Disability Benefits: for disability benefits, the IMSS retains responsibility for the management and collection of contributions, but private insurance companies provide benefits. Workers who were first covered by the social security system prior to 1 July 1997 are eligible for a disability pension if they are assessed with a permanent 50 per cent reduction in normal earning capacity and have at least 150 weeks of contributions. Other workers are eligible for a disability pension if they are assessed with a permanent loss of at least 75 per cent of normal earning capacity and have at least 150 weeks of social security contributions, or if they are assessed with a loss of 50–74 per cent of normal earning capacity and have a least 250 weeks of contributions.
Disability pension benefits are equal to 35 per cent of the worker’s average adjusted earnings during the last 500 weeks of contributions. In addition, 15 per cent of the worker’s pension is paid for a wife or partner, and 10 per cent is paid for each child younger than age 16 (age 25 if a student, no age limit if disabled). If there is no wife, partner, or child, 10 per cent is paid for each dependent parent. A worker who requires the constant attendance of others to perform daily functions is also eligible to receive a constant attendance allowance of up to 20 per cent of the pension amount.
Retirement Benefits: the current pension system in Mexico is a fully funded defined contribution system based on three pillars: i) a minimum guaranteed pension for low-income workers; ii) mandatory individual savings accounts with competitive mutual fund management; and iii) voluntary savings. 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.
Other Required or Typically Provided Benefits
Survivor 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.