Grounds for Termination
An employer may dismiss an employee only where the latter gives cause for dismissal.
There must be a legally permitted cause of termination that substantiates the collective dismissal. The first step is to determine whether the company has unionised workers and confidential employees. If it does, the working conditions of the union workers are governed by the CBA. Therefore, both the termination of the union workers and the CBA must be negotiated with the union. In practice, some labour unions claim the payment of a four-month indemnity plus twenty days of aggregate daily salary for each year of services rendered; arguing termination of the employment relationship is a consequence of new working procedures (by the parent company). Conversely, the union claims an additional premium for the closing of industrial operations that may represent.
Under Mexican labour law, “integrity at work” is mandatory behaviour for the employee. An employee is deemed to act with integrity when the work is carried out with intense effort, care, and attention, in the agreed-upon time, place, and manner. Also, “lack of integrity” is a generic cause for dismissal.
Is Severance Pay required?
The termination payment is calculated depending upon the cause of termination: Voluntary resignation: employer must pay all benefits due, including sales incentives, on a prorated basis up to the termination date. If the employee has at least 15 years of seniority, he is also entitled to a seniority premium of twelve days’ salary for each year of service, capped at twice the minimum daily salary in force. Termination with cause: employer must pay all benefits due, including commissions, on a prorated basis until the date of termination, and the seniority premium of twelve days of salary for each year of service (but with a cap of twice the minimum daily salary). Termination without cause: employees are entitled to the following lump sum severance: (1) three months of the employee’s daily aggregate salary, plus: (2) twenty days of the employee’s daily aggregate salary for each year of service; (3) a seniority premium of twelve days’ salary for each year of service (but with a cap of twice the minimum daily salary); (4) benefits due.
For any agreement or settlement to be valid, it must be entered into in writing and contain a detailed description of the facts that motivated it and the rights therein contained. It must be ratified before the competent Conciliation and Arbitration Labour Board, which will approve it as far as it does not contain a waiver of the employee’s rights. By virtue of the above, a separation agreement may be considered best practice.
Remedies for Employee Seeking to Challenge Wrongful Termination
Employees who have been wrongfully terminated can file a complaint with the Conciliation and Arbitration Board for: (a) constitutional severance consisting of three months of aggregate salary; or (b) reinstatement to the same position he held, plus back wages (which is the salary the employee is not earning during the labour proceedings capped to one year, if the litigation is not concluded after twelve months, the plaintiff will be entitled to request 2% monthly interest over a fifteen-month salary base).
In Mexico, there is no specific statutory protection for employees who alert or provide information about possible breaches of the law or good corporate governance policies.