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The employment relationship

Country specific laws

What laws and regulations govern the employment relationship?

The Federal Labour Law is the only governing law in Mexico for labour and employment relationships in the private sector.

Who do these cover, including categories of worker?

Mexico does not admit a distinction between employees. All employees, foreign or national, are guaranteed all statutory benefits in accordance with Federal Labour Law.

Misclassification

Are there specific rules regarding employee/contractor classification?

Misclassification is a longstanding issue in Mexico. Third-party service providers claim to be the sole employers of any given employee rendering services to a third party. The Supreme Court has stated that due to abuse in misclassification, regarding labour relationships there can be a joint liability principle, whereas both the third-party service provider which pays the salary and the third party as beneficiary of the work being performed are equally liable for all statutory benefits and severances. All employers should be careful when employing staff through outsourcing companies and must always comply with the following three rules:

  • An entire workforce must not be employed through outsourcing companies;
  • Key employees that fulfil roles necessary to obtain company objectives must not be hired through a third-party service provider; and
  •  The same positions and roles must not be treated differently (one role cannot be outsourced while another remains part of the company). 

Contracts

Must an employment contract be in writing?

Yes, all contracts and provisions must be in writing. Nevertheless, a labour relationship is not contingent on the existence of a written agreement due to the principle of the implied contract. Employees can claim at any time, even without an agreement, and the employer has the burden to prove and substantiate factual legal benefits and the nature of the relationship. Precisely for this reason, it is advisable to keep and update written labour contracts with all employees.

Are any terms implied into employment contracts?

Yes, all employees are guaranteed all statutory benefits in accordance with the minimum rights set forth by Federal Labour Law. No employer can reduce, negate or dispute mandated benefits such as:

  • minimum wage;
  • vacations;
  • vacation premiums;
  • Christmas bonuses;
  • Sunday bonuses;
  • working hours;
  • overtime pay; and
  • salary deductions. 

Are mandatory arbitration/dispute resolution agreements enforceable?

Yes, all resolutions handed down by local or federal labour boards may be enforceable by securing property to guarantee payment without need for further or diverse court interference to enforce a ruling. 

How can employers make changes to existing employment agreements?

Changes may be made when agreed on by the employee and employer and must be in writing and signed by both parties. 

Foreign workers

Is a distinction drawn between local and foreign workers?

Pursuant to the Federal Labour Law, at least 90% of a company’s employees should have Mexican nationality, except for directors, administrators and managers.

When dealing with foreign workers, each company must determine who will be the employer so as to avoid bilateral employment liabilities in two countries.

All foreign workers must enter Mexico with appropriate migratory status; once status is granted by the National Migration Institute, there is no distinction in terms of statutory rights and obligations in an employee-employer relationship.

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