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Mexico: 2023, Looking ahead

In 2023, Looking ahead, we explore the most important trends and developments related to labour and employment law in Mexico.



2022, the year in which Mexico began to settle after the global COVID-19 pandemic, over the duration of the pandemic the Mexican labor law landscape changed swiftly, and such changes have impacted the way businesses which have operations in the country have to act.

As many of the reform laws began their in-force period there are still many ways to interpret them, clarity will come alongside the rulings in the court after the correspondent litigation have occurred.

Nonetheless it is important to us to provide or clients and partners ways to operate which are based on legal criteria obtain over our years. of experience.


1. COVID-19.


The guidelines for the Healthy Continuity of Economic Activities in face of COVID-19 (hereinafter, the “Guidelines”) were published on October 10, 2022 on the website. This document, prepared by the New Normality Committee comprised by the Departments of Health, Economy, Labour, and Social Welfare (STPS), and the Mexican Social Security Institute (IMSS), establishes the specific measures that must be implemented at the national level in all work centers for the continuity of work activities in a safe and responsible manner.

In accordance with Transitory Article Two of the Executive order through which the means of dissemination for the Guidelines for the Healthy Continuity of Economic Activities in face of COVID-19,  published in the Official Gazette of the Federation (hereinafter, the “DOF”), it is established on October 07, 2022 that from October 10, 2022 forward, the Executive Order through which the Specific Technical Guidelines for Reopening Economic Activities published in the DOF of May 29, 2020 is revoked.

The Guidelines must be applied at the National level, for all work centers. These Guidelines put an emphasis on health promotion activities in work centers through actions focused on the quest for modifying habits, seeking to reduce the risk of contagion among the population. The actions proposed by the guidelines are listed below:

  • Providing general information on SARS-CoV-2 (COVID-19), its contagion mechanisms, the symptoms it causes and the best ways of preventing infection and contagion of other people.
  • Keeping a minimum distance of 1.5 m between persons.
  • Providing dispensers with 60% alcohol-based solutions, made available to the staff at different locations in the workplace.
  • Guaranteeing that rest rooms have sinks and proper conditions for the staff´s personal cleaning.
  • Establishing a permanent cleaning and maintenance program in the work center and in any other work-related areas, including those intended for food services, resting and, if applicable, overnight stays, using proper cleaning products to prevent the propagation of the virus.
  • If possible, favoring natural ventilation in common areas or the areas with the greatest concentration of personnel in addition to those work areas with a great affluence of personnel. Checking the operation of the ventilation systems, if available, in addition to providing maintenance and filter changes for their proper operation.
  • Establishing a training program for directors or managers on actions and measures to prevent and avoid chains of contagion by COVID-19.

The Guidelines state that antigen and RT-PCR tests for SARS-CoV-2 may be carried out at workplaces, with the prior consent of the workers. However, under no circumstances may the workers be forced to take laboratory tests (RT-PCR, antigen or serological) as a requirement for returning to work. Likewise, the Guidelines state that Companies must include and/or adopt a policy for the protection of workers to prevent the return to work to be made contingent to tests paid for by the worker.

Regarding vaccination, although it is desirable that all people be vaccinated, it is not a conditioning factor for preventing people from conducting their work activities.

As part of the suggestions, we find the elimination of the use of sanitizing mats and the sanitary filter, and there are guidelines for the use of face masks in open and closed spaces, as follows:

Open spaces Closed spaces
Use of face masks With a healthy distance of 1.5 m Without a healthy distance With a healthy distance of 1.5 m Without a healthy distance
Not required Advisable Not required Advisable

That is, the use of face masks is not mandatory either in open or closed spaces when a healthy distance of 1.5 meters between workers is maintained. Nevertheless, the Guidelines suggest maintaining the use of face masks in closed spaces that are not ventilated or have poor ventilation. Additionally, it is suggested that people who decided not to be vaccinated or are immunocompromised wear face masks.

There are specific cases that must be evaluated on an individual basis regarding the use of face masks or lack thereof, as in the case of health care workers and various work positions that are highly exposed to known or suspected sources of SARS-CoV-2, in which N95 face masks, lab coats, eye protection and gloves must be worn.

  1. Planning and surveillance.

The appointment of a committee or person responsible for the correct implementation, monitoring and supervision of the measures for the New Normality within the framework of COVID-19. Said committee or the person in charge must:

  • Make sure that the general control strategies are implemented correctly.
  • Stay informed of the instructions issued by the federal authority to, as applicable, inform the workers about the new measures that are required be implemented.
  • Supervise compliance with the cleaning protocols of areas, surfaces, contact objects and common use objects.
  1. Engineering Measures,
  • It is recommended that sinks with soap, water and disposable paper towels or air dryers for hands and trash cans are available at the entrances of and in common areas of the work centers. If no sinks are available at the entrances, then dispensers with 60% alcohol-based solutions could be made available. This measure guarantees that workers who wish to conduct hand hygiene upon arrival at the workplace can do so.
  • Restrooms must have sinks in proper operating conditions.
  • If ventilation systems are in place at the work center, it must be ensured that they work properly and that filter changes are conducted in accordance with the protocol established by the manufacturer.
  • Natural ventilation must be favored in places in which it is possible. If not possible, ventilation systems can be used with proper maintenance, as established by the manufacturer.
  1. Food and transportation.
  • It is recommended that 1.5 meters between workers is maintained during the consumption of food.
  • It is recommended that workers use face masks during their journeys while in transportation to work (from their homes to the workplace and vice versa or on errands), if said transportation takes place in public vehicles, and that they perform hand hygiene using alcohol-based solutions at 60% as a minimum.
  • If the company provides personnel transportation, the vehicle must be cleaned before the workers board it.
  1. Personal protection equipment.
  • If required, face masks must be worn properly during working hours, covering the nose and mouth, in accordance with the protocol for the use of face masks established in this document.
  1. The Promotion of Health, information, and training.
  • Inform workers on the prevention measures established in the company’s Health Safety Protocol.
  • Have a training program for all workers on the actions to be carried out at the work center to prevent and avoid chains of contagion by COVID-19; material available at CLIMSS [free online course platform provided by the Mexican Social Security Institute], found at the following link, can be used.
  • Your Health Safety Protocol must include, in writing and in a clear manner, the concepts of suspected and confirmed case as well as the concept of contact.
  • Have an instrument (questionnaire) in place for the identification of symptoms in suspected cases of COVID-19 among workers, in accordance with the operational definition in force.
  • Have an instrument (list or census) in place for the identification of work and community contact that includes Name, date of the last contact at work, names of the contacts, time and place of exposure.
  • Establish a policy for the protection of workers to prevent the return to work to be made contingent to tests paid for by worker.


Employee termination is only possible if the employer has a justifiable cause. Termination payment is calculated depending upon the cause of termination:

  • Voluntary resignation: The employer must pay all due benefits, including sales incentives, on a prorated basis up to the termination date. If the employee has at least fifteen years of seniority, he/she is also entitled to a seniority premium of twelve days of salary for each year of service, capped at twice the minimum daily salary in force.
  • Termination with cause: The employer must pay all due benefits, 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 at twice the minimum daily salary, under the same terms explained above).
  • Termination without cause: Employees who are terminated without cause are entitled to the following lump sum severance: (i) three months of the employee’s daily aggregate salary, plus: (ii) twenty days of the employee’s daily aggregate salary for each year of service; (iii) a seniority premium of twelve days of salary for each year of service (but with a cap at twice the minimum daily salary, under the same terms explained above), and (iv) due benefits.


  1. Section 434, subsection II, of the Federal Labour Law, states that in case of notorious and obvious inability to pay, the employer must request approval from the Court to collectively terminate the labour relationships with the employees, and will have to initiate a procedure to obtain a resolution from the labour authority determining whether there is a collective termination corresponding to such a cause.

In the first scenario, the Court will agree with the collective termination and will condemn the employer to pay the following:

  • Due benefits.
  • 90 days of integrated salary.
  • Seniority Premium.

In the second scenario, Court will not authorize the collective termination and will condemn the employer to pay the following:

  • Due benefits.
  • 90 days of integrated salary.
  • 20 days of integrated salary per year of service.
  • Seniority Premium
  1. The closure of the workplace will entail the termination of employment relationships without constituting a justified cause for it, so the employer shall pay the compensation as provided in the Federal Labour Law, which includes: (i) constitutional compensation consisting of three months of integrated salary; (ii) 20 days of salary for each year of services provided; and (iii) the seniority premium equivalent to 12 days of salary for each year of services rendered, calculated at a maximum ceiling of twice the minimum wage, when the employee’s salary exceeds that amount.

Additionally, the employer will have to pay the severance payment, which includes the due benefits to the date of termination, such as wages, Christmas bonus, vacations, vacation premiums and any another benefit to which the employee is entitled to receive. Sometimes, to facilitate the process and obtain the consent of the employees, companies provide an additional amount that would be paid to the employees, but takes the form of a liberality, rather than an obligation to do so.



Telework remains an option; therefore, the employer has the power to implement such policies at its sole discretion, respecting labour, social security, and personal data protection rights. There are a few Sections in the Federal Labour Law regarding telework, so it is important to document, in writing, the working conditions for the employee


Since there are no more restrictions for the employers to reopen their facilities, the employee has the obligation to return to his/her work. If the employee refuses to work, he/she can be sanctioned according to the Internal Regulations (Reglamento Interior de Trabajo), which, to be mandatory, should be duly registered before the LabourBoard. Moreover, the employer is entitled to terminate the labour relationship without responsibility, if the employee is absent more than three times / four days in a period of thirty days, without the permission of the employer or justified cause.


Nowadays the Mexican Institute of Social Security has indicated that any employee who suspects to be infected with COVID-19 or has have symptoms must go to his/her Familiar Medical Unity to be tested and in case to have a positive result the correspondent sick leave will be issued.



Business and companies have an inner obligation to set an adequate group of provisions and rules to ensure corporate compliance and ways to deal with any findings that may constitute a corporate offense.

We recommend you, as employers, to be up to date with every new technology and platform that may be used in corporate offenses this may help you reduce risks and maintain a proper management of information than can be used in activities such as internal investigation and litigation. It is also essential to have a clear way to report any misconduct, file an internal complaint and keep the track of any investigation to obtain the must truthful result.

In Mexico, there is not a particular normative document regarding compliance, nonetheless, the application of foreign rules and examples may help to create a list of “do’s and don’ts” that guides employers in their inner conduct.

Finally, the fact that certain laws, mainly from US and UK have an extraterritorial effect regarding compliance, should encourage local employers to find the ways to prevent and comply with such laws because of repercussions in case of the commission of a crime.


Company or business may establish Internal Labour Regulations (hereinafter ‘ILR’), defined by the FLL in its Chapter V (Articles 422–425), as a set of mandatory provisions applicable to both employees and employers in connection with the activities to be performed in a business or company (the ILR could be interpreted as a form of ‘handbook’). In accordance with FLL Article 424, the terms, and conditions of the ILR will be expressly agreed upon by a joint commission comprised of an equal number of representatives of the employees and the employer. Subsequently, the ILR must be filed with the Federal Labor Conciliation and Registration Center to be enforceable.

The ILR will be mandatory for both employer and employees as of the date on which they are filed with the Federal Labor Conciliation and Registration Center.

Investigation procedures are usually established in the company’s policies or in the company’s ILR.

Workplace investigations are generally very common, and employees must participate in such investigations conducted by the employer


  • Do have ILR and policies updated and duly signed by employees.
  • Do consider that in case of labour claim, the employer always has the burden of proof; therefore, the participation of experts is usually recommended, especially in fraud and theft investigations.
  • Do have the company’s policies updated and duly signed by employees

It is important to say that Mexican Criminal Law does not have a proper legal document regarding compliance, but many laws, criminal and administrative ones, set the basic rules to evaluate companies’ liability and the reduction of penalties.

In the international practice there are some common steps to follow:

  • The evaluation of the need of a full investigation.
  • The selection of the investigation team.
  • The Delimitation of the investigation.
  • Analysis of documents and information
  • Interviews
  • Final Report, findings, solutions, and possible disclosure to authorities.


Due diligences are important not only to the merger or acquisition of another company, but it is also important because it allows us to have an integral look at the health of a company.

The fact that Due Diligence focuses on topics such as intellectual property, compliance with local and federal authorities, tax, employment, financial, social security, litigation, etc. gives us the chance to explore the actual risks, opportunities of improvement, benefits and costs that come along with a company.

In Mexico there is no obligation to run an investigation such as a due diligence to analyze the current situation of a company, however when it is necessary, the next aspects should be taken into consideration.

  • The nature of the Due Diligence.
  • The scope of the Due Diligence.
  • The team in charge.
  • Sources of information.
  • Reaches of privacy.
  • Final Report.

The disclosure of the final report is something that must be determined since the beginning because it may contain private or privileged information that may require certain authorization from one of the parties to be shared.


The Data Privacy Law and its secondary regulations, among other laws, provide for the protection of personal information and rights to access, rectify, cancel, and oppose its treatment by the private sector. The incorporation of such rights obeys current international tendencies and foresees the obligation of the responsible party to treat personal data of individuals, including employees and applicants on a confidential basis and for purposes informed to the holder of the data.

Information contained in the employee’s personnel file shall be kept confidential such as:

(a)        Individual employment agreements.

(b)        Payroll list and salary payment receipts.

(c)        Work shift and attendance records.

(d)        Fringe benefits payment receipts (profit-sharing, vacation, vacation premium, Sunday premium, Christmas bonus, overtime, bonuses, incentives and sales commissions).

In addition, there are other documents that are recommended to be kept in the employee’s personal files:

–          Employment application.

–          Medical records.

–          Recommendation letters.

–          Employee’s personal information.

–          Performance evaluations.

–          Vacation application and records.

–          Life and medical insurance (if these benefits are provided).

–          Any other benefits or agreement executed with the employee.

–          Policies, shop rules or regulations acknowledgment forms, if any.

–          Training records.

–          Employee’s registration and salary modification records filed with the IMSS.

–          In case of employment termination, the written termination notice, resignation letter, termination agreement and/or full payment receipts.

–          Data privacy notice.

Confidentiality rules may be implemented in handbooks, company policies and ILR. Employees have an obligationto follow them, and if they disclose any company confidential information, the employer would be entitled to terminate the employment relationship without any liability, as provided in Article 47(IX) of the FLL.

The employer is not obligated to allow employees access to personnel files and records but needs to grant accessto personal data.

Medical files must be maintained discreetly and in confidence and must only be disclosed to third parties by means of a written order issued by the competent authorities, such as courts and health agencies. However, employeescan request access to their own medical files, and the employer is required to grant such access.


Mexico does not have any kind of normative, law or codes regarding ESG, we should understand them as the active protection of environment, the regulation and recognition of human rights and the reduction of criminal and unethical practices with authorities and within the company.

We highly encourage our clients and partners to promote and internal policy of social and environmental responsibility along with the correspondent provision related to legal compliance since its importance has increased over the past decade.

It is not just a matter of legal compliance, society is more and more interested in knowing the origins, processes and impact of companies, this trend will only increase its magnitude and reach

Companies usually report their advances and preventive measures regarding ESG when the must obtain some certification or permit to operate, but unless it is mandatory it is rarely used in Mexico.

The reception of foreign investments may help to clear the path to adopt a proper legal framework for ESG, since many of the investors have a precedent of legal background, and the participation of international initiatives such as The Principles for Responsible Investment (PRI).



On September 27th, 2022, the Joint Committees of Work and Social Welfare and Legislative Research approved on a positive sense the Bill about the Initiatives, as Projects of Decree, that reform and add diverse provisions to the Federal Labor Law (FLL) regarding Vacation.

After the legislative process that a Decree of this nature requires, on December 14th, 2022, the Joint Committees of Work and Social Welfare and Legislative Research of the Senate of the Republic published the Bill on a positive sense regarding Vacation, which was published in the Official Gazette of the Federation on December, 27th, 2022 to remain as follows:

Article 76.- Workers who reach more than one year of services will be granted an annual period of paid vacation, that under no circumstance may be less than six working days and it will increase at a rate of two working days until it reaches twelve days, by each year of subsequent service.

After the fourth year, the annual period of vacation will increase by two days each five years of service.

Article 76.- Working people who reach more than one year of services will be granted an annual period of paid vacation, that under no circumstance may be less than twelve working days and it will increase at a rate of two working days until it reaches twenty days, by each year of subsequent service.

From the sixth year onwards, the annual period of vacation will increase by two days each five years of service.

No changes.
Article 78.- Workers must be granted six days of uninterrupted vacation, as minimum. Article 78.- Working people must be granted twelve days of uninterrupted vacation, as minimum. Article 78.- Of the whole period that corresponds according to article 76 of this Law, the working person, will be granted twelve days of uninterrupted vacation, as minimum. Said period can be distributed in the way and time chosen by the working person as they required it
Without any correlative. Transitional articles.

First. – The present Decree will come into force January 1st, 2023, or the next day from its publishing in the Official Gazette of the Federation, if it happens in 2023.

Second. – The modifications regarding this Decree will be applicable to individual contracts, collective bargaining agreements valid at the date it comes into force, however its form or name may be, as long as it turns out in the most favorable rights to working people.


No changes.

Bearing in mind the appropriate application of the reform in force regarding Proper Vacation, we must analyze each possible legal scenario that will occur to identify the hypothetical cases in which FLL will be applied prior and following the reform.

We have identified the main characteristic which generates doubts regarding the application of the new text. It comes from those cases in which the employees reach their anniversary of service during the second semester of 2022, therefore they acquire the right to go on vacation within the next 6 months, according to article 81 of FLL.

In these cases, IT must determine if said employees will go on vacation in 2023 according to the new chart (more days), or if they must take into consideration the law that was in force when they acquired their right.

Traditional doctrine explains the retroactive application of Law, based on the theory of acquired rights and the expectation of rights. The first will be those in which the individual has acquired a right, hence, it cannot be affected by a subsequent law. The latter are those that do not represent an acquired right so they could be affected.

To this date there is not a unanimous interpretation of this reformed articles and the way they should be applied, however, the Ministry of Labor and Social Welfare is leaning towards the most beneficious interpretation for the employee, hence, workers will have right to the days of vacation correspondent to their seniority with each coming anniversary, no matter when the seniority began.




The legitimation process has its origin in Annex 23-A of the USMCA which establishes specific obligations for Mexico regarding the representation of employees in collective bargaining.  The second clause, subsection “F” of such annex established that Mexico has to adopt legislation to provide that all existing collective bargaining agreements (“CBA”) must be revised once in in a four-year period after the new Mexican legislation was in force. In case of not complying with this  requirement by the labour union, or if most of the employees covered by such agreement did not approve the CBA, the CBA will be terminated.

To comply with the aforementioned obligation, the reform published in the Official Gazette of the Federation on May 1st, 2019, included a Transitory Article 11 establishing the following:

“In order to comply (…). existing collective bargaining agreements must be reviewed at least once during the four years following the entry into force of this Decree.


If at the end of the term established in the first paragraph of this article, the collective bargaining agreement subject to consultation does not have the majority support of the workers or the consultation is omitted, it will be considered terminated, and will be preserved for the benefit of the workers. the benefits and working conditions contemplated in the contract subject to review, which are superior to those established in this Law, which will be mandatory for the employer.”

The obligation is called CBA legitimation and it means, that all trade unions must submit the CBA to the consultation of the employees through their direct, personal, free and secret vote for its approval by 50% + 1 of the workers covered by said CBA.   Failure to make the consultation or its approval, implies the CBA will be terminated.

It is important to mention the Federal Center for Labor Conciliation and Registration (“FCCLR”) issued a protocol for the legitimation of CBAs in Mexico, which contains the corresponding procedure that must be followed, with three main steps: voting notice, ballot, and result notice.

Regarding the first step, the Union must notify the FCCLR that it will consult the employees affected by the CBA to determine whether they approve or not the content of the CBA, including: information form the Employer, a copy of the CBA, day, time and place of the ballot, among others.  the FCCLR approved the notice it will provide the specific formats and documents to continue with the process.

The call to vote will be published in the most concurrent places by the Union using the format given by the FCCLR with the list of employees with the right to vote. This must be done from 10 to 15 days before the ballot takes place

In relation to the ballot, the employer must grant the necessary facilities for the consultation to be carried out. Furthermore, at least three days before the ballot, a printed copy of the CBA has to be handed to the employees. Finally, the ballot must take place on the date, time and place previously set and the employees must identify themselves with an official ID to participate through their personal, free, secret, and direct vote.

Finally, the Union must notify the result to the FCCLR and publish it in the most visible places in the work center. The FCCLR will receive the documentation, annexes and if needed the reports of the verification personnel. Depending on the results, the FCCLR will function as follows:

o   If most of the workers vote in favor of the content of the CBA, it will issue the resolution to consider the CBA legitimated (validated).

o   if it is not possible to determine whether the majority of the workers voted in favor or against the content or if the vote results in a tie, the FCCLR will ask the Union for a new ballot; and

o   in case most of the employees vote against the content of the CBA will be considered as not legitimated and, consequently, it will be terminated. In this scenario, benefits and working conditions contained in the CBA, greater than the ones established in the Law, will be mandatory for the employer.

According to the information provided by the authorities, up until January 2023, out of a universe of 559,969 registered CBAs, only 11,221 CBA have been approved through the legitimation procedure and less than 200 have been terminated for not reaching the approval of the majority of the Employees. This  implies that, between January and April 2023, more than 500,000 CBA will have to be consulted in order not to be terminated.




Telework is the mechanism to carry out tasks remotely using the advantages of information and communication technologies. It can usually be done from the employee’s home, but they can also alternate between office and home.

In this case, there is no immediate or direct supervision of the employer, the use of information and communication technologies is necessary and more than 40% of the working time is performed from the employee’s home because ff the telework is carried out occasionally or sporadically it will not be considered as such.

Some of the requirements consist of its inclusion in the Collective Bargaining Agreement, the form of written working conditions is mandatory, and it must be included in the Internal Regulations (Handbook).

There are some provisions that must be considered such as:

Working tools: The employer must provide, install, and maintain the equipment and facilities for the employee, including everything related to safety, health, and hygiene obligations, such as the computer and the ergonomic chair, among others. It must also keep a record of the tools provided to the employee, the employer must cover the proportional part of the expenses for communication services and electricity.

Working hours: The employer must respect the right to disconnection, which means that employees will have the right not to answer emails, messages, or work calls, outside of working hours or at the end of their working day, in order to respect the rest time, as well as the personal and family privacy of the workers.

Data protection: Implementation of mechanisms for information security.

Training: Implement training and advisory mechanisms to guarantee the proper use of information and communication technologies.

Safety, health and hygiene: The Ministry of Labor has issued the project of an Official Mexican Standard (NOM-037-STPS-2022) in July 2022, which is yet to be published as a full in force document.

Monitoring: Surveillance mechanisms must be proportional to their use, guaranteeing the right to intimacy and privacy.

The change from on-site to Home-office, must be voluntary and established in writing, except in cases of duly accredited force majeure. In any case, when a modification is made to the Home-office modality, the parties will have the right of reversibility to the on-site modality, for which they will be able to agree on the mechanisms, processes, and times necessary to make valid their will to return to such modality.

Finally, special obligations were created in the matter of labor inspections, to review measures on the full compliance of the special obligations derived from telework:

  • Verify that the employer keeps the record of the supplies granted.
  • Comply with the obligations of safety, health, and hygiene at work.
  • Check that the wages in this modality are never lower than those received by on-site employees with the same functions or positions.
  • Make sure to comply with the special obligations in the general telework modality.

Regarding tax considerations there is no tax reform on teleworking matter, the current income tax provisions set forth that no income exists for the use of goods that the employer provides to the employees for the performance of their own activities, provided those are in accordance with the nature of the work.

As mentioned before and according to the labor reform, the employer must assume teleworking costs, including the payment of telecommunication services and a proportional part of electricity. Payments for these services could be treated as “tools or supplies for work” so they should not be income for individuals for ISR purposes.

The deduction must be supported by a tax receipt (CFDI). It would be inoperative to obtain invoices on behalf of the employees, so it is suggested to include this concept in the payroll receipt and in the agreement for the provision of services. For these purposes, it can be considered for the issuance of payroll tax receipts the use of code 999 “Payments other than those listed and that should not be considered as income from wages, salaries or similar “.

A fixed monthly amount that is granted to all workers for these concepts can be used, it is even recommended that such amount is determined and supported with an economic study. It must be considered that the tax authorities can provide criteria on the tax treatment of these concepts and different from what is indicated here

Regarding Social Security (IMSS / INFONAVIT), work instruments such as tools and clothing are not included in the contribution base salary. Although the concepts indicated in teleworking matter are not expressly stated, they could be treated similarly to the concept of tools or work equipment.

There are items that could be refundable such as: electric power, Internet services, home/cell phone, Use of furniture and equipment, Use of physical space at home.

Finally, there are other concepts that could be paid to the employees, asking them to provide invoices in the name of the Company. The latter must have a list of these assets:

  • Computer equipment
  • Ergonomic chair
  • Cell phone
  • Printers
  • Headphones
  • Computer cameras

There is not a specific definition, law or protocol that addresses the phenomenon of ‘Cross Border Workers’ in Mexico, However, companies who allow their employees to perform their activities from Mexico must bear in mind the following aspects:


Due to the reform regarding subcontracting, there is no chance to hire employees through a Mexican company to perform activities for a third party, so the hiring must be executed by the foreign company, on the other side the employee must not have any interaction with Mexican market while performing his/her activities.


If the employee will work from Mexico for a period up to 183 days there is no way a PE is created, but if the employee stays longer then he/she will have to pay local income taxes. In this case, it is highly recommended and a common practice to provide an insurance with international coverage.


Mexican legislation has 3 different statuses: (1) Permanent resident, (2) temporary resident and, (3) visitor. If the employee stays les than 183 days in the country the temporary resident one will suffice.

It will be important to have a very clear policy known by the employee indicating the do’s and don’ts while performing his/her services including provisions such as: prohibition to interact with the Mexican market, reversibility, payment, insurance, monitoring and surveillance.




On April, 23rd, 2021, the FLL was amendment, the changes consisted of the derogation and amendments of Articles 12, 13, 14, 15, 15-A, 15-B, 15-C, and 15-D, to eliminate personnel subcontracting.

First, the concept of intermediary understood as the natural or legal person who engages or intervenes in the engagement of another or others for the provision of services to an employer was eliminated and instead it was established that employment agencies or intermediaries may participate in recruitment, selection, and training among other activities. They will not be considered as employers; this capacity belongs to the beneficiaries of their services

On the other hand, Article 12 was amended to the effect that personnel subcontracting is prohibited, understanding this as a natural person or an entity providing or making its own workers available for the benefit of another natural person or entity. The law in force allows subcontracting of specialized services or of services for the execution of works that are not a part of the corporate purpose or of the main economic activity of the beneficiary and, if the contractor is registered in the public registry provided for in Article 15 of this Law.

Additionally, it allows to contract complementary or shared services or works within a single business group which are known as back-office activities which are also considered to be specialized, if they are not part of the corporate purpose or of the main activity of the company receiving them.

Any contracting of specialized services or of services for the execution of works must be formalized by means of a written contract in which the objective of the services to be provided or the works to be executed is specified, as well as the approximate number of workers that will participate in the fulfillment of said contract.

It was also established in this Article that the person subcontracting with a contractor that does not comply with the obligations arising from its employment relationship with its workers will be jointly and severe liable in relation to the workers used in said hirings.

Those natural persons or entities that provide subcontracting services for specialized services or works referred to in Article 13 must be registered with the Department of Labor and Social Welfare. And established that, such registration must be renewed every three years.

In relation to the sanctions: Article 1004-A and 1004-C were amended. The first one, to impose penalizations on employers that do not allow the inspection and surveillance ordered by the labor authorities or refuse to provide the required information, through fines ranging from 250 to 5000 times the UMA [Unit of Measure and Update]; the last one, to penalize those who provide subcontracting services referred to in Article 12, as well as natural persons or entities that provide subcontracting services without having the corresponding registration, with fines ranging from 2000 to 50,000 times the UMA.

The amendment to Article 15 A entails highly onerous and bureaucratic obligations in requiring companies that have already obtained their registration with the Department of Labor and Social Welfare to provide the Institute, on every four months basis, the information on the agreements that it has entered into within that fourth month period, their objective and term, a list of the workers including their CURP [Personal Population Registry Code], social security number and base salary used for the payment of social security dues as well as the name and federal taxpayer’s registration number of the beneficiary of the services. In addition to a series of rules for its compliance


All employees in Mexico have the right to share in the profits of the business in which they work, as provided by Article 123, section A, paragraph IX, of the Federal Constitution. The percentage of share participation is determined every 10 years by the National Commission on Profit Sharing, a government body comprised of representatives of employees, employers, and the government itself. The Commission last set the percentage of employees’ profit sharing on September 18th, 2020, at 10% of each employer’s business’ pretax profit.

On April 23rd, 2021, an amendment to FLL was published on the Official Federal Gazette, among various modifications the one regarding Profit Sharing determines a limit to the amount of money employees have the right to receive. There are two different scenarios a) An amount equivalents up to three months’ full salary and b) A average calculation taking in consideration the last three amounts of money receive by the employee under this concept, in accordance to FLL employers must pay the most beneficial amount of money to the employee out of the two scenarios described.

The executive officer, administrator, or general manager of an enterprise is not entitled to share in the profits. (The general manager position has been interpreted by labor authorities as the highest position within the enterprise.) Workers in positions of trust receive a share based on a hypothetical salary that may not exceed by more than 20 percent the highest salary of rank-and-file workers. Enterprise profits are distributed among workers as follows: 50 percent to individual workers based on the salary that each receives during the year and the remaining 50 percent equally among all workers, taking into account the number of days each worked

Certain enterprises are exempt from profit sharing. These include the following:

  • newly formed enterprises, during their first year of operation; product.
  • newly formed enterprises engaged in manufacturing a new, during the first two years of operation.
  • newly established extractive industries, during the exploration period.
  • non-profit private welfare institutions.
  • the Mexican Social Security Institute (Instituto Mexicano del Seguro Social or IMSS) and other public institutions with cultural, welfare, or charitable purposes; and
  • undercapitalized enterprises (subject to a determination by the Secretariat of Labor and Social Welfare (Secretaría del Trabajo y Previsión Social or STPS) in consultation with the Secretariat of Economy).

Employers must provide a copy of the annual tax return of the enterprise to workers and must also make available to them, in the enterprise’s office, for a period of 30 days, supporting documents presented to the Treasury Department. Within the next 30 days, workers may comment on these documents to the Treasury Department.