Mexico: 2025, Looking Ahead

2024 will be marked by significant transitions in Mexico, as the country embarks on a new administration that will bring a range of legal and constitutional reforms with considerable implications for the business and labour sectors. This change in government comes amidst expectations that the new administration will continue the progressive leftist trends of the outgoing government, with a renewed focus on policies that benefit workers, specially focusing on gender equality and gender perspective.

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 has occurred.

The Mexican labour and employment legal landscape is rapidly changing, nowadays there are some quite important bills to amend the labour law were introduced and might be studied, discussed, and approved in 2025. Some of the proposed bills pending approval and discussion are: (1) reduction of working hours; (2) reduction of work week; (3) teleworking for employees with children in their early stages; (4) equal pay; (5) increment of Christmas Bonus. Once any of the abovementioned bills is approved, we will inform our clients and the L&E Global network.

1. COVID-19

I. ONGOING MEASURES

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 www.coronavirus.gob.mx 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 centres for the continuity of work activities in a safe and responsible manner. On 2023, the Social Security Institute amended its occupational diseases table to classified COVID 19, as an occupational disease.

The Guidelines must be applied at the National level, for all work centres. These Guidelines put an emphasis on health promotion activities in work centres 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 centre 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, favouring 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.

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.

II. AMENDMENT TO THE SOCIAL SECURITY INSTITUTE’S OCCUPATIONAL DISEASES TABLE

The Labour and Social Welfare Ministry, after 52 years, amended the occupational diseases table including:

Anxiety disorders and specific women’s conditions such as, pregnancy loss and endometriosis, are now recognized as occupational ailments. Unanimously approved by the Senate on October 24th, 88 new diseases were updated, raising the total currently recognized, from 161 to 194. Over 50 experts from the IMSS and occupational health, participated in this process. The updated table aligns with the OMS, CIE-11, in effect since February 2022. This comes with significant implications for the recognition and protection of workers in Mexico. Among the notable additions are the following diseases:

• Covid-19
• Severe stress
• Depression
• Anxiety
• Adjustment disorder
• Thirty types of occupational cancer
• Pregnancy loss
• Infertility
• Endometriosis
• Intoxication-related diseases

 

III. SUGGESTED ACTIONS IN REGARD TO HEALTH SAFETY MEASURES IN THE WORK ENVIRONMENT

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.

2. 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 centres. 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 centre, 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 favoured in places in which it is possible. If not possible, ventilation systems can be used with proper maintenance, as established by the manufacturer.

3. Food and transportation

• 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.

4. 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.

5. 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 centre 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 https://climss.imss.gob.mx/, 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.

IV. REDUNDANCY

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, it 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.

V. FACILITY CLOSURE

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.

 

2. 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.

VI. COST-REDUCTION STRATEGIES

POLICIES AND PROCEDURES FOR TELEWORK.

Telework remains an option; therefore, the employer may have some of its employees to work under a teleworking modality, for this case and in accordance with the Federal Labour Law and the Official Standard NOMN 037, the employer should have in place a teleworking policy and document in writing, the working conditions for the employee working under this modality.

EMPLOYEES WHO FEAR INFECTION AND REFUSE TO WORK.

Since there are no more restrictions for the employers to reopen their facilities, the employee has the obligation to return to its work. If the employee refuses to work, it can be sanctioned according to the Internal Regulations (Reglamento Interior de Trabajo), which, to be mandatory, should be duly registered before the Labour Board. 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.

MEDICAL LEAVE

The Mexican Social Security Institute specifies that if an employee suspects that he has an illness and/or disease, and/or suffers an accident, should go to its Familiar Medical Unit to be treated and taken care of, an in case of a leave of absence per se, the Mexican Social Security Institute will issue a justified leave of absence certificate.

2. Compliance

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.

I. INTERNAL INVESTIGATIONS

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 Labour Conciliation and Registration Centre 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 Labour Conciliation and Registration Centre.

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.

CHECKLIST OF DO’S AND DON’TS

• 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.

 

II. BEST PRACTICES

DUE DILIGENCE

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 of how the company is.

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 analyse 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.

EMPLOYER RECORDKEEPING, DATA PROTECTION, AND EMPLOYEE ACCESS TO PERSONNEL FILES AND RECORDS

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 record

–             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 obligation to 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 access to 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, employees can request access to their own medical files, and the employer is required to grant such access.

 

III. ENVIRONMENTAL, SOCIAL AND GOVERNANCE

Although Mexico does not have any kind of normative, law or codes regarding ESG, Companies, especially those multinational companies that have ESG requirements, and criteria, are requesting Mexican subsidiaries and/or Mexican providers, to comply with its ESG standards, since the Mexican private sector has been starting some non-official committees and certifications such as, Socially Responsible Company (“ESR”) badge, issued by the Centro Mexicano de Filantropia (“CEMEFI”), which in a sense governs ESG in Mexico, as previously mentioned this is not an government official certification nor standard.

What Mexican currently companies are understanding as ESG is an active environment protection, 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.

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).

3. Vacation

In 2022, the Federal Labour Law was amended to change and modify vacation days in Mexico. As of 1 January 2023 employees instead of taking a minimum of 6 vacation days at the end of the first year of service, are now entitled to take 12 vacation days, at the end of its first year of service.

Moreover, the new amendment regarding vacation days, stipulates that, for each year of service, the number of rest days per year should increase by 2, until reaching 20 days. This effectively raises the number of vacation days, as the previous maximum was 10 days of vacation after five years.

Before 2023		After 2023
Years of service	Vacation Days	Years of service	Vacation Days
1	6	1	12
2	8	2	14
3	10	3	16
4	12	4	18
5-9	14	5-9	20
10-14	16	10-14	22
15-19	18	15-19	24
20-24	20	20-24	26
25-29	22	25-29	28
30-34	24	30-34	30
35-39	26	35-39	32

4. Mandatory rest days

As 2025 is an electoral year, where the Executive and Legislative branches will be elected, there are a few mandatory rest days added to the ones set forth by the Federal Labour Law. For 2025, the mandatory rest days are:

• January 1^st
• February 3^rd
• March 17^th
• May 1^st
• September 16^th
• November 17^th
• December 25^th

5. Collective matters

LEGITIMATION PROCESS

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 Centre for Labour 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 centre. 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 favour 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 favour 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.

6. Telework and cross-border remote work

I. TELEWORK

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) recently the Mexican Official Standard NOM 037, was published and created the obligation for employers who have employees working under the teleworking modality, to have a standalone policy and to meet certain criteria and guidelines issued by the Labour and Social Welfare Ministry.

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 Joint Committee for Health and Safety within the workplace, should be supervising teleworking conditions and also, should be aware as well as, of those employees working under the teleworking modality under the content of the teleworking policy.

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 labour 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 labour 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

 

II. CROSS-BORDER REMOTE WORK

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:

EMPLOYER.

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 its activities.

TAXES AND SOCIAL SECURITY.

If the employee will work from Mexico for a period up to 183 days there is no way a Permanent Establishment is created, but if the employee stays longer then it 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.

IMMIGRATORY STATUS.

Mexican legislation has 3 different statuses: (1) Permanent resident, (2) temporary resident and, (3) visitor. If the employee stays less 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.

7. Subcontracting and profit sharing

I. SUBCONTRATING

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 fulfilment 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 hiring.

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 Labour 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 labour 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 Labour 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

 

II. PROFIT SHARING

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’ pre-tax 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 labour 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, considering 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 Labour 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.

It is important to note that recently, some Unions, have been filling remedies to challenge the profit-sharing caps, 2 of the Remedies filled have been solved by the Mexican Labour Courts declaring  the caps to profit sharing as unconstitutional, and obliging companies to pay the 10% profit sharing without the caps. We will have to keep following up the resolution of all the Remedies and to see what the Mexican Supreme Court will rule.

8. Recent amendments to the federal labour and labour and employment dispositions: Chair Law, Gender Equality and Digital Platforms Law

I. CHAIR LAW

On December 18, 2024, the reform to the Federal Labour Law known as the “Chair Law” was published. This reform was designed to guarantee the employees’ right to rest during the workday, promoting their health and well-being.

The reform provides that employers are required to provide seats or chairs with backrests to employees performing work in sectors such as commerce, services and other similar workplaces. These seats must be available both for performing their duties and for rest breaks during the workday.

Likewise, employers may not require employees to remain standing during the entire workday. In cases where it is not feasible to have seating in the areas where work activities are carried out, specific spaces must be provided within the facilities for employees to rest periodically.

In addition, the Internal Labour Regulations must contemplate both mandatory rest periods and measures to ensure adequate use of the seats during working hours.

Companies will have 180 calendar days from the date of publication to amend their internal labour regulations.

 

II.GENDER EQUALITY

On 15 November 2024, the Presidency of the Republic published the decree on substantive equality, gender perspective, women’s right to a life free of violence and the eradication of the gender pay gap.

Mexico has undertaken a significant constitutional reform to advance gender equality, focusing on substantive equality, a gender perspective, and equal pay. These reforms mandate the State to guarantee women’s right to substantive equality by eliminating workplace discrimination and ensuring equal opportunities while acknowledging gender differences. Protection from violence is also a key focus, with obligations to safeguard individuals from violence, implement a gender perspective within public safety and justice systems (including specialized prosecutor’s offices), and empower federal authorities to address gender-based violence. The reforms define “gender perspective” as a methodology to identify and address gender-based discrimination and inequality. Furthermore, the amendments promote gender parity in federal public administration appointments and require the establishment of mechanisms to reduce and eliminate the gender wage gap. In essence, these constitutional changes aim to create a more equitable society for women in Mexico by addressing systemic inequalities and ensuring their protection from violence.

 

III. DIGITAL PLATFORMS LAW

On December 24, 2024, an amendment to the Federal Labour Law focused on regulating employment through digital platforms was published in the Official Journal of the Federation. This amendment recognizes as employees those who provide their services through these applications, ensuring them access to labour rights and social security.

According to the reform, an employee of digital platforms will be a person who performs subordinate activities and earns a net monthly income equivalent, at least, to the minimum salary in force in Mexico City (estimated at $8,364.00 pesos per month for 2025), regardless of the effective working time. Those who do not reach this amount will be classified as independent employees, and the platforms will be obliged to register them with the IMSS to guarantee their coverage for occupational risks while they perform their duties.

Among the main aspects of the reform, it is established that working hours will be only the time actually worked by the employee, i.e., from the time the employee accepts a task until it is completed. Likewise, the salary must be fixed for each task or service performed and paid on a weekly basis, considering the proportional benefits such as days off, vacations, vacation premium, Christmas bonus and overtime.

The reform also provides that tips will not be included in the calculation of social security contributions. In addition, it will be mandatory to establish individual employment agreements, which must be registered with the Federal Centre for Labour Conciliation and Registration (Centro Federal de Conciliación y Registro Laboral). These agreements may be digitally signed and will include specific information regarding payments, necessary equipment, safety conditions and supervision mechanisms.

On the other hand, employees will have the right to participate in the profit sharing of digital platforms, as long as they accumulate more than 288 hours worked during the fiscal year. The reform also establishes a specific procedure to calculate this benefit.

Another relevant point is that digital platforms must implement an algorithmic management policy, explaining how tasks are assigned through the algorithms used. This policy must be communicated from the beginning of the employment relationship and any change must be notified in a timely manner to the employees, who must accept and sign the policy.

Additionally, new grounds for contract termination are created that will not generate liability for the employer. These include conduct that jeopardizes the security or privacy of the users of the platforms, as well as unjustified failure to comply with tasks or work instructions.

The reform also establishes specific indemnities in the event of termination of the employment relationship with employees of digital platforms. In addition, it states that the platforms must have internal procedures to address and review decisions that may affect the connection or access of employees to the application through which they provide their services.

Finally, it is stipulated that the employment relationship will be automatically terminated if the employee does not perform any activity during a continuous period of 30 calendar days.

The reform will enter into force 180 days after its publication, that is, on June 22, 2025. During this time, the institutions and companies involved must implement the necessary changes to ensure compliance with the new regulation.

The Mexican Social Security Institute (IMSS) will also have 180 calendar days to develop a proposal to reform the Social Security Law, based on the results of the pilot test for the insurance of employees of digital platforms.

For its part, the Instituto del Fondo Nacional de la Vivienda para los Trabajadores (INFONAVIT) must publish, within 5 business days following the entry into force of the reform, the general rules to ensure compliance with the specific obligations imposed on digital platforms.

 

9. Proposed possible amendments to Mexican labour and employment regulations for 2025

1. Proposed amendment to modify working weeks; This amendment seeks to increase the number of weekly rest days to 2 mandatory rest days per week, with full pay.

2. Proposed amendment to reduce working hours; From 48 working hours to 40 working hours.

3. Proposed amendment to establish telework for parents of minors in the early childhood stage; To establish that, the fathers or mothers of minors in stage of early childhood will have the right to agree with their employer the modality of telework in those cases in which it is possible, with the aim of adapting the schedules and days of work to the needs of both parts.

4. Proposed amendment to establish the verification of compliance with the principle of equal pay for equal work, without distinction of gender; The amendment establishes that employers must establish training programs regarding the principle of equal pay for equal work. In addition, employers must integrate these concepts into their internal labour regulations.

5. Proposed amendment to modify the Christmas bonus; This amendment seeks to increase to 30 days the payment of Christmas Bonus.