Labour and employment law in Mexico

Introduction

Mexican Labour Law grew out of an armed revolution that concluded with the adoption of the current Federal Constitution in 1917.  Article 123 of the Federal Constitution, entitled “Labour and Social Welfare”, expressly recognizes and protects the basic inalienable rights of employees.  This was the first constitutional recognition of labour rights in world history.  Thereafter, in 1931, the first Federal Labour Law was enacted to regulate employer-employee relations nationwide, later replaced by the 1970 Federal Labour Law, which improved working conditions for employees.  The 1970 Law was, for all practical purposes, the federal government’s “political reward” to workers’ organizations for not supporting the 1968 student movement.

In September 2012, the President of Mexico, Felipe Calderon, introduced a bill to amend the Mexican Federal Labour Law, which after much debate before both the House of Representatives and the Senate, was approved by the Congress on 13 November 2012 and enacted by the President of Mexico on 30 November 2012 becoming effective on 1 December 2012. The reform amends and includes important provisions to the Mexican Federal Labour Law (herein after the “FLL”), which has extensive implications for employers with operations in Mexico.

In April 2016, President Enrique Peña Nieto sent to the Senate a bill to substantially amend the Constitution on labour justice. The bill proposed discontinuing the Conciliation and Arbitration Labour Boards, which have been the agencies in charge of Labour justice, and their replacement by federal Labour courts belonging to the federal judicial branch and by local Labour courts belonging to the local judicial branch. This initiative was discussed and approved by both the Senate and the Chamber of Representatives and was sent to the local congresses for their approval. The proposed constitutional reform was approved by 17 local congresses.

On 24 February 2017, the bill amending several provisions of Sections 107 and 123 of the Mexican Constitution was published in the Official Gazette and became effective on 24 February 2018. As a result of this constitutional reform, Labour Justice will be provided by Labour courts belonging to the Federal or Local Judicial Branch, which will give them more Independence in relation to the Executive Branches. This reform created a decentralized organism, independent of the Federal Administration and similar bodies in the States, which will be in charge, in the federal jurisdiction, of substantiating a mandatory pre-trial instance for the parties, which aims to fasten labour proceedings. Also, this organism will be in charge of the registration of union and collective bargaining agreements. This Constitutional Reform necessarily involves adjustments to the Regulatory Law, especially on procedural labour matters.

Constitutional amendment to reform the FLL: The reform to the Mexican Federal Labour Law (herein after the “FLL”), came into effect on 1 May 2019. The amendment did include pro-employees and pro-union provisions in order to create a better system.

It is important to mention that this amendment arose as part of Mexico’s obligations after the signing of the United States Mexico Canada Agreement (USMCA) that came into effect on 1 July 2020. In this sense, there was a necessity to make substantial changes in labour and union matters in order to adapt to the terms of the agreement.

The three main pillars of the 2019 amendment to the FLL are:

• A new Labour Justice system: The parties are now obliged to attend the Conciliation Centre before filing for trial; if no agreement is reached the Labour Justice will now be provided by labour courts belonging to the Federal or Local Judicial Branch. The new procedure is governed by the principles of orality, immediacy, continuity, concentration and publicity.
• Union democracy: A new democratic procedure came into effect to guarantee the unionized employees their right to a personal, free, secret and direct vote for choosing their union leaders, as well as knowing about and approving their collective bargaining agreements.
• The kick off for the Federal Conciliation and Labour Registry Centre: Beside the conciliation part, this Centre will keep the records of unions and collective agreements at the national level. Moreover, it will ensure that union rights and the collective interests of employees are respected, through free and democratic processes.

On 1 July 2018, Mexico had federal and local elections for several political positions, including the President, State Governors and Majors, among others. Andrés Manuel López Obrador (AMLO), candidate of the National Regeneration Movement (MORENA, by its acronym in Spanish) won the Presidential election with 53% of the votes. Which meant significant changes for the labour and employment legislation in Mexico, with significant changes regarding outsourcing, profit sharing, vacation days and labour exploitation, which meant that Companies had to do tremendous changes to its internal regulations and work culture.

In 2024, for the first time in modern history, Mexico elected its first female President, Claudia Sheinbaum. As a member of the leftist party Morena, significant labour reforms are anticipated, aiming to continue and expand the policies implemented by the López Obrador administration. Additionally, new programs are expected to be introduced to improve the working and social conditions of various groups of employees. Notably, as the first woman to hold the presidency, her administration has placed a strong emphasis on gender-related policies, promoting legislative and regulatory measures aimed at strengthening equality between men and women in the workplace.

On December 4, 2024, the Plenary of the Senate approved a bill amending Articles 132, section V; 133, first paragraph; 422, first paragraph; and 423, sections I, V, VIII and X of the Federal Labour Law, as well as adding Article 1000 Bis. These amendments aim to improve working conditions by prohibiting employees from being required to remain standing throughout their entire workday, ensuring their right to access chairs with backrests, establishing rest periods that allow employees to sit, and preventing employers from imposing continuous standing during the entirety of the working schedule.

On December 24, 2024, a decree amending the Federal Labour Law regarding digital platforms was published in the Official Gazette of the Federation. The reform entered into force on June 22, 2025, and establishes that work performed through digital platforms constitutes an employment relationship when services are rendered under conditions of subordination through the use of information and communication technologies. The amendment introduces specific obligations for platform operators, including the registration of workers before the Mexican Social Security Institute (IMSS), the payment of social security and housing contributions, the issuance of payment receipts, the implementation of health and safety measures, and the development of algorithmic management policies. Additionally, such relationships must be formalized through a model agreement to be registered before the Federal Conciliation and Labour Registration Centre. This reform represents a significant shift in the regulation of digital labour, imposing new compliance requirements on companies operating through digital platforms.

On March 3, 2026, the President of Mexico, Claudia Sheinbaum Pardo, published a decree amending sections IV and XI of Section A of Article 123 of the Mexican Constitution, regarding the reduction of the workweek. The reform establishes a maximum working schedule of 40 hours per week and increases the limit of overtime paid at double rate to up to 12 hours per week, compared to the previous limit of 9 hours.

Notwithstanding the entry into force of the constitutional amendment, its implementation will be gradual. The maximum weekly working hours will remain at 48 hours during 2026, to be reduced to 46 hours in 2027, 44 hours in 2028, 42 hours in 2029, and ultimately reaching 40 hours per week in 2030.

Further legislative amendments are required to harmonize secondary laws. Pursuant to the Second Transitory Article of the decree, the Congress of the Union has a 90-day period to amend the applicable legislation, including the Federal Labour Law. Such period expires on June 1, 2026. Therefore, specific regulations regarding the workweek, overtime limits, and the mechanics of the gradual implementation are still pending.

Mexican labour and employment legislation has undergone significant and continuous transformation in recent years, reflecting an active legislative agenda aimed at strengthening employees’ rights and adapting to evolving workplace dynamics. In this context, several initiatives are expected to be discussed and potentially approved during the current legislative period, including the following:

• Mental health in the workplace: a proposal establishing the obligation for employees to actively participate in the creation of healthy working environments, including the use, at least once per month, of emotional, mental health, and psychosocial prevention services provided at the workplace.
• Christmas bonus (Aguinaldo): a proposal to introduce a progressive scheme based on seniority, increasing the bonus to 15 days of salary during the first year of service, 20 days from the second to third year, 25 days from the fourth to fifth year, and 30 days from the sixth year onwards.
• Minimum wage: a proposal establishing that the monthly minimum wage may not be set below the cost of two basic baskets, including food and non-food essential goods.
• Personal data protection: a proposal prohibiting employers from using or disseminating sensitive personal data of employees who have been terminated or have resigned, in order to restrict or condition their access to future employment.
• Special leave: a proposal granting employees with parental authority or guardianship over minors under eighteen years of age with neurodevelopmental conditions the right to take leave ranging from 4 to 20 hours per week, in order to attend prescribed treatments. Such time may be compensated in accordance with an agreement between the parties, without affecting employees’ labour rights.

The above, are all of the proposed bills that Congress will have to discuss and approve but it is most likely that some of the above will be approved and will impact employment relationships in Mexico for the upcoming years.

Key Points

• Employers dealing with operations in Mexico should be aware that labour relations are highly regulated in our country and that Mexican employees generally have greater rights than their American counterparts.
• Job stability principle. Any individual employment relationship is subject to the principle of ‘job stability’, that is, subject to the employee’s right to keep its job as long as the employment relationship so requires. If the employment relationship is for an indefinite term, the employee cannot be laid off without cause. In other words, there is no employment-at-will in Mexico.
• Duration of the employment contract. The Mexican Federal Labour Law assumes, as a general principle, that an employment agreement has been executed for an indefinite term, unless the nature or the particular type of service to be provided calls for an employment agreement for a specific job or term, or if the parties agree to execute an employment agreement for initial training or subject to a probationary period.
• Joint Committees: Employers in Mexico have the obligation to create and form with employee’s representatives 6 mandatory Joint Committees: Health and Safety; Employees participation in profit sharing; Seniority; Drafting of the Internal Regulation; Training and Non-Discrimination Protocol.
• Restrictive Covenants or Non-Competes. In the strictest sense, non-compete agreements are void under Mexican law; specifically, under Article 5 of the Mexican Constitution. Notwithstanding the foregoing, pursuant to an opinion issued by a Circuit Court, Covenants not to compete are fully enforceable provided they are limited in time, geographical scope, clients and activity, products and services, and consideration is paid in exchange.
• Outsourcing. Although strictly regulated, the FLL allows the provision of specialized services or the execution of specialized works. This type of arrangement must comply with the following conditions: (a) the services must not form part of the corporate purpose or the main economic activity of the beneficiary; (b) they must be justified by their specialized nature; (c) the activities performed by the service provider’s personnel must not be identical or substantially similar to those ordinarily carried out by the beneficiary’s employees; and (d) the service provider must be duly registered before the Registry of Specialized Service Providers or Specialized Works (REPSE). Additionally, such services must be formalized through a specialized services agreement complying with the requirements set forth by law, and services rendered between companies belonging to the same corporate group must also adhere to these formalities. Failure to comply with these requirements will prevent the lawful provision of specialized services.Additionally, subcontracting continues to be one of the most heavily regulated and actively enforced areas of Mexican labour law. In September 2025, the Ministry of Labour issued a new Inspection Protocol on Subcontracting, establishing standardized inspection criteria applicable to REPSE-registered service providers and their beneficiary companies. Under this framework, authorities may verify that services are genuinely specialized, that there is no unlawful supply of personnel, and that contracted activities do not overlap with the beneficiary’s corporate purpose or core business.

  The protocol also clarifies the documentation that may be required during inspections, including service agreements, REPSE registrations, personnel records, social security and tax compliance documentation, as well as filings such as SISUB. For beneficiary companies, this reinforces an ongoing obligation to monitor and document compliance by their service providers, while for contractors it increases scrutiny over the consistency between registered activities and actual operations. In practice, subcontracting compliance now requires a robust and audit-ready approach, as discrepancies between contractual documentation and operational reality are increasingly treated as enforcement risk indicators.

Legal framework

The Mexican legal system is based on the Civil Law tradition, which is highly systematized and codified. Thus, the main sources of law are codified texts that derive from the provisions of the Mexican Constitution. As the utmost source of law in Mexico, the Constitution, has specific provisions set forth to protect the rights of citizens. These rights, previously referred to as Individual Guarantees in the civil tradition (Constitutional Rights) and now regulated as Human Rights, are classified in relation to the right they safeguard: (i) constitutional rights of equality; (ii) constitutional rights of freedom; (iii) constitutional rights of due process of law (or legal certainty); and, (iv) constitutional social rights – which by definition are those that were created with the intention to protect the common interests of a specific group collectively (e.g., workers, students, common land farmers). Applicable legislations for Labour law in Mexico derive from the Constitutional provisions on social rights for workers in Article 123.

Furthermore, Article 123 of the Mexican Constitution provides protection for the collective interests of workers by establishing general employee rights that seek a balance in the employer-employee relationship; including but not limited to: (a) setting maximum limit of working hours per week; (b) equality rights; (c)   weekly rest days; (d) mandatory rest days in the year (holidays or long weekends); (e) employees’ right to profit sharing; (f) maternity leave; (g) limitations on work of minors; (h) limitations on work of pregnant and breastfeeding mothers; (i) paid vacation periods; (j) right to unionize, to strike and lockout, and right to collective bargaining; (k) minimum salaries; (l) limitations on work shifts; (m) overtime; (n) social security rights (such as the establishment of a housing fund for workers); (o) Christmas bonus; (p) mandatory training; (q) labour authorities (competence and jurisdiction); amongst others.

The following laws govern all labour relationships in Mexico, regardless of the worker’s nationality: FLL, 1970; Social Security Law, 1997; and the National Workers Housing Fund Institute’s Law, 1972.

a) Federal Labour Law

The FLL is the most important employment legislation in Mexico. It defines a ‘labour relationship’ as the rendering of a subordinated personal service by one person to another, in exchange for a wage. The main element of any labour relationship is subordination, which the Mexican Supreme Court of Justice has defined as the employer’s legal right to control and direct the employee and the employee’s duty of obedience towards the employer. Once a labour relationship exists, the rights and obligations provided for by the FLL automatically apply, regardless of how the agreement is defined by the parties.

b) Social Security Law

Additionally, the Social Security Law is the legislation that contains the stipulations intended to provide further social benefits for the collective; specifically aimed for the employers and the employees. The Social Security Law covers the various rights and duties of both employee and employer with respect to retirement funds and healthcare benefits provided for by the authorities.

c) National Workers Housing Fund Institute’s Law, 1972

The National Workers Housing Fund Institute’s Law was created with the purpose of providing support for the employees in order to acquire their own homes. A National Housing Fund was created for employees in order for them to have access to a government run mortgage (credit institution) and acquire their own homes.

New Developments

a. Bill amending and supplementing diverse constitutional provisions on Labour justice

On 28 April 2016, President Enrique Peña Nieto sent a bill to the Senate to amend and supplement several Articles on labour justice. This reform intends to consolidate the autonomy and effectiveness of labour justice administration, being the most relevant after the Constitution was enacted in 1917.

Although adjustments to the Regulatory Law are still pending, the initiative proposes a deep transformation of procedural labour law, beginning with three essential premises:

1. Labour Justice will be further administered by the Federal or Local Judicial Branch, which should focus on their jurisdictional duties.
2. A pre-judicial conciliatory stage is inserted during the labour proceeding, which will be mandatory for the parties and will be responsibility of decentralized agencies named Conciliation Centres, which will be provided with legal capacity and own budget, as well as with technical, operational, financial, deciding and acting autonomy. This new stage will consist in one sole mandatory hearing, which date and time will be promptly set by these new decentralized agencies; the subsequent hearings will only take place with agreement between the parties.
3. A new decentralized agency of the Federal Public Administration is created, which will be in charge of registering all Collective Bargaining Agreements and union organizations, as well as of the administrative processes inherent to those subjects; furthermore, it will be in charge of the conciliatory role at the Federal level.

The implementation of this Federal Conciliation and Labour Registry Centre was implemented in three stages and now is fully compliant and enforceable. b. Amendment to Federal Labour Law regarding vacation days: On December 27, 2022 Article 76 of the Federal Labour Law was amended providing employees with the right to an annual vacation period of at least 12 days from the first year of service and will increase every year for 2 days until it reaches 20 vacation days. From the 6, year, the vacation days will increase 2 days for every 5 years of service.

b. Legitimation of Collective Bargaining Agreements. The Federal Conciliation and Registration Centre should verify the fulfilment of the legitimation of the collective bargaining agreements set forth in Annex 23 A of the USMCA and its tenth transitory. The legitimation implies that the existent collective bargaining agreements should be reviewed at least once within 4 years (deadline expired on May 1, 2023) and approved by the majority of the employees through the secret, personal and free vote, on the contrary they will be terminated.

c. Profit Sharing Cap: On April 3, 2024, the Second Chamber of Justice, by unanimous vote, validated the constitutionality of the cap of three times the salary for the payment of the profit sharing of the companies, established in section VIII of article 127 of the Federal Labour Law, considering that the Congress of the Union has the authority to legislate on labour matters and issue the provisions related to profit sharing.

d. Labour Exploitation: On June 7, 2024, a decree was published in the Official Gazette of the Federation, introducing significant amendments to the General Law to Prevent, Punish, and Eradicate Crimes related to Human Trafficking and to Protect and Assist Victims of these Crimes. Specially Article 21 in its section IV, which now categorizes labour exploitation as a punishable crime. The law defines labour exploitation as “working hours beyond what is stipulated by law.”