02. Employment Contracts

Minimum requirements

Written employment agreements in Mexico are mandatory. Every employee must enter into an individual employment agreement with the employer and set out the terms and conditions of the employment. There is no ‘employment-at-will’ in Mexico. An employer must have justified cause (as defined by the FLL) in order to terminate the employment relationship, if not, employer must compensate the unjustly terminated employee accordingly (FLL stipulates the amount for severance payments). Notwithstanding the previous statement; in the given case that an employment relationship exists and there is no written agreement; the employee’s constitutional and statutory rights are not waived or affected by this omission.

In the case of Unions, there is an additional agreement that is negotiated and entered into by the Union and the employer in order to promote the creation or improvement of the labour conditions for the employees as a collective and in turn the employer obtains a loyal and solid workforce. The Collective Bargaining Agreement (hereinafter ‘CBA’) is renewable and cannot contain provisions that stipulate the waiver of the basic constitutional and statutory rights or benefits for the employees as a collective. It can always be more favourable than the constitutional and statutory requirements but never less than the latter.

Article 24 of the FLL provides that working conditions must be established in writing, and each party must be provided with a copy of the employment agreement. In addition, Article 25 states that the individual employment agreement must contain the following information:

• name, nationality, age, sex, civil status, CURP, tax id number, and domicile of the employee and the employer, if applicable;
• whether employment is for a specific job or term, initial training, permanent, and if it is subject to a probationary period;
• the service or services to be provided, as specifically as possible (job description);
• the place or places where the employee will work;
• the work schedule;
• amount of salary and any fringe benefits;
• date and place where salary is to be paid;
• an indication that the employee will be trained according to the plans and programmes established by the employer;
• amount of rest and vacation days, and any other conditions agreed to by the employee and the employer.

Every employment agreement contains an implied relationship of mutual trust and confidence. Furthermore, employment agreements cannot contain an employee’s acceptance to waive the necessary legal grounds for justified dismissal on the part of the employer and the minimum mandatory benefits provided by the FLL. On the other hand, CBAs must also be in writing and contain the following information:

• names and domiciles of the parties executing the CBA;
• the address of the facilities where the CBA will be applicable;
• duration or whether it is for an indefinite term or specific job;
• work schedules;
• rest days and holidays;
• salary amounts;
• employee training;
• initial training for new hires;
• integration and operation of the Employee/Employer Committees as established by law;
• other conditions agreed upon by the parties.

CBAs must be filed in the Local or Federal Conciliation and Arbitration Board, depending on competence and jurisdiction. Competence and jurisdiction of the Conciliation and Arbitration Boards is determined by the employer’s main business activities in accordance with the applicable FLL provisions.

Fixed-term/Open-ended Contracts

Any individual employment relationship is subject to the principle of ‘job stability’, that is, subject to the employee’s right to keep his job as long as the employment relationship so requires. The FLL 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. The FLL provides that employment agreements for an indefinite term are for continuous work, but the parties may agree that the services be provided for a fixed term and for periodic work with a discontinuous character in cases where the services are required to be provided during a season, or are not required for an entire week, month or year.

Trial Period

The initial training employment relationship is the relationship whereby the employee agrees to provide his subordinated personal services, under the control and supervision of the employer, in order to acquire the necessary knowledge and skills to perform the services for which he is hired. This agreement must establish a training period of 3 months, as a general rule, and 6 months, for executive positions.

Employment agreements executed for an indefinite term or for a specific job or term of more than 180 days, may be subject to a probationary period of 30 days, or up to 180 days for executive positions, in order to verify that the employee has the necessary knowledge and skills to perform the services for which he has been hired.

Both, the initial training agreement and those agreements subject to a probationary period, cannot be executed on a consecutive basis and their term cannot be extended. It is mandatory to execute these agreements in writing, establishing that the employee will be entitled to all social security benefits. If the labour relationship continues once the effective term of these agreements has elapsed, the labour relationship will be considered for an indefinite term and the seniority accrued during the training and probationary period shall be recognised.

Notice Period

There is no notice period under the FLL. However, the employer must notify the worker in writing of the cause or causes for dismissal. Notice may be delivered directly by the employer at the moment the dismissal takes place or communicated to the Conciliation and Arbitration Labour Board within 5 work days, in which case the employer must provide the employee’s last domicile registered in its files so the conciliation and arbitration labour board notifies the employee in person. If neither is done, the dismissal will be considered unjustified. Failure to execute a dismissal within one month after the employer knew about the event that gave rise to the cause for dismissal will invalidate the action.