News, Insights and Best Practices for Manufacturing in Mexico

Introduction to the Mexican Federal Labor Law: The Basics

   
27 Mar 2017

Category: Labor & Economics

 With few updates, one most recently in 2012, Mexican labor laws were written into the constitution after the revolutionary war in 1917. The laws rigorously implement a safe work environment and pristine working conditions, improved by the previous labor reform in 1970. The Mexican Federal Labor Law implements employee rights and seeks to provide a platform for sustainable living. Modern day labor laws in Mexico enhance work relationships, payroll, benefits, contracts, and social security.

The Mexican Labor Law Reform of 2012

The Labor Reform of 2012 implemented its first modifications since 1970, and brings extensive implications for employers manufacturing in Mexico. The reform was supposed to enforce more accountability and transparency of union actions; allow temporary, part-time and trial periods for workers; and restrict striking rights. The reform also provides some clarity to companies doing business in Mexico. Although there are mixed reviews on the impact the “modernized” reform has had on the labor market, or lack thereof, the middle class has been growing the past few years because of an uptick in manufacturing production.

 

Mexican Labor Contracts

Unless specified, an employment relationship is established for an indefinite period to provide employees with job stability and tenure security, unless the nature of the job is temporary.  The 2012 Mexican Labor Law reform now enables employers to staff part time, temporary, or seasonal work arrangements, and allow for a 30 day probationary period to ensure that the employee is right for the job. Through this reform, employers can now hire for an hourly wage payment which must be at or above minimum wage.

 

mexican-employee-relationships.jpgMexican Employment Relationships

The Mexican Federal Labor Law regulates employment relationships, conditions, and employee rights in detail. There are two general types of employment relationships, individual and collective. An individual employment relationship is created when a person is hired to perform the required job duties and accepts the employment contract. The different types of individual labor contracts considered by the Mexican Federal Labor Law cover an undetermined period, a determined period, and a specific job.A collective employment relationship is established when the employees are represented by a labor union, and the point of contact is with the union.

 

The Mexican Social Security Law

The Mexican Social Security Law provides health care and retirement systems for employees. These systems are funded by a mandatory charge paid by the employer based on employee wages. Social security funds help hospitals operate and provide full medical coverage to registered employees. Registering employees with the Mexican Social Security Institute helps employers avoid paying for the full cost of:

  • Work Related Risks
  • Health and Maternity Insurance
  • Disability Pension and Life Insurance
  • Retirement, Advanced Age and Old Age Pension
  • Child Care and Social benefits

The Mexican Social Security Institute almost works in the same vain as that of the U.S. where it provides services to the population, but in Mexico it’s at the expense of the employer. When an employee is hired and registered for social security, work liabilities such as accidents or illnesses along with the topics listed above are covered by the the Social Security Institute under the Mexican labor law. The employer is also required to provide handicap access for centers with 50 or more employees. If the employer does not register or comply with payment obligations, benefits will still be provided to the employee and the cost of the visit will be charged to the employer along with added penalties.

Many details are incorporated into the basic sections of the labor law that help set workforce standards and provide a platform for greater efficiency and acquired skills. Contracts, relationships, and social security enable a safe work environment and preferable working conditions for the Mexican employee. 

 

An Introductory guide to Navigating Mexican Labor Laws

  

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