News, Insights and Best Practices for Manufacturing in Mexico

Mexican Labor Law Primer – Employee Benefits Basics

28 Jul 2015

Category: Labor & Economics, Manufacturing in Mexico, Politics & Regulations, Taxes & Finance

Mexico, like many countries, has a baseline legal benefits regime that is often codified in national labor law.  A basic overview of legally prescribed benefits in the Mexican workplace includes:

  • Vacation time – Under Mexican labor law workers that have one year of permanence with the company for whom they render services are eligible to receive six days of paid vacation.  At the end of the second year the number of days available for rest increases to a total of eight.  When ten years of service have been put in by the worker in Mexico the total days available for vacation time rises to ten days.
  • Vacation premium – Companies in Mexico must pay salary equal to the time off that the worker has accrued, in addition to paying a minimum of 25% of salary as a premium.  Depending on labor negotiation with unions, this number can be negotiated up from the baseline legal requirement in Mexico of twenty-five percent.
  • Christmas Bonus – Business establishments in Mexico are required to pay 15 days salary during the Christmas holidays under Mexico’s Labor Law.  Many companies, this is particularly true in Mexico’s manufacturing sector, shut down their facilities between Christmas and the New Year Holiday.
  • Sunday (7th- day) Rest Day – Mexican workers have a legally prescribed six day work week of 48 hours, they do receive, however, payment for seven days.
  • Rest Day (7th-day) Premium – If a Mexican worker renders service on the seventh day of the week, in addition to payment for that day, he or she will receive twenty-five percent more of what the regular salary paid for that day would be.
  • Legal Holidays – During the course of a calendar year, the following days are statutory paid days off as per article 74 of Mexican labor law:
    1. The 1st of January; (New Year's day)
    2. The first Monday of February in commemoration of the 5th of February; (Constitution day – effective Jan. 18, 2006)
    3. The third Monday of March in commemoration of the 21st of March; (Benito Juarez's birthday – takes effect in 2007.)
    4. The 1st of May; (Labor Day)
    5. The 16th of September; (Independence Day)
    6. The third Monday of November in commemoration of the 20th of November; (Revolution day - effective Jan. 18, 2006)
    7. The 1st of December every six years, when it corresponds to the transition of the Federal Executive Power (when the new President takes office)
    8. December 25th – Christmas

The above listed benefits are those that are included under Mexican labor law.  In addition to legally mandated benefits in Mexico, there are those that have become customary in certain economic sectors and certain labor markets.  For instance in the Mexico manufacturing sector particularly along the border are historically seen as having high availability, absenteeism and turnover rates. Some labor laws and other benefits have been introduced to address these issues.

On the Mexican border it is not unusual that maquiladoras pay workers a bonus for returning back to work from Christmas holidays.  This is due to the floating demographic that many times makes up the composition of the workforce on the border.  Since many maquiladora employees in this area are originally from points further south, during the holiday season they typically return to their home towns and cities to visit with family members.  Many times they do not to return.   Therefore, many Mexico border factories offer a cash incentive to promote them doing so.   This situation does not typically affect maquiladoras in the interior of the country.  Workers in the interior tend to live there with their families and extended families.

Workers in Mexico manufacturing facilities that are located in the border are typically provided one hot meal a day as a benefit.  It is not uncommon that two are offered.  This is a practice that is not commonly found in interior plants.  Additionally some companies may offer coupons for use in the purchase of groceries at stores in the community in which they are established, as well as for the purchase of prescription medicines.  Another common benefit provided to Mexico manufacturing workers in the maquiladora industry is a stipend to be used to pay for transportation to and from work.

When researching worker benefits in Mexico companies must take into account those legally prescribed by Mexican labor laws, as well as benefits over and above those that are driven by conditions specific to individual labor markets.

Click here for a complete overview of what to consider when  establishing a manufacturing operation in Mexico.

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