Labor Agreements

Employee Labor Agreements and
Legal Requirements

Everything you need to know about Employee Contracts and HR Compliance in Mexico

Labor Agreements Overview

Formal labor agreements in Mexico are essential to hiring workers. Mexico does not have at-will employment and therefore particular caution should be exercised when drafting employee agreements.

Indefinite Employment Contracts:

Most employment agreements in Mexico are for an indefinite period of time until the employee or the employer decides to separate from the employment relationship.

Probation Period

It is important to always include a specific probation period within any employment agreement. The standard trial period is 30 days or 3 months for training, and up to 180 days for specialized employees or managerial positions. During the probation period, the employee may be separate for any reason with or without cause.

Specific Duration Employment Contracts

Employment agreements linked to a specific period of time or a specific project. The nature of the project or definite start and end date must be specified precisely to avoid the agreement from being considered an indefinite period contract.

Severance Pay

Must be paid in any case where an employee is separated or fired, unless for specific justified
causes as outlined in the Mexican Federal Labor Law. Severance is due even in cases where the employee is unqualified for their position or underperforms.

Scenario	Entitlement	Legal Basis (LFT)	Observation
Unjustified Dismissal (Employer terminates without cause)	3 months’ integrated salary (constitutional indemnity) – 20 days of salary per year of service – Seniority premium (12 days per year, capped at 2× minimum wage) – Accrued benefits (aguinaldo, vacation, vacation premium, etc.)	Arts. 48–50, 162	Employer must pay immediately; employee can sue for reinstatement or severance.

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MexInc’s attorneys can customize your company’s labor agreements to suit the needs of the specific position and mitigate employer risk, reducing the likelihood of litigation. Let us help…

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What are the limited conditions where an Employee can be
Terminated without being Paid Severance?

Even if an employee underperforms, failing at their duties or simply not a right fit for their position,
Mexican law requires the payment of severance of at least 3 months of the employee’s salaries.
The only basis for “for-cause termination” in Mexico are outlined below and included failure to
appear for work for a total of 3 days within any 30 day period, criminal activity,
drug or alcohol use, violence, or a few limited circumstances as outlined below:

Paid Severance
Cause of Dismissal	Description	Notes / Examples
Dishonesty or False Documents	Employee used false certificates, references, or documents to secure employment.	Includes misrepresentation of qualifications or work history.
Lack of Honesty / Integrity	Acts of dishonesty, violence, threats, insults, or misconduct against the employer, family, management, or coworkers.	Example: theft, harassment, or verbal aggression.
Violence or Harassment at Work	Acts of violence, harassment, or sexual harassment against coworkers, employer, or clients.	Covers both physical and verbal abuse.
Damage to Company Property	Employee intentionally or negligently damages company property, materials, or equipment.	Must be proven by employer.
Endangering Safety	Reckless acts that endanger safety at the workplace or coworkers.	Example: ignoring safety protocols, causing accidents.
Immoral or Offensive Acts	Immoral conduct at the workplace affecting discipline or company reputation.	Example: inappropriate behavior or misconduct.
Revealing Trade Secrets	Disclosure of confidential company information or trade secrets.	Applies even if no monetary loss occurred.
Absenteeism	Accumulating more than 3 unjustified absences in 30 days.	Absences must be without employer’s permission or valid justification.
Disobedience	Repeated refusal to follow lawful work instructions or policies.	Example: refusal to perform assigned tasks.
Lack of Attendance / Neglect of Duties	Unjustified refusal to work, negligence, or abandoning duties.	Example: not showing up for assigned shift.
Intoxication / Drugs	Appearing at work intoxicated or under the influence of drugs, unless prescribed.	Exception: if job involves hazardous work, dismissal can be immediate.
Criminal Conviction	Employee receives a final criminal conviction preventing performance of work.	Applies only when conviction makes employment impossible.

What are the Main Clauses and Provisions
of Mexican Labor Agreements?

The table below provides a brief overview of the main clauses and provisions of Mexican labor agreements,

include conditions that are required and cannot be renounced be either party.

Legal Clause	Required Condition	Notes / Legal Basis
Nature of Contract	Default contract type; has no fixed end date.	Art. 35–37 LFT: if duration is not specified, the relationship is presumed indefinite.
Probation Period	Allowed: up to 30 days for general workers, up to 180 days for managerial or specialized positions.	Art. 39-A LFT. Must be specified in contract.
Work Hours (Jornada Laboral)	Day shift: 8 hrs/day, 48 hrs/week – Night shift: 7 hrs/day, 42 hrs/week – Mixed shift: 7.5 hrs/day, 45 hrs/week	Art. 61–69 LFT. Overtime: double pay (first 9 hrs/week), triple pay thereafter.
Salary	Must be at least the minimum wage or applicable professional wage. Paid in legal tender.	Art. 82–94 LFT. Payment must be regular, on agreed periods (weekly, bi-weekly, etc.).
Mandatory Benefits	Aguinaldo (15 days min.) – Paid vacation (starting at 12 days, increasing with seniority) – Vacation premium (25%) – Rest days (1 per 6 worked) – Public holidays (12 per year) – Seniority premium in cases of termination)	Arts. 76, 80, 87, 162 LFT.
Termination by Employer	With cause (Art. 47 LFT) → no severance owed. – Without cause → entitled to severance: 3 months salary + 20 days per year + seniority premium + accrued benefits.	Art. 48–50, 162 LFT.
Termination by Employee	Employee may resign with just cause (Art. 51 LFT) and claim severance, or resign voluntarily and receive accrued benefits (aguinaldo, vacation, etc.).	Protects employee’s right to fair exit.
Stability Principle	Mexican law favors job stability; indefinite agreements are presumed unless explicitly justified otherwise.	Courts often side with employees if contract type is disputed.

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