Mexico is one of the largest economies in Latin America and is home to a large and diverse workforce. It is important for employers to know the mandatory employee benefits and laws that are in place to protect workers.
There are complex regulatory system when it comes to labor laws and mandatory benefits. These regulations also designed to protect workers and ensure that they receive fair treatment from their employers.
Statutory and mandatory benefits of employee in Mexico
In Mexico, businesses are legally obligated to provide their full-time employees with statutory benefits. These benefits are essential for ensuring that employees are treated fairly and are protected under the law. While some companies may choose to offer additional benefits, such as healthcare or retirement plans. All businesses must provide the following statutory benefits to avoid facing penalties and fines.
The important and mandatory benefits in Mexico to be provided to each employee are:
- Christmas bonus or Aguinaldo
- Paid time-offs or vacation benefits in Mexico
- Paid time off bonus or prima or vacation bonus
- Weekly rest day and Sunday premium
- Maternity leaves, paternity leaves and adoption leaves
- Severance pay
- Seniority premium or seniority bonus in Mexico
- Profit sharing
- Social security
1. Christmas bonus or Aguinaldo
In Mexico, it is mandatory for employers to give their employees a Christmas bonus, known as Aguinaldo (or 13th month pay) every December.
This bonus is equivalent to at least 15 days of pay, but some employers may choose to give 20 days of pay. To ensure that employees can use the bonus for holiday expenses, it must be distributed before December 20th. Many companies opt to give out the bonus during the second week of December.
Aguinaldo is a mandatory bonus that is designed to help employees cover the cost of holiday expenses and other end-of-year expenses. Aguinaldo is an important part of Mexico’s labor laws, and employers who fail to pay the bonus can face legal penalties. It helps employee productivity with undue financial stress.
2. Paid Time-offs or vacation benefits in Mexico
In Mexico, employees working full-time are entitled to a minimum of six days of paid vacation time after completing their first year of service previously. But labor law in Mexico has revised it to 12 days of vacation time since 2023. As they continue their tenure, they accrue additional paid time off on a graduated scale, with a maximum amount granted after five years. After the sixth year of service, the annual leave increases by two days for every five years of employment till a maximum of 32 days is reached.
For example, an employee who has worked with a company in Mexico for 35 years should receive a minimum of 32 days of paid time off per year, consisting of 20 days after five years, two days after 10 years, an additional two days after 15 years, and a final two days after 35 years. It’s important to note that unused paid time off usually does not carry over from one year to the next in Mexico. However, employees who leave or are terminated from their job are entitled to a payout of their remaining vacation time.
|Years of employment||Vacation days in Mexico|
|1 year||12 days|
|2 years||14 days|
|3 years||16 days|
|4 years||18 days|
|5 years||20 days|
|6 to 10 years||22 days|
|11 to 15 years||24 days|
|16 to 20 years||26 days|
|21 to 25 years||28 days|
|26 to 30 years||30 days|
|31 to 35 years||32 days|
3. Paid time off bonus or prima or vacation bonus
In Mexico, employers are required to provide their employees with a mandatory vacation premium. This premium is a bonus paid on top of the employee’s regular salary and is intended to help cover the cost of vacation time. According to Mexican labor law, employees are entitled to at least six days of paid vacation after one year of employment, and the vacation premium must be at least 25% of their salary for that period. The vacation premium is paid in addition to the employee’s regular salary and is usually paid out just before the employee goes on vacation. This is an important benefit for workers in Mexico, as it allows them to take time off from work without worrying about the financial impact of lost income.
4. Weekly rest day and Sunday premium
In Mexico, it is mandatory for employers to provide their employees with a weekly rest day for every 6 days worked, commonly known as “Día de Descanso.” This day is typically on Sundays, but it can be any day of the week, depending on the employer’s discretion. On the weekly rest day, employees are entitled to be off work and cannot be required to work, except for certain exceptions such as any emergency project delivery or implementations. Additionally, many employers in Mexico offer their employees a “Sunday bonus,” which is an extra payment that is provided to employees who work on Sundays. This bonus is typically 25% of the employee’s salary and serves as an incentive for employees to work on Sundays when necessary.
5. Maternity leaves, paternity leaves and adoption leaves
In Mexico, both maternity and paternity leave are recognized as important policies for supporting the well-being of families.
a. Maternity leave
Expectant mothers entitled to 12 weeks of paid leave, which can take 6 weeks before the expected due date and 6 weeks after delivery. During this time new mothers receive their full salary through social security. If the newborns have a disability or require hospital care, the maternity leave can be extended up to 8 weeks after delivery, provided that a valid medical certificate is submitted.
b. Paternity leave
Fathers entitled to five days of paid leave as paternity leave, during which time they can be with their new-born child and support the mother.
c. Breastfeeding break
Under the Federal Labor Law in Mexico, the employer must provide the new mother with two additional 30-minute rest periods per day to breastfeed the child in a suitable and hygienic location. In case such a place is not available, the employer and the employee can mutually agree to shorten the work shift by an hour.
d. Adoption leaves
According to Article 170 of the Federal Labor Law, working mothers who adopt a minor child entitled to 6 weeks of paid adoption leave.
6. Severance pay
Severance pay in Mexico is a legal requirement that employers must adhere to when terminating an employee’s contract. The Mexican labor law mandates that all employees who worked for a company for more than one year receives severance pay upon termination. The amount of severance pay is based on the employee’s length of service, the reason for termination, and their last salary.
Severance pay in Mexico designed to provide financial support to employees who lose their job. It helps to alleviate the stress and uncertainty that can come with sudden unemployment.
a. Severance pay for employees who voluntarily quit
- The unpaid amount for worked days
- Christmas bonus calculates based on the number of days worked during the year
- A proportionate amount of paid vacation, determined by the amount of earned vacation days
- Additional payments as specified in the employment agreement, including bonuses, food vouchers, contributions to savings plans, profit shares, etc.
b. Severance for employees who terminated with cause (justified dismissal)
The employees fired with a justified cause in Mexico are entitled to get the severance pay as the employee who quit themselves. Additionally, the employer must pay an additional 12 days of salary for every year worked to them.
c. Severance pay for employees fired without case (unjustified dismissal)
Any employee entitled to 20 days of daily wage for each year worked, as well as 90 days of daily wage as Constitutional Indemnification and 12 days of daily wage as Seniority Bonus for each year of service. However, it’s important to note that the daily wage is often capped at twice the amount of the minimum daily wage.
7. Seniority premium or seniority bonus in Mexico
In Mexico, employees who remain with a single company for an extended period are more likely to receive a seniority premium, which is essentially a bonus.
Mexico’s employment laws
Any seniority premium bonus that granted to employees who worked for 15 years or more in an Organization. The amount of the bonus is typically equal to 12 days’ worth of wages for each year of service. In this way, seniority premiums serve as a means of recognizing and rewarding employees for their long-term commitment to their employer.
8. Profit sharing
In Mexico, profit sharing is an important legal obligation for employers, enshrined in the Federal Labor Law. Profit sharing is an annual payment made to employees based on the profits generated by their employer during the preceding year.
Employers need to distribute 10% of their pre-tax profits to their employees, in proportion to each employee’s salary and the length of their service.
This system intended to promote fairness and equity in the workplace, as it allows employees to share in the success of their employer. Recently established companies don’t require to share their profits during their initial year of operation.
9. Social security employee benefit in Mexico
Social security benefits include medical services, maternity and paternity leave, disability and survivor benefits, and retirement pensions.
Common additional employee benefits in Mexico
Companies in Mexico can offer a range of additional benefits to retain and attract new talent. Supplemental benefits that can help companies stand out from the competition include:
- Flexible work arrangements
- Professional development opportunities
- Wellness programs
- Bonuses to incentivize performance
- Productivity bonuses
- Punctuality bonuses
- Gym memberships
- Food vouchers
- Loans and credits
- Company cars
- Internet service
- Devices and gadgets
- Private health insurance
All these employee benefits attract and retain top talent in Mexico or employees working for any Mexico company project.
Interested in learning more about the benefits offered to employees in Mexico?
Global Squirrels offers a solution for businesses struggling to provide benefits to their employees in Mexico. With their own local legal entity in Mexico, we provide a seamless and high-quality experience to Mexican employees. Their comprehensive SaaS platform includes Mexico payroll, benefits, tax, and compliance services, helping businesses thrive. Contact Global Squirrels today to learn more about how they can support your business.