Terminating employees in Mexico
Information on legally terminating employees in Mexico
Termination of Employment and Severance Payments
Once an employment relationship in established, unless it is for a specific job or for a determined period, the employment relationship cannot be terminated by the employer without cause. If it is terminated thus, the employee will be entitled to a severance payment in the amounts described hereunder. As noted above, employment relationships for a specific job or for a determined period may be established only if the circumstances actually warrant such type of relationship. Otherwise, an employment relationship for an undetermined period will be presumed to exist.
Occasion and Basis of the Severance Payment/Reinstatement
To dismiss an employee without giving him or her a severance pay described below, a Mexican employer must: (i) be able to prove, in a labor court if necessary, that the dismissal was for a statutorily defined just cause; and (ii) give the employee prompt written notice of the dismissal stating the just cause therefore. If the employer fails to prove just cause or give adequate written notice, or if the employee ends the individual employment relationship for a statutorily defined just cause as explained below, the employer is obligated to give a severance payment comprising the following:
(i) Three months’ wages based on the employee’s wages earned at the time of the termination
- (ii) 20 days’ wages per year of service (This amount does not apply under certain circumstances.)
- (iii) A seniority premium equal to 12 days’ wages per year of service rendered (subject to salary limitation up to twice the minimum wage)
- (iv) Back wages from the date of the dismissal until the date of payment
- (v) Accrued benefits
An employee dismissed without cause has the option to be reinstated to his former job instead of receiving the severance payment, provided he is not an employee of “trust” as described below.
Just Cause for Dismissal
The FLL lists the specific causes for which an employer may dismiss an employee without being liable to severance pay. These causes include the following:
- (i) The employee during work hours, commits dishonest or violent acts, makes threats, offends or mistreats the employer, his family or the officers or administrative personnel, unless he is provoked to act in self-defense.
- (ii) The employee commits any of the offenses listed in the preceding paragraph against his co-workers.
- (iii) The worker commits (outside work premises) the offenses listed in paragraph (i) above.
- (iv) While performing his or her work, the employee intentionally or through negligence materially damages the workplace, machinery, instruments, raw materials and any other items that belong to the company.
- (v) The employee through negligence or inexcusable carelessness, jeopardizes the safety of the establishment or the persons inside it.
- (vi) The employee commits immoral acts in the workplace.
- (vii) The employee reveals manufacturing secrets or confidential matters to the detriment of the enterprise.
- (viii) The employee defies the authority of the employer or its representatives by disobeying their orders or instructions without reasonable cause, in matters related to the work under contract.
- (ix) The employee refuses to follow preventive measures or certain procedures to avoid accidents or illnesses.
- (x) The employee reports for work under the influence or is found to have taken narcotics or illegal drugs. An exception to this rule is if the employee is required to take depressants per a doctor’s prescription.
- (xi) A final judgment imposing a prison sentence on the employee, which prevents him from fulfilling the employment contract.
- (xii) There is reasonable cause for loss of confidence.
The FLL, in most instances, imposes the burden of proof on the employer in regard to the cause of termination of an employee’s services.
Employee Just Cause for Rescinding
An employee may rescind and be entitled to severance pay if his/her employer commits specific acts against him/her (per the FLL list). These acts include the following:
- (i) The employer misleads the employee with respect to the conditions of the job at the time it was offered to him/her. This cause will cease after the first 30 days of employment.
- (ii) The employer, his family, his officers or administrative personnel, during working hours, commit dishonest or violent acts, threaten, offend or mistreat the worker, his spouse, parents, children or siblings.
- (iii) The employer commits the acts referred to in item ii beyond working hours.
- (iv) The employer diminishes the worker’s salary.
- (v) The employer fails to give the worker his or her salary on the agreed-on date and place.
- (vi) The employer intentionally damages the employee’s work tools.
- (vii) There is serious danger to the security or health of the worker or his family.
- (viii) The employer through negligence or inexcusable carelessness, endangers the safety of the work site.
- (ix) Equally severe circumstances with similar consequences.
The seniority premium discussed above, which is equivalent to 12 days’ wages (limited to twice the minimum wage) for each year of service, must be paid to all employees who: (i) voluntarily leave their employment after completing 15 years of service; (ii) leave their employment for just cause; (iii) are dismissed by the employer with or without just cause; or (iv) die while employed, in which case their beneficiaries receive the seniority premium.
Employees of “Trust”
The FLL contemplates a special category of employees in management positions in general and other employees in positions of trust (“trabajadores de confianza”). If dismissed without just cause, an employee of trust will be entitled to severance pay, but he or she can not be reinstated. Employees of trust may form unions, but they must be different from those of other employees. To determine whether employees hold positions of trust depends not on their titles but on their actual functions. The FLL defines functions of “trust” as those that generally pertain to direction, inspection, surveillance and supervision (“direccion, inspeccion, vigilancia y fiscalizacion”) and those that involve the personal lives of the principals of the company.
Other Special Categories of Jobs
In addition to employees of trust, there are special regulations under the FLL for the following: (i) work on board ships; (ii) work of airline crews; (iii) railway work; (iv) automotive transportation work; (v) public service handling operations in zones under federal jurisdiction; (vi) field work; (vii) work of commercial and similar agents (sales representatives); (viii) work of professional athletes; (ix) work of actors and musicians; (x) work at home; (xi) domestic work; (xii) work in hotels, restaurants, bars and similar establishments; (xiii) family industry; and (xiv) residency work of physicians undergoing training.