Regardless of whether you are a small, medium or large business, it is essential that a well-drafted employment contract be in place for every employee. Depeding on the country you are hiring your talent, employment agreement will differ. Let’s see together hows does employment contracts in Mexico work.
Jump to a key chapter:
Table of Contents
What is an employment contract?
An employment contract is a binding agreement between an employer and the employee that sets out enforceable terms and conditions that govern the employment relationship.
Each contract sets out different employment conditions, rights, responsibilities and duties depending on the employee, the position and so on. However, every employment contract in Mexico must abide by the principal sources of law to employment relationships in Mexico which are the Mexican Constitution (Constitución Política de los Estados Unidos Mexicanos) and the Federal Labour Law (FLL).
Employment contract can be in writing or in verbal depending on the country you are hiring your talent. However, written employment contracts in Mexico are mandatory.
During the period of employment, both employer and employees must stick to the contract or agree to update the contracts if there is any change.
What do you must include in the employment contract?
An employment agreement outlines the fundamental aspects of the employment relationship to reduce the risk of misunderstanding or confusion. Terms must be cleat and agreed by both parts.
As said earlier, every employment contract is unique. However, there are specific terms and conditions that must appear in employment contracts in Mexico. Article 25 states that the employment contract in Mexico must contain the following information:
- The employee’s basic information: complete name, nationality, age, gender, marital status and domicile, federal taxpayer number and Unique Population Code;
- The employment contract term: whether the contract is for an indefinite term, a defined term, specific job, or initial training, and whether the employee will be subject to a probationary period or seasonal work;
- The description of the activities performed during the service;
- The workplace, in other words, the place or places where the services will be performed;
- The work hours and schedule;
- The salary;
- The day and place of salary payment;
- Other provisions that may be agreed between employee and employer, including holidays and vacations;
The employment agreement should not contain any provisions which are ambiguous, contradictory, discriminatory or that are non-compliant to law or an applicable industrial instrument.
What are the minimum terms set down by law in Mexico?
The Federal Labour Law in Mexico provides for the following minimum benefits, which may not be waived whatsoever. This benefits are:
- Social Security Benefits
- Profit Sharing: Employers are required to distribute 10% of its annual taxable income among its employees.
- Paid Time Off
- Vacation Premium
- Christmas Bonus
Find more about the Mandatory benefits in Mexico.
Types of labor contracts in Mexico
Fixed-term employment contracts
This type of labor contract is defined for a specific and explicit time period in the document. It is performed under the following specific circumstances:
1.
When there is a need to reinforce the work team during the Christmas season, the beginning of the school year or the summer vacation period.
2.
To temporarily replace an employee during medical or maternity leave, vacation or disability. The contract ends at the end of the leave.
3.
To perform activities required only during a specific time, for example, a construction site, harvesting crops or working in a mine.
Indefinite employment contracts
These are the most commonly used in Mexico. They formalize an employment relationship with no term limit and that exceeds 180 days.
Depending on the epmployment contract, a trial period of 30 days maximum can be established, which can be extended up to 180 days, especially in the case of administrative, managerial or managerial positions, or in the performance of specialized tasks.
Temporary employment contract
This type of labor contract is used to regulate employment relationships that are performed for an indefinite period of time, but which contemplate discontinuous tasks. That is to say, when work is not performed year-round, for example, any season job.
Initial Training Contract
It is established when it is necessary for the employee to acquire certain skills and knowledge necessary for the performance of his or her duties.
When an employment relationship is established under these terms, the employee can, for example, access counseling or mentoring programs to acquire specific training and develop the necessary skills.
The initial training contract has a maximum duration of 90 days, but may be extended up to 180 days in the case of high-level employees or those with specialized professional knowledge.
If at the end of the training period the employee is qualified, the contract is automatically modified for an indefinite period of time and the employment relationship continues. Otherwise, the leader may terminate the employment relationship.
Trial period contract
The idea behind this type of contract is for the company to be able to evaluate the employee before hiring him indefinitely. Regardless of it being a trial period, the company must grant the employee all the mandatory benefits like social security. If, at the end of this period, the company decides not to continue the labor relationship with the employee, it can terminate it without any responsibility. Which essentially means not paying the severance. The duration of this type of contract is as follows.
- Up to 30 days in most cases
- Up to 180 days in the case of directors, managers, and specialized professionals
