Salaries are normally paid in cash on the last workday of the week – or with the employee’s prior consent, an employer may pay wages by check, direct deposit, transfers, or through any other electronic means.
Employees are entitled to Social Security, the bulk of which is paid by the employer based on the employee’s weekly wage. The employee pays a little, which is retained weekly by the employer. Payment to this program, through ISR, is every month and bi-monthly for INFONAVIT.
Social Security is comprised of 3 components: IMSS health care, senior’s pension (AFORE) and INFONAVIT. Many employees for fear of losing their job will not insist on being placed on SS. Nor do they understand the ramifications of not having contributions made to Social Security. Some simply ask for a slightly higher wage not thinking of long-term implications. Employers, at times, try to avoid SS altogether or, they underreport their employee wages to save a small amount of money.
IMSS is government healthcare supported by employer contributions and a relatively small number of individuals including some expats who pay for the coverage. For employees, it provides full health coverage including medical clinics, hospitals, medications and dental. One can not substitute Seguro Popular for IMSS.
Pension (AFORE) as the name implies is similar to US Social Security or Canadian CPP and is based on contributions related to an employee’s wage and years of employment. Compared to foreign standards it is not a lot of pension income but certainly important for retired seniors.
INFONAVIT was started in 1972. It provides homes to Mexicans who otherwise could not qualify for financing nor save for a down payment. The interest is extremely low. The amount one qualifies for is based on their wage and duration of employment reported by the employer. After a time, a person qualifies for assistance. Example based on an actual case, an employee works for a small organization making 1200 pesos a week. After a very few years, she bought an INFONAVIT in August 2015. The home is 280,000 pesos. She contributed 1500 pesos to the purchase price and the rest from INFONAVIT. Her payment is 1497 pesos per month to pay off the home. All closing costs were paid by the same program. The homes are basic and may start at ~500 sq ft on one floor. Some are up to double that size with a second floor. In more expensive areas and with bigger homes, prices go up accordingly but seldom go beyond 700,000 pesos. The person can also buy land or any home from their INFONAVIT credits. If one does not qualify for the full amount they may borrow from the pension noted above or qualify for a bank loan for a portion. The housing loan payment is deducted from the employee’s wage.
An employee making for example 1000 pesos a week would cost the employer approx. 800 pesos a month for this coverage. It is important employees are provided Social Security and to be based on full wage. The ramifications are significant.
Vacation pay as per Articulo 76 of the LEY FEDERAL DEL TRABAJO is to be provided to workers including those that provide seasonal and intermittent services in proportion to the number of workdays in the year either before the vacation or before the year’s end if no vacation was taken. Vacation pay is paid in one lump sum. The vacation pay must equal the required number of vacation days of salary plus 25% of the amount (vacation premium) as per Articulo 80 of the LEY FEDERAL DEL TRABAJO.
To calculate the amount of vacation pay use the amount earned in a week divided by 7 to determine the daily rate. Multiply that times the number of vacation days x 1.25 (that is the 25% premium).
Example: employee earns 700 pesos in a week, divided by 7 = daily rate of 100 pesos. Vacation days after year 1 is 6 days. Therefore, 6 x 100 = 600 pesos x 25% extra for premium = 600 x 1.25 = 750 pesos.
Year 1 = 6 days Year 2 = 8 days Year 3 = 10 days Year 4 = 12 days Year 5 to 9 = 14 days Year 10 to 14 = 16 days Year 15 and more = 18 days
For each year the employee continues to work for the employer, he/she will receive an additional 2 working days. After five years, the employee’s vacation period will increase only 2 working days for every additional five years he/she works for the employer. In the formula above replace the “6” with the appropriate number of days.
Statutory Holiday / Sunday / Christmas Pay
If an employee is required to work on one of the Official Government holidays, they receive regular payment for the day plus double time for hours worked as per Articulo 74 of the LEY FEDERAL DEL TRABAJO.
Jan 1 New Year’s Day
First Monday of February* Constitution Day
Third Monday of March* Benito Juárez’ Birthday
May 1 Labor Day
Sep 16 Independence Day
Third Monday of November* Revolution Day
Dec 25 Christmas Day
Federal Election Day, once every 6 years.
*These 3 days are established by Mexican law and may be changed to tie in with a weekend.
Sunday Pay: If an employee is required to work on a Sunday, pay + 25% is required. If that employee has worked the other six days of the week, the employee is entitled to overtime pay as well as the 25% premium.
Aguinaldo (Christmas Payment): Aguinaldo is considered a regular part of an employee’s wages. It is not a bonus and is required by law to be paid to all employees as per Article 87 of the LEY FEDERAL DEL TRABAJO. Payment is to be made before December 20th although many pay a week or more earlier. The Aguinaldo amount to be paid is what an employee would earn over a 15-day period which is half of a typical month.
The easiest calculation is the amount earned in a week divided by 7 to determine the daily rate. Multiply that times 15 days.
Example: employee earns 700 pesos in a week, divided by 7 = daily rate of 100 pesos. Aguinaldo is 100 x 15 = 1500 pesos. If the employee worked only part of the year, pro-rate this payment. This is to be paid in cash or with the prior consent of the worker by bank deposit, debit cards, check, transfers or other electronic means. It is not to be paid in merchandise, vouchers, tokens or any other form intended to substitute currency.
Hours and Premium Pay
The working week must not exceed:
48 hours for day shifts 42 hours for night shifts 45 hours for mixed shifts
The working week consists of six working days. However, the daily or weekly distribution of hours can be agreed so that employees have all, or part of, Saturday and Sunday as regular days off.
Employees required to work on Sundays (as a regular work day) as noted above are entitled to an additional bonus amounting to an extra 25% of their usual daily wages.
An employee can only be required to work overtime in exceptional circumstances.
Employees are paid:
Double their usual wages for the first nine hours of overtime per week.
Three times their usual wages for each subsequent hour of overtime per week.
Employees are entitled to at least one full day of rest after six days of work. If employees agree to work on their day off, they receive triple their wages for that day. In addition, employees are entitled to a rest break of at least 30 minutes during a working day. If the rest break given to an employee is less than 30 minutes long or the employee is not entitled to leave the work facilities to rest, then that rest break must be determined as time actually worked and remunerated. As noted below under maternity right, a special rule applies regarding working mothers, who must have two additional daily breaks of 30 minutes each when breastfeeding.
Employees must obtain a certificate from the IMSS in the case of illness or injury (FLL and Social Security Law of 1997). Of course, they are to be provided IMSS by the employer.
Once a certificate has been obtained from the IMSS the entitlement to sick leave varies, depending on the type of illness and degree of incapacity. The IMSS decides whether sick leave is to be granted, as well as the amount to be paid to employees during the illness or injury. The IMSS pays this amount directly to the employees.
Pregnancy, Nursing Mothers, Adoption
They must not work night shifts in industrial plants that have a hazardous work environment; work after 10:00 pm in commercial or service establishments; work overtime; carry out any work that could endanger their health or that of their child. This includes work involving the use of considerable force (for example, lifting or pushing) and standing for long periods of time.
Pregnant employees are entitled to six weeks statutory maternity leave before and six weeks after giving birth. During maternity leave, the IMSS pays the employee’s registered salary. If the employee’s salary is above the cap registered salary (25 times the minimum daily wage), then the employer pays the difference between that amount and the employee’s total wage. Pregnant employees, subject to prior medical approval and authorization from the employer and IMSS, may transfer up to 4 weeks of the six weeks, which are supposed to be enjoyed prior to childbirth, to the moment after the birth.
During the nursing period, the new mother is entitled to two additional 30-minute rest periods every day to feed the child, in an adequate and hygienic place set aside by the employer. This provision is available to the mother for up to 6 months following the birth.
When returning from maternity leave, the employee is entitled to be reinstated, provided that not more than one year has passed since the date of childbirth.
Fathers are entitled to five days of paternity leave in the event of a child’s birth.
There are no rights for employees in cases of surrogacy in Mexico.
Female employees that adopt a child are entitled to take adoption leave of six weeks when they take placement of a child.
Fathers that adopt a child are entitled to five days’ leave when they take placement of a child.
Trial / Probationary Employment
These may be a maximum of 180 days for management, technical or specialized professional positions and up to 100 days for technical roles. Employees at lower levels may be offered a 30-day probationary period.