It is very important to have employee contracts. At some time you may need to be able to prove when your employee commenced employment, wage rate, hours of work, days worked, duties, issue of visitors and keys, probation period of 30 days, etc.
Many companies in Mexico, both foreign and local, try to avoid paying the mandatory benefits discussed above by hiring people as independent contractors under a service contract and paying them on a fees-for-services basis. However, regardless of whether or not the parties have signed such an agreement/clause, if a subordinate relationship exists between the individual service provider and the contractor, then Mexican law will determine that an employer/employee relationship exists. This relationship triggers the payment of all employee benefits required under Mexican labor and social security laws.
Mexican labor law establishes that most contractual waivers of employee rights are void, including waivers of mandatory benefits, salary and rights upon termination. Employees are free, however, to sign voluntary resignations and settlement agreements in which they waive the right to sue and recognize that the employer does not owe them any back wages or benefits.
Should there be an employee performance issue, a contract will protect you. Your contract should also include a reference to vacation pay and Aguinaldo. Mexican government labor boards where employees can file disputes are usually very pro-employee. Settlements of tens of thousands of pesos are not uncommon. At the time of termination, a signed document outlining the payment and reasons are critical. Changing the terms and conditions of employment, such as reduction of hours/pay which cause the employee to quit will require payment of full severance pay.
I have more than 15 years of HR experience as well as my husband who has many years in HR at a senior level at the largest nuclear station in the world in Ontario Canada and at a hospital in New Mexico.
I prepare employment contracts and termination letters in both languages for clients all over Mexico. For more information, please email: Sonia@SoniaDiazMexcico.com