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With the deepening of globalization, when enterprises expand their business in multiple countries, cross-border labor compliance has become one of the most complex and severe challenges. To help enterprises systematically address this issue, we have collaborated with top labor lawyers from over 50 major jurisdictions worldwide (all recommended by Chambers, The Legal 500, or equivalent institutions) to jointly compile a Chinese-English labor & employment compliance guide exceeding 1 million words, and we will continuously update relevant key points.

This article publishes the key points of labor & employment compliance by September 2025 in Mexico. 

01 Overview of the Labor Law System

1.Legal System

Mexico operates under a civil law system.

2.Resources and Agencies

In 1931, Mexico enacted its first Federal Labor Law, later replaced by the Federal Labor Law of 1970 (“FLL”), which governs individual and collective labor relationships, mandates minimum employment conditions, and protects workers’ rights. 

02 Employment Qualifications and Classification

1.Employment Age

The minimum legal age for employment is 15 years.

There is no mandatory retirement age in Mexico, however employees may retire at 60 years of age with a reduced pension or 65 years of age with full pension.

2.Qualifications for Foreign Employers

Foreign businesses without a physical presence in Mexico must establish a legal entity, to lawfully employ local workers. This requirement ensures compliance with Mexican labor, social security, and tax regulations.

3.Classification of Employment

Under Mexican labor law, an employee is defined as an individual who performs personal, subordinated work for another person in exchange for payment of a wage. The employer is the person or entity that utilizes the services of one or more employees.

While the law does not provide a formal definition of an independent contractor, the classification depends primarily on the existence of a subordinated relationship; if such subordination is present, the relationship will be deemed an employment relationship regardless of contractual terms.

Similarly, there is no legal definition for contingent or agency workers.

4.Foreign Workers

Under Article 7 of the FLL, employers are required to ensure that at least 90% of their workforce consists of Mexican nationals, with an exception for executive, managerial, or highly specialized technical roles, which are not counted toward this ratio. Foreign employees must hold a valid work permit issued by the National Institute of Migration (INM) to legally work in Mexico.

03 Recruitment and Employment Contracts

1.Background Examination

Employment applications are not highly regulated; therefore the employer generally has flexibility with regard to the requirements that candidates must meet before being hired.

Any background checks must comply with the FLPPD. One of the requirements under this law is for applicants to receive a Privacy Notice before the collection or processing of their personal data.

2.Contract Types

The FLL assumes, as a general principle, that an employment agreement has been executed for an indefinite term, unless the nature or the particular type of service to be provided calls for an employment agreement for a specific task or term, or if the parties agree to execute an employment agreement for initial training or subject to a probationary period. 

The FLL further provides that employment agreements for an indefinite term are for continuous work, but the parties may agree that the services be provided intermittently, in cases where the services are required to be provided during a season or are not required to be provided during the entire week, month or year.

3.Probationary Period

For those employment agreements executed for an indefinite term or for a specific task or term of more than 180 days, the FLL establishes that the same may be subject to a probationary period of 30 days, or up to 180 days for executive positions, in order to verify that the employee has the necessary knowledge and skills to perform the services for which they have been hired.

04 Working Standards

1.Remuneration

In Mexico, salaries and all labor-related benefits must be paid in local currency (Mexican pesos). Employers may use various payment methods, including bank deposits, debit cards, wire transfers, or other electronic means, provided that the employee has given prior written consent for such payment method.

2.Statutory Benefits and Social Security

The FLL entitles employees to the following fringe benefits:

·  Year-end bonus

·  Yearly vacation period

·  Vacation premium

·  Mandatory paid holidays

·  Sunday premium

Article 12 of the SSL establishes that this regime is mandatory for employees, either permanent or part time, regardless of how the relationship originates or the type of business, even when the latter, by law, may be exempt from the payment of taxes or duties.

All social security contributions are calculated on the employee’s earnings. 

3.Working Hours

Under the FLL, the maximum regular daily and weekly hours employees can work are as follows:

·  Eight hours per day shift (48 hours per week)

·  Seven hours per night shift (42 hours per week)

·  Seven and a half hours per mixed shift (45 hours per week)

Under Article 59 of the FLL, employers may allocate the total hours worked per week to allow for an additional rest day, such as Saturday, to be enjoyed.

4.Rest and Leave

Employees are entitled to at least one day off per each six days of work. Preferably such day must be Sunday. If employees work on Sunday they are entitled to a 25% Sunday premium additionally to their regular salary.

Employees are entitled to annual vacation, the amount of which is based on seniority.

05 Occupational Health and Special Protection

1.Occupational Health and Security

The FLL regulates harm due to:

·  Occupational injuries

·  Industrial accidents

·  Occupational diseases

·  General illness or accidents

There are no mandatory unpaid medical leaves of absence in Mexico. If the employee needs an unpaid medical leave of absence due to a condition not recognized by the IMSS, the employee can request that the employer provide a leave, but the employer is not required to grant the employee’s request.

2.Special Protection

Other than the protections already mentioned above, Mexico does not have any additional generally applicable special protection regime.

06 Personal Information and Privacy

1.General Rules

The FLPPD and its Regulations establish that all personal data processing—including collection, use, storage, transfer, and disposal—is subject to the free, specific, and informed consent of the data subject, except in cases expressly provided for as exceptions under the law.

For the processing of sensitive and financial personal data, the law requires that the data subject’s consent be express, meaning it must be clearly and directly provided.

2.Transnational Transfer

In general, the prior consent of the data subject is required for international transfers of personal data. This consent must be informed and obtained through a compliant privacy notice.

07 Anti-Discrimination and Anti-Harassment

1.General Rules

Workplace equity and diversity in Mexico are supported by specific legal and policy requirements aimed at fostering inclusive, respectful, and non-discriminatory environments. Specific requirements regarding equity and diversity in the work place, include:

·  Employers with more than 50 employees have the obligation to have appropriate facilities for the performance of the services of employees with disability.

·  Employers cannot carry out or allow bullying or sexual harassment against any individual within the workplace.

2.Protective Characters

Expressly forbidding any kind of discrimination based on ethnic or national origin; age; gender; disability; health, economic or immigration status; religion; opinion; sexual orientation; pregnancy; marital status or any other basis that negatively impacts human dignity.

08 Internal Policies

1.Applicability

It is not usual to manage workforce through policies in Mexico. In Mexico due to the fact that employment agreements are mandatory and many labor and employment rights and conditions or governed by law. However the FLL makes reference to internal labor regulations, are not mandatory but are widely recommended as a best practice for employers.

2.Validity

These regulations must be drafted and approved by a joint employer-employee committee and registered with the Federal Center for Conciliation and Labor Registry to be legally enforceable.

3.Whistleblowing

There are no statutory whistleblowing protections for employees in Mexico, however, employers are required to implement confidential channels for employees to file anonymous reports.

09 Transactions

1.Employment Relationship

The rules governing transfer of undertakings in case of an M&A transaction depend on several factors. When a commercial transaction involves the sale or transfer of shares, there is no direct impact on employment relationships. The new employer shall not modify the existing employment agreements in any manner whatsoever.

2.Compensation

There is no statutory requirement for a mandatory compensation payment.

10 Termination of Employment

1.Termination Grounds

All employees in Mexico are protected against dismissal. An employer in Mexico may dismiss an employee without liability only if there is a cause for the dismissal.

Article 47 of the FLL enumerates specific kinds of conduct that are deemed cause for dismissal: (1) the use of false documentation to secure employment; (2) dishonest or violent behavior against the employer, customers or service providers; (6) negligently causing serious damage to the employer’s property; or (16) the commission of any other acts of similar severity.

2.Termination Procedure

In case of a termination with cause, the employer must deliver a termination notice to the employee, either directly to the employee or through the corresponding Labor Court.

An employee may appeal their discharge to a Labor Court, within two months of the dismissal following the date on which they personally receive the termination notice. The employer has the burden of demonstrating that the employee engaged in the conduct referred to above and described in Article 47 of the FLL.  

3.Severance and Compensation

Additionally, employees dismissed with or without cause, as well as those who resign with fifteen or more years of seniority, are also entitled to a seniority premium equivalent to twelve days’ salary for each year of service provided.  

4.Wrongful Termination

If an employer in Mexico wishes to terminate the employment relationship without cause, the employee is entitled to the following severance:

·  Three months’ full salary; 

·  days’ full salary for each year of service; and

·  Seniority Premium.

5.Mass termination and Layoffs

While the FLL establishes a process for mass terminations, in practice the same is not used.

11 Confidentiality, Non-Compete, and Non-Solicitation

1.Confidentiality

In Mexico, the protection of confidential business information, including trade secrets, is governed by the Federal Law for the Protection of Industrial Property (“FLPIP”). This law defines an industrial secret as any industrial or commercial information that is kept confidential by the person or entity exercising legal control over it, and which provides or maintains a competitive or economic advantage over third parties in the conduct of business.

2.Non-Compete and Non-Solicitation

Noncompetition or non-solicitation agreements whereby one of the parties is bound not to engage in economic activities similar to those usually carried out by the other party during a given period are void due to the provisions contained in article 5 of the Mexican Constitution.

12 Work Representation and Trade Unions

1.Work Representation

Under the FLL, the union must obtain a certificate of representation from the Federal Center for Conciliation and Labor Registration as evidence that it represents at least 30% of the employees of the company or establishment.

2.Trade Unions

Once the labor authorities issue the certificate of representation, the union may exercise its right to strike to compel the company to sign the proposed collective bargaining agreement. Collective agreements are executed by one or more employees’ unions with one or more employers or one or more employers’ associations.  They may be for definite or indefinite duration or for a specific project.

13 Dispute Resolution

1.Procedures & Enforcement

Most labor disputes in Mexico are single plaintiff litigation cases for wrongful termination requesting either reinstatement or severance payment.  Before filing a formal complaint, employees must attend a conciliation hearing. This is a prerequisite for litigation.

Parties may settle at any point before a final judgment is issued and decisions can be appealed through “amparo” proceedings before federal courts.

2.Waiver & Enforcement

Employees could not agree to waive statutory right.

14 Others

1.Latest Development & Trends

The most discussed and impactful initiatives are those related to expanding paternity leave and reducing the standard workweek—both of which reflect a broader shift toward more equitable and family-friendly labor policies.

2.Cultural and Religious Considerations

For international investors—particularly those from China—looking to establish or expand operations in Mexico, understanding the cultural and religious landscape is essential for building strong relationships and ensuring smooth business operations.

* To avoid ambiguity, this article should not be regarded as legal advice.

Authors

Mónica Schiaffino is a founding partner at Littler’s Mexico offices, with over 20 years of experience advising domestic and international employers across Latin America.Her expertise spans pension plans, expatriate labor structures, compliance programs, internal investigations, executive coaching, and collective bargaining.

Translator

Jin Dongjie, Master of Laws, associate at Anli Partners. Area of expertise: Labor Law, ESG Compliance, Dispute Resolution.