Changes To The Contract
Making changes to the employment contracts unilaterally is prohibited bylaw. Any amendment has to be made with the consent of both contracting parties, in writing. Otherwise, any change made unilaterally by the employer may be deemed as sufficient ground to terminate the employment relation without any liability on the employee and with the obligation for the employer to pay full statutory severance.
Change In Ownership Of The Business
There are no specific rules when there is a change in control of the company. In consequence, if a change of control occurs due to a transfer of assets of the employer or a stock purchase, a specific analysis shall need to be made to determine necessary actions to be implemented (i.e. to inform the union’s leader about such change in control).
Social Security Contributions
The amount of social security contributions is determined by the following rules that vary according to the branch in which the social security system is divided in Mexico: (i) Occupational hazards, (ii) Illness and maternity, (iii) Disability and life, (iv) Day nursery and social benefits, and (v) Retirement, early retirement and old age, as well as to the level of salary the employees receive for their work.
For the National Fund for Employees’ Housing (in Spanish, “Instituto del Fondo Nacional de la Vivienda para los Trabajadores”, “INFONAVIT”) the employer must pay 5% of the employee’s consolidated salary as housing fund contributions administered by the aforesaid government agency.
For the Retirement Savings System (in Spanish, “Sistema de Ahorro para el Retiro”, “SAR”), employers have to pay 2% of the employees’ salary.
Accidents At Work
A working accident (or occupational accident) happens when an employee suffers an organic injury, malfunction or even death caused because of the activities performed at work. An occupational illness is considered a pathological state derived from the activities performed during work.
Employees who suffer a work-related accident or illness shall be entitled to:
- Medical and surgical assistance;
- Hospitalization, when required;
- Medication and curative materials;
- Necessary prosthetic and orthopaedic devices; and
- An indemnity.
In the event of a work related accident or illness, employers must provide employees medical attention, rehabilitation, hospital services, medicines, etc. In order to meet these obligations, employers register the employees with the IMSS, which assumes such obligations provided the employer pays the corresponding contributions in a timely manner. Under Mexican Social Security Law, employees receive payment of a subsidy from the IMSS equal to 100% of their salary during the time of disability for up to 52 weeks. If the employee recovers prior to 52 weeks and returns to work, or if permanent disability is determined, the payment ceases.
Discipline And Grievance
Articles 47 and 185 of the Law sets forth the legal causes for termination of the employment relation without any liability on the employer. In the case of employees in a position of trust (those who perform direction, supervision activities), the loss of trust is sufficient ground for termination as well.
Furthermore, even though low performance in Mexico is not considered as a legal cause for termination for most of the employees, such rule does not apply to sales people pursuant to article 291 of the Law, since said provision establishes that a significant and repeated decrease in the volume of operations is a special cause for termination of employment relationships, unless there are justifying circumstances.
Also, any additional disciplinary measure the employer wishes to determine for employment has to be included in the company’s Internal Work Regulations, which need to be produced by both the employer and employees, and be registered with the Labour Board/Courts to be enforceable.
According to the law, harassment is considered grounds for termination. Also, employers may not differentiate between employees on the basis of race, skin colour, gender, age, religion views, political opinion or social condition. Also the Llw sets forth that employees shall receive the same salary in the event they perform the same work, in the same position, with the same working shifts and same conditions for efficiency.
Compulsory Training Obligations
Employers have an obligation to train their employees, and the latter have to receive the training and instruction that may allow them to increase their standards of life, skills and productivity. Training and instruction programs have to be determined jointly by employer and employees through the Joint Committee for Training, and shall be taught either by the company’s own personnel or by specialized instructors certified by the Ministry of Labour and Social Welfare (in Spanish, “Secretaría del Trabajo y Previsión Social”, “STPS”).
Any debt contracted by the employee with the employer has certain restrictions regarding salary discounts. The amount claimable is limited to one month’s salary and the deductions to be made by the employer cannot be greater than 30% of the employee’s salary exceeding the minimum salary. Also, debts contracted by employees with employers shall not accrue interest.
Payments For Maternity And Disability Leave
In the event of pregnancy, the IMSS provides the mother with obstetric care, assistance in kind during six months of lactation and a bassinet for the new-born child. In addition, the employee shall be entitled to leave with full pay (subsidy paid by the IMSS) of 42 days before and 42 days after giving birth, being able to transfer up to 28 days from before to after.
Male employees shall be granted with a paid leave of 5 days for childbirth or infant adoption.
Employees who suffer a work accident are entitled to a subsidy paid from the 4th day of disability and for up to 52 weeks. The said subsidy shall be equal to sixty per cent of the employee’s last salary.
The parents of minors diagnosed with any type of cancer, will enjoy a license in order to accompany the patients through their corresponding medical treatments. The Mexican Social Security Institute may grant a subsidy of 60% of the employee’s salary in the event the employee has covered at least 30 weekly contributions in the period of 12 months prior to the date of diagnosis by the institutional medical services, and in case of not complying with such period, that the employee has at least registered 52 weeks of immediate contributions prior to the start of the license.
All insurances are covered by the IMSS as long as the employer makes the corresponding payments of social security contributions. If the employer fails to do so, then shall be liable to cover all the medical, hospital and health care in favour of the employee, in addition to other personal liability in which the employer will incur for failing to comply with its social security obligations.
Absence For Military Or Public Service Duties
The employer has an obligation to grant employees leave to comply with public service duties, such as electoral services/elections, during census and jury duties. They have also an obligation to provide employees leave for them to attend or perform a commission as part of the union, as long as the employees gave notice of such a situation in advance.
Works Councils or Trade Unions
Having a collective bargaining agreement executed with a union is not mandatory pursuant to the Law; however, in the event that an employer engages an employee adhered to a union, then it will have the obligation to enter into such agreement; otherwise, the relevant union may start strike actions and/or work stoppages against the employer.
In general terms, a trade union has the duty to represent its members in any matter which concerns them.
Collective bargaining agreements are common in Mexico and are legally enforceable. The main purpose of a collective agreement is to establish the working conditions under which services shall be rendered in one or more companies or establishments by the employees that will be covered by such agreements.
On 2019 the law had an important amendment in relation to unions and collective bargaining agreements as follows:
- Right to a free, direct and secret voting for union leaders
- Creation of the Federal Center of Conciliation and Labour Registry for the (a) union registrations, (b) the registration of collective bargaining agreements and (c) employee representation verification
- Sanction to employer’s interference in any Union matter
Employees’ Right To Strike
Trade unions acting on behalf of their members (workers) have the legal ability to initiate any proceedings to defend the employees’ interests. The most important right for trade unions is the right to strike. A strike is the temporary suspension of all work carried out at a certain business. The strike must follow one of the objectives listed as follows:
- To obtain a balance between production factors, harmonizing the employees’ and the employer’s rights;
- To obtain from the employer the execution of a collective bargaining agreement or demand revision thereof;
- To obtain the execution of a ‘law-agreement’ and demand the revision thereof;
- To demand the fulfilment of the existing collective bargaining agreement or the ‘law-agreement’;
- To request the fulfilment of legal provisions in connection with profit sharing;
- To support a strike having one of the objectives previously listed; and
- To request the revision of wages under the terms and conditions established in law
Employees On Strike
When on strike, the employment relationship is deemed as suspended, but not terminated.; therefore, employees cannot be terminated by any reason whatsoever by the employer throughout the duration of the strike.
Employers’ Responsibility For Actions Of Their Employees
Employers have full responsibility for all the acts carried out by their personnel, except in those cases where the conduct of the employees fall into the category of causes for termination without liability on employers. When not on duty, employees are fully responsible for their own actions.