Terms and Conditions of Employment

The main sources of employment law are: (i) constitutional rights; (ii) international treaties approved by the Mexican Senate; (iii) precedents of the Supreme Court of Justice (jurisprudence); (iv) general rules of law; (v) tradition; and (vi) general rules of fairness.

1.2 What types of worker are protected by employment law? How are different types of worker distinguished?

The Mexican Federal Labour Law (MFLL) protects all the individuals involved in an employment relationship. The MFLL considers three different types of workers/employees: (i) unionised workers; (ii) non-unionised workers; and (iii) entrusted employees.

1.3 Do contracts of employment have to be in writing? If not, do employees have to be provided with specific information in writing?

According to the MFLL, employment contracts must be documented in writing; otherwise, in case of litigation, the employer is obligated to evidence the working conditions.

1.4 Are any terms implied into contracts of employment?

Employment agreements could be executed for a fixed time, specific task, initial training, specific season or indefinite time.

Employment agreements must contain: (i) information of the parties; (ii) term of the employment; (iii) services to be rendered by the employee; (iv) place in which the services will be rendered; (v) salary information (i.e. amount, terms to be paid, payment day, etc.); (vi) training references; (vii) holidays; and (viii) any other working condition agreed to by the parties.

1.5 Are any minimum employment terms and conditions set down by law that employers have to observe?

The minimum employment rights are: (i) vacation – six days for the first year of services, eight days for the second year of services, 10 days for the third year of service; after that, vacation days are increased by two days every five years; (ii) vacation bonus – 25 per cent of the salaries related to vacation days; (iii) 15 days of salary as Christmas bonus; (iv) maximum of 48 hours as weekly work shift for day shifts; (v) a rest day or day off per week; (vi) profit sharing; and (vii) minimum wage (currently, the daily minimum wage is $73.04 pesos), among others.

1.6 To what extent are terms and conditions of employment agreed through collective bargaining? Does bargaining usually take place at company or industry level?

The employer and the trade union are able to agree on any terms and conditions of employment through collective bargaining agreements (i.e. benefits, compensation, work shifts, training, positions, etc.) as long as the agreement: complies with the minimum mandatory rights and benefits granted by the MFLL; does not contain provisions that contradicts such law; and is filed before the Labour Court.

Employee Representation and Industrial Relations

According to the MFLL, unions have the right to call a strike against an employer in order to force the execution of a collective bargaining agreement (CBA), regardless of whether the union actually represents the majority of the employees. Due to the aforementioned, employers that do not have a CBA executed and duly registered before the Labour Court may face several calls to strike. It is mandatory for the Labour Court to reject any calls to strike of a trade union other than that with which the employer has previously executed a CBA duly registered before such authority. However, a different trade union does have the right to file a “Union Certification” procedure with the Labour Court. This procedure consists in this second union arguing that, rather than the union with which the company has executed the registered CBA, it is the employees’ organisation that represents the actual interests of the majority of the workers in the company. In cases where the second trade union is able to prove that it is the organisation that represents workers, it will have all the rights and duties conferred upon the trade union, including the right to call to strike.

2.2 What rights do trade unions have?

According to the MFLL, trade unions have several rights, such as: prepare their own by-laws and regulations; elect their representatives; and organise their management and administration, as well as their activities and action programmes. In addition, trade unions may also: file a call to strike with an employer in order to enforce the execution of a CBA; object to information being filed by the employer with the Treasury Department in connection to profit sharing; request the employer to withhold the employees’ contributions for the trade union agreed on the CBA; participate in the preparation of the companies’ training programmes; file a union certification procedure when they represent the majority of the employees of an employer; and execute the CBA, among others.

2.3 Are there any rules governing a trade union's right to take industrial action?

The MFLL recognises strikes as a temporary suspension of the work performed by a trade union of workers. The MFLL contains the applicable rules for strikes and their procedure. The notice for strike should be filed by the trade union before the competent Labour Court in order to accomplish one of the specific objectives mentioned in the MFLL (review the CBA or law collective bargaining agreement, obtain a balance between the employees’ and the employer’s rights, enforce the execution of a collective bargaining agreement or law collective bargaining agreement, secure the compliance with the remedies imposed for a breach of the collective bargaining agreement, request the compliance to obligations related to profit sharing, and support another strike that shares any of the goals listed herein). The majority of the employees should perform the strike; otherwise, after the strike starts, the employer may file a procedure requesting the inexistence of the strike.

Except for forcing the execution of a CBA, only the trade union in charge of the CBA may call for a strike or give notice of the strike. It should give notice of the strike to the employer, including a list of its demands, the objective of the strike, and the exact date and time when work activities will be suspended.

Once a strike notice has been given to the employer, any, and all, action against the employer’s assets should be suspended.

The labour union should also file a copy of the strike notice before the Labour Court at least six days prior to the strike in the case of private companies, and at least 10 days prior to the strike in the case of public services. Within the 48 hours following receipt of notice, the employer should file a written answer with the Court. The Court will then conduct a conciliation hearing.

The employees should appear at the conciliation hearing to proceed with the strike. The employer also should appear; otherwise, the strike notice remains in full force and effect. This pre-strike period may be extended at the request of the labour union, but the strike will take place if no settlement is reached at this stage.

During a strike, the employees should bring any ships, aircraft, trains, buses, or other means of transportation en route to their last scheduled destinations. For strikes affecting hospitals, clinics, and similar establishments, patients should continue to receive care until transferred to another location.

A minimum number of employees, as determined by the Court, should also continue working in activities that would cause severe problems or compromise the safety or well-being of the workplace, machinery, equipment, or raw materials, should they be completely suspended, or to enable suspended business activities to resume.

The Court may refuse to approve a strike if it fails to meet the requirements in the MFLL. The employees should then return to work within 24 hours.

It is illegal for employees to strike in a number of cases, such as when a majority of the striking employees engage in violent acts against the employer or his property, or where the employees work in government establishments or shops during wartime. If the Court declares a strike illegal, the strikers’ employment relationships are automatically terminated.

2.4 Are employers required to set up works councils? If so, what are the main rights and responsibilities of such bodies? How are works council representatives chosen/appointed?

The MFLL does not provide for works councils.

2.5 In what circumstances will a works council have co-determination rights, so that an employer is unable to proceed until it has obtained works council agreement to proposals?

3.2 What types of discrimination are unlawful and in what circumstances?

Any kind of discrimination is unlawful. According to the MFLL, discrimination practices are also prohibited during the hiring process.

3.3 Are there any defences to a discrimination claim?

In case of a claim for discrimination, the employer must evidence that no discriminatory practice or policy are applicable or have occurred; otherwise, a fine and other sanctions could be imposed on the employer.

3.4 How do employees enforce their discrimination rights? Can employers settle claims before or after they are initiated?

Employees affected by discriminatory practices or policies could file or claim before the Labour Court or the National Board to Prevent Discrimination.

Employers can settle claims before litigation is initiated or even when litigation takes place.

3.5 What remedies are available to employees in successful discrimination claims?

Remedies could be anything from a fine award of approximately US$30,000.00 to a severance payment.

3.6 Do “atypical” workers (such as those working part-time, on a fixed-term contract or as a temporary agency worker) have any additional protection?

Maternity and Family Leave Rights

According to the MFLL, maternity leave will last 12 weeks (six weeks before the child is born and six weeks after birth). The period before birth can be negotiated by the employee in agreement with the employer in order to be partially enjoyed after birth. In the case of adoption, maternity leave lasts six weeks.

4.2 What rights, including rights to pay and benefits, does a woman have during maternity leave?

During maternity leave, women are entitled to the benefits that they would normally receive. In addition, the following rules apply:

Pregnant women may not work under hazardous conditions, perform industrial tasks during the night or during extraordinary hours or during sanitary contingencies. Their salary, benefits and rights should not be affected.

Statutory maternity leave may be extended as necessary if work is not possible because of the pregnancy or the delivery of the child.

During the nursing period, the new mother is entitled to two additional 30-minute rest periods per day to feed the child in an adequate and hygienic place set aside by the employer; if this is not possible, the parties may agree to reduce her work shift by one hour.

When returning from maternity leave, the employee is entitled to return to her employment, provided that no more than one year has passed since the date of delivery.

Maternity leave does not affect longevity of service.

The employer should have enough seats available for pregnant women.

During maternity leave, the Mexican Social Security Institute will pay the working mother 100 per cent over her daily salary of social security contribution. If the maternity leave period is extended, she is entitled to 50 per cent of the daily salary of social security contribution for a period of up to 60 days.

4.3 What rights does a woman have upon her return to work from maternity leave?

The rights of women after maternity leave are: (i) to be considered as a regular employee; and (ii) two daily breaks of 30 minutes during the following six months as a lactation period or a one-hour reduced shift.

4.4 Do fathers have the right to take paternity leave?

Yes, employers are obligated to provide five working days as paternity leave.

4.5 Are there any other parental leave rights that employers have to observe?

Yes, to provide pregnant women with a safe place to work. In case of adoption, maternity/paternity leave applies and the time corresponding to the maternity and paternity leave shall be considering for purposes of seniority.

4.6 Are employees entitled to work flexibly if they have responsibility for caring for dependants?

Yes, if the employer and employee agree to modify the working conditions, the employee shall be able to render services on a flexibility basis.

Business Sales

5.1 On a business sale (either a share sale or asset transfer) do employees automatically transfer to the buyer?

Employees automatically transfer to the buyer in a share sale if the employees continue working for the buyer. In the event of an asset transfer, the following scenarios could be applicable: (i) employees could be transferred to the buyer; (ii) the employment of the personnel could be terminated; (iii) a mix of scenarios (i) and (ii); and (iv) the employees could continue working for the seller. The transfer of personnel is normally negotiated during the process of acquisition.

5.2 What employee rights transfer on a business sale? How does a business sale affect collective agreements?

The working conditions of the personnel could not be affected or reduced in case of employer substitution (transfer of employees); therefore, if a CBA is applicable to the personnel, such an agreement must be transferred to the buyer.

5.3 Are there any information and consultation rights on a business sale? How long does the process typically take and what are the sanctions for failing to inform and consult?

There is no obligation on the employer to inform or consult with the personnel regarding a business sale. However, it is always advisable to comment and discuss the terms of the sale with the Union representatives to avoid misunderstandings.

5.4 Can employees be dismissed in connection with a business sale?

If the decision is to terminate the employment of an employee due to the business sale, the employer must pay the corresponding severance (three months of integrated salary, plus 20 days of integrated salary for each year of services, plus a seniority premium).

5.5 Are employers free to change terms and conditions of employment in connection with a business sale?

No. If the working conditions/rights suffer a modification that reduces the employee’s rights, the employee will be able to sue the new employer, asking for the maintenance of the labour rights or for the termination of the employment and payment of the full severance, plus back salaries.

Termination of Employment

6.1 Do employees have to be given notice of termination of their employment? How is the notice period determined?

There is no obligation for the employer to inform employees in advance about the termination of employment.

6.2 Can employers require employees to serve a period of "garden leave" during their notice period when the employee remains employed but does not have to attend for work?

There is no prohibition for the employers to impose such a condition. However, the prevailing practice in Mexico is not to ask for a period of “garden leave” and terminate the employment the day on which the employee is informed.

6.3 What protection do employees have against dismissal? In what circumstances is an employee treated as being dismissed? Is consent from a third party required before an employer can dismiss?

In the case of a wrongful dismissal, the employee could sue the employer asking for his/her reinstatement or the payment of full severance. An employee could be dismissed with cause by the employer only if one or more reasons for termination determined by the MFLL are applicable; in this case, the employer has the burden to prove the reason for termination. If the employer is not able to prove the above, the payment of full severance plus back salaries will apply. The employer does not require consent from a third party to dismiss an employee.

6.4 Are there any categories of employees who enjoy special protection against dismissal?

No, there are not. Employees with an authorised leave of the Mexican Social Security Institute cannot be dismissed during such a period.

6.5 When will an employer be entitled to dismiss for: 1) reasons related to the individual employee; or 2) business related reasons? Are employees entitled to compensation on dismissal and if so how is compensation calculated?

Only when the employer rescinds the employment due to the cause of termination stated by the MFLL, is it not obligated to pay the severance; otherwise, if the employer terminates the labour relationship without reasons for termination, the severance payment will have to be paid. Severance consists in the payment of three months’ integrated salary, plus 20 days of integrated salary per year of services (integrated salary is calculated adding to the salary all benefits and payments earned by the employee), as well as seniority premium.

6.6 Are there any specific procedures that an employer has to follow in relation to individual dismissals?

No, there are not (except for termination with cause in which a notice should be delivered during the termination). However, it is recommended to execute termination agreements, which must be ratified before the Labour Court for its enforceability.

6.7 What claims can an employee bring if he or she is dismissed? What are the remedies for a successful claim?

Claims or legal actions that an employee can bring are: (i) reinstatement in his/her job; and (ii) payment of legal severances. In both cases, the payment of back salaries and other benefits are part of the claims remedies.

6.8 Can employers settle claims before or after they are initiated?

Yes, the employer is able to settle, before or during, a labour claim at any stage of the procedure before the Labour Court resolves the case.

6.9 Does an employer have any additional obligations if it is dismissing a number of employees at the same time?

No, there are no additional obligations. However if the personnel will be substituted by new equipment or technology, the employer must pay, in addition to the severance, a month’s integrated salary.

6.10 How do employees enforce their rights in relation to mass dismissals and what are the consequences if an employer fails to comply with its obligations?

Employees are able to sue an employer, either individually or jointly for their reinstatement or for a full severance payment; if the employer obtains a resolution against its interests, and if it fails to comply with its obligations, the Labour Court could order the attachment of goods in order to preserve the rights of the plaintiffs in the case.

Protecting Business Interests Following Termination

From a labour perspective, restrictive covenants in general are not recognised by the MFLL due to the provisions contained in Article 5 of the Mexican Constitution. This Article expressly prohibits covenants in agreements or contracts by means of which a person “restrains temporarily or permanently to a determined lawful profession, industry or business activity” and grants individuals with the right and freedom to engage in any lawful activity except when there is a valid resolution that determines that the third party’s rights are affected.

In addition, the Mexican Constitution as well as the MFLL establishes that employees’ rights cannot be waived. This means that restrictive covenants or agreements run the risk of being considered null and void.

Notwithstanding, it is customary to include restrictive covenants and confidentiality clauses either in the employment contract, or in separate agreements, as grounds for justified causes of termination of employment in case said obligations are breached.

It is also common to agree to post-employment restrictive covenants on civil agreements in return for additional compensation for employees in return for performance of said obligations. Restrictive covenants shall remain in full effect between the parties until one of the parties brings an action against the other before the Courts, in order for the latter to issue a decision declaring the agreement void before the Civil Courts. Once the Civil Court declares the agreement to be null and void it will order for events to be “restituted” to their initial status by means of which an employee will be requested to deliver the compensation paid for performance of the obligations of restrictive covenants.

Notwithstanding the above, Industrial Property Law expressly includes that “the individual or company that contracts an employee that is working or has worked as a professional, advisor or consultant that renders or has rendered services for another individual or entity in order to obtain its trade secrets will be liable for the payment of damages and lost profits caused to such individual or entity”. A person or entity that, by means of any illegal way, obtains information that contains a trade secret, will also be liable for damages and lost profits.

7.2 When are restrictive covenants enforceable and for what period?

There are no judicial precedents in this regard. Based on our experience, in order for these clauses to be enforceable, it is important that they are limited to a specific territory, period of time, and industry. They must also identify the confidential information protected thereby.

7.3 Do employees have to be provided with financial compensation in return for covenants?

This is advisable, in order to strengthen their enforceability. For further information, please refer to question 7.1.

7.4 How are restrictive covenants enforced?

This will depend on the restrictive covenants, as well as on how the parties agree these covenants. One option may be by means of a civil agreement, filing a civil claim alleging damage and lost profits due to the breach of these covenants, and even criminal liability. Please refer to question 7.1 for further information.

Data Protection and Employee Privacy

8.1 How do employee data protection rights affect the employment relationship? Can an employer transfer employee data freely to other countries?

Even though the MFLL does not establish a specific provision on the matter, the Federal Constitution establishes the right of personal data protection. The Federal Law for the Protection of Personal Data in the Possession of Private Parties (Federal Law), effective on July 6, 2010, sets forth that all personal data processing or treatment (gathering, disclosure, storage, and use) is subject to the consent of the individual to which such data belongs, unless such processing is contemplated within one of the exceptions provided by the Federal Law.

In general terms, there are two main obligations under the aforementioned Federal Law that must be observed by the employer as data controller: i) the need to deliver a privacy notice to the data subject (employees), which must comply with specific requirements; and ii) the creation of a personal data department, which will promote the protection of personal data within the private entity and represent the private entity if an application for access, rectification, cancellation or objection of personal data is filed by the data subject with the employer or before the data protection authority (Federal Institute for Access to Public Information and Data Protection). The employer should also take the necessary measures to secure the protection of its employees’ personal data. The corresponding authority may sanction employers for not complying with these privacy protection obligations.

Employers can only transfer employee data freely in the country or abroad in case of one of the specific exceptions allowed by the Federal Law (i.e. permitted by Law or a Treaty, for prevention or medical diagnose, within entities of the same Group that operate with the same processes and internal policies, etc.) or in terms of the privacy notice; otherwise, the employees’ consent is required for the transfer.

8.2 Do employees have a right to obtain copies of any personal information that is held by their employer?

Yes, as long as the employee complies with the process and provisions to exercise the right to access his/her personal data as described by the Federal Law.

8.3 Are employers entitled to carry out pre-employment checks on prospective employees (such as criminal record checks)?

Yes; nevertheless, it is advisable to obtain express employee’s consent.

8.4 Are employers entitled to monitor an employee's emails, telephone calls or use of an employer's computer system?

Yes, as long as these communications are maintained in the work tools property of the employer. Notwithstanding the aforementioned, it is advisable to obtain express employee’s consent and recognition that these communications could be monitored by the employer.

8.5 Can an employer control an employee's use of social media in or outside the workplace?

Yes, as long as the employer establishes appropriate policies and dispositions in the internal labour regulations to enforce the applicable terms according to labour dispositions.

Court Practice and Procedure

9.1 Which courts or tribunals have jurisdiction to hear employment-related complaints and what is their composition?

Labour claims are resolved by Federal and Local Conciliation and Arbitration Boards (Courts). These are formed by representatives from the government, the employees’ sector and employers.

9.2 What procedure applies to employment-related complaints? Is conciliation mandatory before a complaint can proceed? Does an employee have to pay a fee to submit a claim?

All individual or collective disputes arising from labour relationships between the employer and the employee or between the employer and the trade union should be resolved before the Labour Courts that exist at the federal and local levels.

a) Individual disputes generally arise when an employee files a claim against an employer with the competent Board. Filing a claim initiates the “ordinary” procedure; after receiving the employee’s claim, the Board sets a day and time for a hearing that has two stages (conciliation, and claim and answer to such a claim).

During the conciliation stage, the Board seeks to facilitate a settlement between the employer and the employee. If the parties fail to settle, the lawsuit proceeds into its second phase: claim; and answer to such a claim. The employee may ratify, clarify, or make further claims and the employer may answer and challenge these.

Once this stage is finished, the Court sets an additional hearing for the parties to offer and render evidence to support their claims and objections. After introducing evidence, the parties are given time to file their final arguments. The file is then submitted in order for the Labour Court to issue the resolution and notify each of the parties.

After the parties are notified of the resolution, they have 15 days to challenge it by means of a constitutional proceeding (amparo) before the Collegiate Court of Labour Matters.

b) The collective conflicts procedure depends on the type of conflict filed by the parties (i.e. collective conflicts of an economic nature, and strikes). Please refer to question 2.3 for further information.

c) According to the MFLL, labour procedures before courts are free of governmental fees for the parties.

9.3 How long do employment-related complaints typically take to be decided?

The labour procedure takes around two to three years to be decided.

9.4 Is it possible to appeal against a first instance decision and if so how long do such appeals usually take?

The first instance resolutions are able to be appealed before the Federal Collegiate Tribunal by the amparo process. Such a process takes from five to nine months to be resolved.

Acknowledgment

The authors would like to acknowledge the assistance of their colleague Mary Carmen Fuertes Abascal in the preparation of this chapter.