Mexico: Mexican Federal Labor Law Reform: Opportunities And Challenges For Employers With Operations In México

On November 29, 2012, departing Mexican President Felipe de Jesús Calderón signed a comprehensive reform of México's Federal Labor Law (FLL), instituting more than 300 changes, effective December 1, 2012. Many of the more significant amendments favor employers and, as a result, could potentially lead to future economic growth in México. These changes have implications for current and future United States employers with operations in México. This Client Alert provides a summary of the foundation of Mexican labor law and notable FLL amendments that are relevant to employers with operations in México.


The Mexican Constitution is the basis for Mexican labor law: it guarantees workers a set of minimum rights and grants the federal government exclusive power to enact labor laws to carry out and expand upon those rights. México's government passed its first labor law in 1931; the law has been amended several times - most significantly in 1970 and, now, in 2012. Additionally, México enacted the federal Social Security and Housing laws (these laws are not covered in this summary). Several government agencies and tripartite commissions implement, oversee and enforce Mexican labor laws. Generally, the constitutional, statutory and regulatory labor laws apply to all workers in the country, including those workers employed in México by United States employers. Failure to comply with Mexican labor laws can result in significant penalties and financial liability for employers.

Major Amendments to the FLL

Wage Payments

The Mexican minimum wage is expressed in pesos per day. The amended FLL formalizes the system for paying employees an hourly rate, directing that employees may not receive less than the equivalent of the daily minimum wage. Employers, therefore, must calculate an employee's hourly rate accordingly. In addition, the amended FLL formally permits employers to issue wage payments by check, direct deposit, transfers or electronic means, with the employee's consent.

Employment Contracts and Temporary Employment

The amended FLL now permits employers to enter into limited duration contracts with employees for seasonal work and for initial training agreements. Initial training agreements must provide a minimum term of three months for general employees and six months for executive employees.

The amended provision is significant because every employee must enter into a written employment agreement with his/her employer setting out the terms and conditions of employment and the duration of employment is presumed indefinite. Prior to the amendment, contracts for a limited duration were only permitted in the following situations: work on a vessel, work on a limited and defined project, or to hire artists and athletes, medical students and substitute workers.


The amended FLL outlaws discrimination based on ethnicity, national origin, age, disability, socioeconomic status, health, religion, immigration status, political opinion, sexual orientation, or marital status.


As amended, the FLL seeks to regulate the outsourcing of jobs. Previously, employers would outsource employment to avoid paying worker benefits. Now, among other requirements, employers may only hire temporary workers or independent contractors if those individuals will not be performing work similar to the work already performed by other employees of the company. In other words, the outsourced employees must perform work of a specialized character.

Employers may not outsource jobs to subcontractors to avoid labor law obligations. All outsourcing contracts must be in writing, and the employer has an affirmative duty to ensure that the contractor complies with Mexican labor laws. If the employer violates these new requirements, the outsourced workers will be considered employees of the employer, subject to the protections and benefits of full-time employees, such as notice requirements, severance payments, profit-sharing and social security.

Termination and Back Wages

The amended FLL permits employers to terminate employment at any time for "just cause." Under the statute, just cause for termination includes, among other situations, falsifying employment application materials, immoral conduct on the job, insubordination, using drugs or alcohol while at work, or refusing to comply with safety requirements. The FLL amendments add bullying and sexual harassment to this list. Note, however, that an employer must terminate the employee within 30 days of the event justifying the termination.

The amended FLL also requires employers to obtain an advisory opinion from the Joint Commission for Productivity and Training before terminating initial training or probationary employees.

Keep in mind that employers must still provide written notice of termination to each employee prior to termination. If an employee refuses to accept the notice, the employer must provide the written notice to the Conciliation and Arbitration Board. The notice must include the grounds for termination to establish that the employer had just cause for the termination. Regardless of the grounds for termination, certain workers are entitled to severance and bonus payments based on their years of service.

Employees have two months from the date of discharge to challenge their termination. Employees may challenge their termination as a wrongful or constructive discharge. A successful employee may seek reinstatement with back wages or, alternatively, indemnification equal to three months' salary, back wages and any accrued salary and bonuses. The amended FLL limits back wages to one year (plus interest after fifteen months), significantly reducing an employer's liability for a wrongful termination.

Productivity and Training

The FLL amendments created a National Productivity Committee to oversee other agencies and to establish state-based committees. Employers must undergo training and provide training for workers to increase and optimize productivity. The amendments require stakeholders (employers, unions, employees, academia and government) to reach agreements to measure and increase productivity. Finally, the amendments regulate the promotion process and eligibility, giving a worker's skills and productivity greater weight than seniority.

Union Elections and Transparency

The initial proposal to amend the FLL included vast reforms to union democracy and transparency. Mexican unions are powerful entities that have long influenced policy and legislation. Consequently, there is very little union transparency.

Due in part to the unions' political prowess, most of the union reform proposals did not survive the legislative process. For example, President Calderón attempted to pass a measure to permit employees to vote on their own contracts, but the Mexican Congress removed this provision from the bill.

Nonetheless, three notable reforms were passed. First, unions are now required to have labor leader elections by free and secret ballot. Second, unions must provide an accounting of all union finances to the government every six months, and employees may pursue a cause of action against the union if the union fails to provide the employee an accounting of union finances. Finally, the amended FLL repeals the "closed shop" laws, which required membership in the union.


Keeping in mind the fact that employees may not waive their constitutional labor and employment rights, the FLL amendments have broad implications for employers with operations in México and for employers seeking to establish operations in México. Because the potential financial penalties and liability for non-compliance can be significant, and because this summary is not exhaustive, companies with operations in México should consult with Godfrey & Kahn, S.C.'s Labor, Employment and Immigration Practice Group regarding their obligations under Mexican labor laws.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions