jurisdiction
- Angola
- Austria
- Belgium
- Bosnia and Herzegovina
- Brazil
- Bulgaria
- China
- Colombia
- Croatia
- Czech Republic
- France
- Germany
- Hong Kong
- Hungary
- Italy
- Kenya
- Luxembourg
- Mauritius
-
Mexico
- Monaco
- Morocco
- Mozambique
- Netherlands
- North Macedonia
- Peru
- Poland
- Portugal
- Romania
- Singapore
- Slovakia
- Slovenia
- South Africa
- Spain
- Sweden
- Switzerland
- Turkey
- Ukraine
- United Kingdom
1. Dismissal of employees
1.1 Reasons for dismissal
At-will employment does not exist in Mexico, and termination at-will clauses are only applicable in favor of the employee, therefore employers may not terminate employment relationships without just cause (i.e. unfair dismissal).
There is a closed list of causes in the Mexican Federal Labour Law and a set procedure to terminate employees at any time without incurring liability, which includes, inter alia:
- false statements about work qualifications;
- breaches in obedience or honesty principles;
- vandalism;
- sexual harassment;
- alcohol in the workplace;
- revealing company secrets;
- refusing to comply with safety procedures; and
- four unexcused absences in a 30-day period.
As a result of a reform to the Federal Labour Law passed in December 2024, digital platform providers are now to be considered, if certain conditions are met, as regular employees of the digital platform company. In the case of digital platform employees, in addition to the causes indicated above, the employment relationship may be terminated, without liability for the employer, in the following cases:
- submitting false documentation when registering data on the digital platform;
- compromising, through recklessness or inexcusable carelessness, the security or privacy of the user or client of the digital platform;
- engaging in breaches of probity or honesty, acts of violence, threats, insults, harassment and/or sexual harassment, ill-treatment, discriminatory acts or other similar acts, during and in connection with their work;
- repeatedly failing to comply with the tasks, services, works or jobs accepted by the employee, as well as with work-related instructions without just cause;
- if the employee ceases to be active for a consecutive period of 30 calendar days.
Moreover, a special cause for termination of the employment relationship is also the disabling or closure/shut-down of the digital platform company for just cause and with prior notice to the employees.
If there is no substantial motive or evidence, labour relationships can also be terminated via a voluntary agreement where the employee is entitled to statutory benefits and possibly some form of compensation. (Each case must be treated individually through human resources).
If there is no termination with just cause or a negotiated exit for an employee, the employee is entitled to claim wrongful termination and sue either for substantial statutory benefits, lost salaries and the severance package, or reinstatement to the job. Note, however, that employers can always pay compensation in lieu of reinstatement.
Employees must claim within 60 days following alleged wrongful termination.
Before the employee is entitled to sue for either substantial statutory benefits or job reinstatement, the employee and the employer will be subject to a "conciliation hearing", which shall not last more than 45 calendar days. If the conciliation is not successful, then the employee will be entitled to proceed with his/her claims against the employer.
1.2 Form
If an employer has just cause to terminate an employment relationship, there is an obligation to give personal notice to the employee or, where not possible, to the competent Labour Court, and to prove the cause for dismissal. If the notice is not delivered, the termination will be deemed to be without cause, unless evidence to the contrary proves that the dismissal was justified.
Special rules apply to digital platform employees depending on the cause of termination. Any termination, restriction, or prohibition on connection to the digital platform that is not accompanied by a notice identifying the conduct giving rise to the termination decision will be void.
In the case of disablement or closure of the digital platform company, notice must be given within a period not less than fifteen days from the date on which the employer became aware of the justified cause for the disablement or closure of the digital platform.
1.3 Notice period
There is no obligation to serve a notice in advance to the employee in case of dismissal but only upon the dismissal moment. The notice shall contain the just causes for dismissal, and the date of their occurrence, which should have occurred during the last 30 days.
If it is not possible to deliver the notice to the employee, the employer shall serve the notice to the competent Labour Board and provide it with the last known domicile of the dismissed employee.
Failure to deliver the notice to the employee or to the Labour Board will be deemed dismissal without just cause unless evidence to the contrary proves that the dismissal was justified.
1.4 Involvement of employee representatives
The involvement of employee representatives in the dismissal is not mandatory nor common in México.
1.5 Involvement of a union
The involvement of a union in the dismissal will be tied to the actual rights and obligations assumed under the corresponding Collective Bargaining Agreement, which may provide for union representatives to be present during the act of providing notice for dismissal.
1.6 Approval of state authorities necessary
Not necessary.
1.7 Collective redundancies
Collective redundancies are only permitted in Mexico as a consequence of the closure of the company or the definitive reduction of jobs.
Such circumstances can, inter alia, be the result of:
- Acts of God;
- Employer’s disability or death (where the employer is an individual) that results in the termination of work;
- Non-profitability of the business;
- Depletion of the product (in the extraction industries);
- Bankruptcy, if the same results in the closure of the company or a definitive reduction of jobs.
The employer must obtain the authorisation of the Labour Board to implement collective redundancies. If they are approved, the employer must pay the affected employees the statutory severance package consisting of 3 months of salary – without the need to pay 20 days of daily wage per worked year.
In case of a definitive reduction of jobs, the employer shall take into consideration the seniority of the employees and primarily apply collective redundancies to employees with less seniority.
1.8 Summary dismissals
Summary dismissals are not allowed under Mexican law; failure to provide the corresponding notice to the employee will lead to the dismissal being considered as a dismissal without just cause.
1.9 Consequences if requirements are not met
If the employer dismisses an employee without just cause, or if it does not serve the notice of dismissal upon the dismissal, the employer will be obliged to pay the severance package and, in some cases, to reinstate the employee to his position.
1.10 Severance pay
Employees hired for an undetermined term who are dismissed without just cause are entitled to claim reinstatement or the payment of a mandatory severance package comprised of the amounts described below. Note that the determination of the “daily wage” should include the daily proportion of any employment benefits paid on a regular basis to the employee (e.g. private medical insurance; performance bonuses), and should amount to:
- 90 days of daily wage as Constitutional Indemnification
- 12 days of daily wage as Seniority Bonus for each year of service that the employee has worked. For purposes of this concept, the daily wage is capped at twice the amount of the minimum daily wage.
- Any accrued salaries and pro-rata benefits (including unused vacation days plus its vacation premium, Christmas bonus and any other accrued benefit).
- 20 days of daily wage for each worked year, as payment in lieu of reinstatement.
Employees hired for a determined term who are dismissed without just cause are also entitled to a severance payment, but this is calculated differently, as follows:
- 90 days of daily wage as Constitutional Indemnification
- 12 days of daily wage as Seniority Bonus for each year of service that the employee has worked. For purposes of this concept, the daily wage is capped at twice the amount of the minimum daily wage.
- Any accrued salaries and pro-rata benefits (including unused vacation days plus its vacation premium, Christmas bonus and any other accrued benefit).
- And, as a compensation in lieu of reinstatement:
- If the employment relationship was for a determined term of less than one year, an amount equal to half the total salaries for the duration of the services rendered.
- If the employment relationship was for a fixed term and exceeded one year, an amount equal to six months' wages for the first year, plus 20 days of daily wages for each subsequent year in which the employee rendered services.
Where an employee is dismissed for just cause under the Mexican Federal Labour Law, that individual will only be entitled to the payment of accrued salary and benefits, and will not be entitled to any of the other statutory severance payments outlined above.
1.11 Restrictive covenants
Non-compete arrangements on individuals are generally unenforceable under Mexican law, as they are perceived by courts to limit an individual’s constitutional rights to employment and the exercise of a profession.
However, the Mexican Supreme Court has ruled that under limited circumstances (e.g. where there is proportionate compensation, and limitation of time and geographic scope), non-compete agreements may be enforceable. The enforceability of non-compete (and no-solicitation) arrangements in Mexico must be carefully analysed on a case-by-case basis.
1.12 Miscellaneous
Relocation of the company / Change location of the work
Some court precedents establish that a change to the work place is a unilateral change to labour conditions. Therefore, it will allow an employee to terminate employment with just cause and consequently access the severance package payment.
2. Dismissal of managing directors
2.1 Reasons for dismissal
Pursuant to Mexican Law, employees will be considered trust employees if they perform:
- direction, inspection, vigilance or supervision activities, when of a general nature (applying to all areas of a company); and/or
- personal services for the employer (they are in personal or direct contact with the employer regardless of their position and activities).
The classification of a trust employee depends on the activities performed and not on the name given to their position.
Based on this definition, Directors will be considered trust employees and special rules will be applicable for their dismissal.
At-will employment does not exist in Mexico, and termination at-will clauses are only applicable in favour of the employee. Therefore, employers may not terminate employment relationships without just cause (i.e. unfair dismissal).
There is a closed list of causes in the Mexican Federal Labour Law and a set procedure to terminate employees, at any time without incurring liability, which includes, inter alia:
- false statements about work qualifications;
- breach of obedience or honesty principles;
- vandalism;
- sexual harassment;
- alcohol in the workplace;
- revealing company secrets;
- refusing to comply with safety procedures; and
- four unexcused absences in a 30-day period.
In the case of Directors, in addition to the regular causes, the employer may terminate the employment relationship with a trust-employee if there is a reasonable ground for loss of trust.
However, if the reason for dismissing a Director is loss of trust, and if the trust employee (i.e. the Director) was promoted from a non-trust employee position, the employer will have to switch him back to the non-trust position rather than to dismiss him.
If there is no substantial motive or evidence, labour relationships can be terminated via a voluntary agreement where the employee is entitled to statutory benefits and possibly some form of compensation (each case must be treated individually through human resources).
If in any case there is no termination with just cause or a negotiated exit for the Director, the Director is entitled to claim for wrongful termination and sue either for substantial statutory benefits, lost salaries and the severance package. Given that the Director is a trust employee, he/she won´t be entitled to request reinstatement in the job position, but will be obliged to receive the payment In lieu of reinstatement as statutory severance pay.
Trust employees must claim within 60 days following alleged wrongful termination.
Before the Director is entitled to sue for either substantial statutory, the employee and the employer will be subject to a "conciliation hearing", which shall not last more than 45 calendar days. If the conciliation is not successful, then the employee will be entitled to proceed with his/her claims against the employer.
2.2 Form
If an employer has just cause to terminate an employment relationship, there is an obligation to give personal notice to the employee or, where not possible, to the competent Labour Board, and to prove the cause for dismissal. If the notice is not delivered, the termination will be deemed to be without cause.
It is common practice in México for MDs to also hold a statutory position as members of the Board of Directors or Sole Directors of the company. In that case, the company’s shareholders meeting will have to approve the removal of the MD
2.3 Notice period
There is no obligation to serve a notice in advance to the employee in case of dismissal but only upon the dismissal moment. The notice shall contain the just causes for dismissal, and the date of their occurrence.
If not possible to deliver the notice to the employee, the employer shall serve the notice to the competent Labour Board and provide it with the last known domicile of the dismissed employee.
Failure to deliver the notice to the employee or to the Labour Board will be deemed as dismissal without just cause.
2.4 Involvement of employee representatives
The involvement of employee representatives in the dismissal is not mandatory.
2.5 Involvement of a union
The involvement of a union in the dismissal will be tied to the actual rights and obligations assumed under the corresponding Collective Bargaining Agreement, which may provide for the right for the union to be present during the act of providing notice for the dismissal.
Pursuant to Mexican Federal Labour Law, trust employees, such as Directors, cannot be members of the same union as normal employees.
2.6 Approval of state authorities necessary
Not necessary.
2.7 Collective redundancies
Collective redundancies are only permitted in Mexico as a consequence of the closure of the company or the definitive reduction of jobs. Such circumstances can, inter alia, be the result of:
- Acts of God;
- Employer’s disability or death (where the employer is an individual) that results in the termination of work;
- Non-profitability of the business;
- Depletion of the product (in the extraction industries);
- Bankruptcy, if the same results in the closure of the company or o a definitive reduction of jobs.
The employer must obtain the authorisation of the Labour Board to implement collective redundancies. If they are approved, the employer must pay the affected employees the statutory severance package, except for the requirement to pay 20 days of daily wage per worker.
In case of a definitive reduction of jobs, the employer shall take into consideration the seniority of the employees and primarily apply collective redundancies to workers with less seniority.
2.8 Summary dismissals
Summary dismissals are not allowed under Mexican law; failure to provide the corresponding notice to the employee will lead to the dismissal being considered as a dismissal without just cause.
2.9 Consequences if requirements are not met
If the employer dismisses an employee without just cause, or if it does not serve the notice of dismissal upon the dismissal, it will be obliged to pay the severance package.
2.10 Severance pay
Trust employees such as Directors, hired for an undetermined term who are dismissed without just cause are entitled to the payment of a mandatory severance package comprised of the amounts described below. Note that the determination of the “daily wage” should include the daily proportion of any employment benefits paid on a regular basis to the employee (e.g. private medical insurance; performance bonuses), and should amount to:
- 20 days of daily wage for each worked year.
- 90 days of daily wage as Constitutional Indemnification.
- 12 days of daily wage as Seniority Bonus for each year of service that the employee has worked. For purposes of this concept, the daily wage is capped at twice the amount of the minimum daily wage.
- Any accrued salaries and pro-rata benefits (including unused vacation days plus its vacation premium, Christmas bonus and any other accrued benefit).
Employees hired for a determined term who are dismissed without just cause are also entitled to a severance payment, but this is calculated differently, as follows:
- If the employment relationship was for a determined term of time less than one year, an amount equal to the amount of the salaries of half the time of services rendered.
- If the employment relationship was for a determined and exceeded one year, in an amount equal to the amount of wages of six months of wage for the first year and 20 days of daily wage for each of the following years during which the employee rendered services.
- 90 days of daily wage as Constitutional Indemnification.
- 12 days of daily wage as Seniority Bonus for each year of service that the employee has worked. For the purposes of this concept, the daily wage is capped at twice the amount of the minimum daily wage.
- Any accrued salaries and pro-rata benefits (including unused vacation days plus its vacation premium, Christmas bonus and any other accrued benefit).
Where an employee is dismissed for a just cause under the Mexican Federal Labour Law, that individual will only be entitled to the payment of accrued salary and benefits, and will not be entitled to any of the other statutory severance payments outlined above.
2.11 Restrictive covenants
Non-compete arrangements on individuals are generally unenforceable under Mexican law, as they are perceived by courts to limit an individual’s constitutional rights to employment and the exercise of a profession.
However, the Mexican Supreme Court has ruled that under very limited circumstances (e.g. where there is proportionate compensation, and limitation of time and geographic scope), non-compete agreements may be enforceable. The enforceability of non-compete (and no-solicitation) arrangements in Mexico must be carefully analysed on a case-by-case basis.
2.12 Miscellaneous
Relocation of the company / Change location of the work
Some court precedents establish that a change to the work place is a unilateral change to labour conditions. Therefore, it will allow an employee to terminate employment with just cause and consequently access the severance package payment.