Pursuant to Mexican Law, employees who perform
- direction, inspection, vigilance or supervision activities, when such are of a general nature (so that they apply to all the areas of a company); and / or
- personal services for the employer (so that they are in personal / direct contact with the employer regardless of their position / activities).
will be considered as trust-employees.
The classification of a trust employee depends on the activities performed and not on the name given to their position.
Based on this, Directors will be considered as trust-employees and therefore, some 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 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 Labor Law and a set procedure to terminate employees, at any time without incurring in liability, which includes, inter alia:
- false statements about work qualifications;
- breach to the disobedience or honesty principles;
- sexual harassment;
- alcoholism 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 cause of dismissal of 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, it won´t be entitled to request reinstatement in the job position, but will be obliged to receive the 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.