Termination of employment in Mexico

Termination of employment in Mexico

Mexican labor law sets detailed procedures and protections for ending employment relationships. These rules apply to both employers and employees and are designed to ensure due process and fairness.

Termination by the employer

Employers may dismiss employees without liability only under specific conditions outlined by law.

• Dishonesty or providing false documents during hiring
• Acts of violence, threats, or assault at the workplace
• Intentional or negligent damage to property or equipment
• Revealing confidential information or trade secrets
• Repeated unjustified absences (more than three days)
• Serious disobedience or refusal to follow lawful instructions
• Failure to observe safety or hygiene measures
• Engaging in immoral acts or harassment, including sexual harassment
• Attendance at work in an inappropriate state (such as intoxication)
• Serving a prison sentence or lacking required documents attributable to the worker

The employer must formally notify the employee of the dismissal, either in person or through the appropriate labor authorities.

Upon termination, employers are required to pay for days worked and not yet paid, proportional Christmas bonus, holiday pay, and other contractually agreed benefits.

The employee must sign a receipt for the severance payment, and the employer should notify the Mexican Social Security Institute (IMSS) of the termination.

Dismissal due to pregnancy, marital status changes, or childcare responsibilities is explicitly prohibited.

Termination by the employee

Employees may resign without liability in several situations, particularly when the employer breaches contractual or legal obligations.

• Working conditions differ from those initially agreed upon (within first 30 days)
• Dishonest, violent, or abusive conduct by the employer or their representatives
• Reduction or non-payment of salary
• Malicious damage by the employer to the employee’s work tools
• Unsafe or unhealthy workplace conditions
• Any behavior by the employer disrespecting the employee’s dignity
• Other serious acts with similar consequences

Employees who wish to resign should provide written notice stating their reasons and specifying their last working day.

Severance and employee protections

Employees dismissed without justified cause are generally entitled to statutory severance payments.

• Three months’ salary as severance pay
• Proportional vacation pay and vacation bonus
• Proportional Christmas bonus (aguinaldo)
• Seniority bonus: 12 days’ wages per year of service (subject to a wage cap)

If the dismissal results from permanent work-related disability, the indemnity may reach 1,095 days’ salary.

In insolvency or bankruptcy, employee wage and severance claims have priority under Mexican law.

Termination procedures and documentation

Proper documentation is required when ending an employment relationship. Employers must record the reason for termination and maintain evidence that all payments and social security notifications have been completed.

It is customary for the final settlement to be documented in a formal agreement, signed by both parties.

Special protections and prohibitions

Certain categories of workers have special protections. For instance, terminations based on pregnancy, marital status, or childcare are not allowed.

FAQs

What severance payment are employees entitled to in Mexico?

Employees without justified cause for dismissal are entitled to at least three months’ salary, proportional benefits such as vacation pay, vacation bonus, Christmas bonus, and a seniority bonus based on years of service. Special cases like permanent disability have higher compensation amounts as prescribed by law.

How must employers notify employees of termination in Mexico?

Employers must notify the employee in writing, personally or through labor authorities, and clearly state the grounds for termination. Proper notice and documentation are required for legal validity, and the employer must pay all required benefits upon termination.

When can employees resign without liability in Mexico?

Employees can resign without liability when the employer significantly violates the contract, such as withholding pay, providing unsafe conditions, or committing serious misconduct. The resignation should be set out in writing and specify the reasons and final working date.

Is it legal to terminate employment due to pregnancy in Mexico?

No. Mexican law protects employees from dismissal on grounds of pregnancy, marital status, or responsibilities for young children. Such dismissals are considered discriminatory and are expressly prohibited.

What documentation is needed for termination in Mexico?

Termination requires formal written notice, a settlement agreement detailing final payments, and proof of severance receipt. Notification to social security authorities, such as IMSS, is also necessary to close registration of the worker.