June 1, 2012

Minimum Requirements for Hiring Personnel

By Pablo Sáenz

It is very important for companies to understand the minimum requirements with which they must comply when
hiring Mexican or foreign personnel. The minimum rights held by employees working in Mexico are provided
for in Article 123 of the Constitution of the United Mexican States and its regulatory law, the Federal Labor Law
(LFT, for its acronym in Spanish), the Social Security Law, which guarantees the right to health, medical
assistance and retirement and pensions for employees, and the National Workers’ Housing Fund law, which
regulates the housing needs of employees. When hiring personnel of Mexican nationality, companies should: (i)
ask the potential candidate to complete an employment application in the format used by the company for such
purposes, which form should request personal information from each candidate such as age, domicile, marital
status, etc.; (ii) if the candidate is accepted, execute the corresponding individual employment agreement, which
is the document necessary to evidence the salary and benefits pursuant to which an employee was hired; (iii)
register the employee with the Mexican Social Security Institute, the National Workers’ Housing Fund and pay
the corresponding fees to each of such organizations. In general terms, the LFT establishes the following
minimum rights for employees hired in Mexico: (i) maximum work schedule of 48 hours per week; (ii) a day of rest with payment of salary and benefits for each six days of work; (iii) a holiday/Christmas bonus each year of at
least 15 days of salary; (iv) an annual vacation period of at least six work days paid after the first year of
employment and increasing with each year of service; (v) an annual vacation bonus equivalent to at least 25% of
the employee’s regular salary and payable during the vacation period; and (vi) annual employee profit sharing of
10% of the net profits generated by the company and calculated and distributed according to the terms of the LFT
and the Income Tax Law. Furthermore, it should be noted that the lack of a written employment agreement,
failure to register the employees with the previously indicated institutions or failure to pay the corresponding
social security payments does not deprive the employee of the rights that arise from the employment relationship
and the referenced laws. Finally, when hiring foreign employees, companies must comply with the same
requirements and proceedings as for Mexican employees. However, in addition to the foregoing, and in
accordance with the Federal Immigration Act (Ley General de Población), foreigners must have a visa to work in
Mexico from the National Immigration Institute. The National Immigration Institute issues work visas subject to
certain requirements. Furthermore, certain additional special documentation, depending on the particular facts of
the hiring of the foreigner, is normally recommended.