Employment Lawyer in Mexico City

Fired in Mexico? Severance Rules Every Foreigner Should Know

The first shock for Americans in particular: Mexico has no at-will employment. An employer cannot legally end the relationship just because it wants to — dismissal without a legally proven cause triggers a severance formula written into the Federal Labor Law (LFT):

• 3 months of salaryas constitutional indemnification — or reinstatement, at the worker’s choice (Art. 48 LFT).
• 20 days of integrated salary per year of service in the cases where reinstatement is not pursued or not available (Art. 50 LFT).
• Seniority premium of 12 days per year with a legal salary cap, plus proportional aguinaldo, vacations and vacation premium.
• Back pay (salarios vencidos) if the case is litigated and won — capped at 12 months, with interest after that.

One deadline controls everything: dismissal claims prescribe in two months from the day after the separation (Art. 518 LFT). If you were just let go, the clock is already running.

The Mandatory Conciliation Hearing — Where Most Cases Are Won or Lost

Since the 2019 labor reform, most individual disputes cannot go straight to court. The law requires a prior conciliation hearing at a Labor Conciliation Center (Art. 684-B LFT) — federal centers under the Ministry of Labor (STPS) for federal industries, local centers for everything else. Exceptions exist for discrimination, sexual harassment and similar protected cases (Art. 685 Ter LFT), which may file directly.

Here is what the brochures don’t say: the conciliation table is where most of the money changes hands. Walk in without your severance calculated and you will hear a “final offer” that sounds reasonable and is not. A convenio signed and ratified there is essentially final — there is no renegotiating it next month. Walk in with real numbers and a strategy, and conciliation becomes the fastest way to a fair payout, usually in weeks instead of the years a trial takes.

Our complete approach to preparing and negotiating these hearings is documented (in Spanish) on the labor conciliation page. For foreign clients we run the same playbook, briefing you in English before and during the hearing — and if no dignified agreement appears, we take the non-conciliation certificate and file suit.

Before You Sign a Mexican Work Contract: What to Check

Mexican work contracts are short compared to US offer letters, but a few clauses decide everything if the relationship sours:

• The salary actually written down. Severance is calculated on your registered salary — schemes that put part of your pay “outside” the contract or the IMSS registration shrink your severance and your social security coverage.
• Who the employer really is. Foreign parent, Mexican subsidiary, staffing entity? The entity on the contract is the one you would have to sue — and outsourcing structures have been heavily restricted since 2021.
• Trial periods and temporary terms. Legal, but only within the limits the LFT sets — a “permanent trial period” or endless chain of temporary contracts is not enforceable.
• Choice-of-law clauses. A contract saying Texas or Ontario law governs does not strip you of Mexican labor rights for work performed in Mexico — but it signals how the employer plans to litigate.

A contract review before signing costs a fraction of what any one of these clauses costs after a dismissal. We review the document, flag what is missing or illegal, and tell you what is standard — in English, before you commit.

Labor Rights That Don’t Depend on Your Nationality

Mexican labor rights attach to the work relationship itself. If you render subordinated work in Mexico, these statutory minimums are yours — visa status, passport and what the contract says notwithstanding:

If any of these were never paid, they can usually be claimed as part of a severance dispute. Our labor law practice page (in Spanish) covers the full range of employee and employer matters we handle.

For Foreign Companies Hiring in Mexico: The Obligations That Surprise Employers

We advise employers too — and the honest brief for a foreign company entering Mexico is that the labor framework is workable, but only if you price these in from the first hire:

• Profit sharing (PTU).Employees are entitled to 10% of the company’s taxable profit each year, distributed under the LFT’s formula with a legal cap per employee. It is not optional and not a bonus you design.
• REPSE for contractors.Since the 2021 subcontracting reform, providing specialized services with your own personnel to another company requires registration in the STPS’s REPSE registry — and hiring an unregistered contractor exposes the client to joint liability and tax consequences.
• Termination always has a price. Budget severance as a cost of every position, document performance issues in real time, and treat negotiated exits as the norm rather than the exception.
• Statutory benefits and IMSS. Aguinaldo, vacations, vacation premium and social security registration are floors set by law — misclassifying employees as contractors to avoid them is the most litigated mistake we see.

We work both sides of this system, which is exactly why our advice to employers is unsentimental: compliance from day one is dramatically cheaper than your first labor lawsuit.

Common questions from foreign clients

Know Your Real Numbers Before You Sign Anything

Whether you were dismissed, are about to sign a contract, or are hiring your first Mexican employee — the first consultation gets you a written diagnosis, your severance math and a closed quote, in English, for $2,000 MXN (about $100 USD).

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