Mandatory Vacation Days Under Mexico’s Federal Labor Law: What Employers Need to Know

Regardless of hierarchy or job position, employees in Mexico are entitled to paid vacation days as a statutory mandatory benefit. Vacation days shall be granted to employees at least pursuant to the minimum statutory terms set forth in Mexico’s Federal Labor Law (FLL). Employers that fail to comply with the FLL’s requirements may be subject to fines and penalties up to a constructive discharge claim.

Quick Hits

• Vacation days are mandated under the Federal Labor Law as a benefit for all employees in Mexico.
• Employees are entitled to decide how and when they use their vacation days.
• Employees are also entitled to a vacation premium equivalent to at least 25 percent of their base salaries corresponding to the vacation period.

The following are key points of the FLL’s requirements related to the vacation entitlement:

• Vacation days are inalienable and unwaivable.
• The FLL requires employers to provide minimum mandatory days of vacation leave to employees. Employees are entitled to twelve days of paid annual vacation in the first year of service. The number of vacation days increases by two days each subsequent year of service, up to twenty days. After the sixth year of service, the number of vacation days increases by two days every five years of service.
• All employees are entitled to vacation days (not hours). Vacation days are based on seniority rather than time worked under a work schedule.
• Employees are entitled to enjoy their vacation days when the year of service is completed. However, the employer can discretionarily decide to grant vacation days before the applicable year is completed.
• Vacation days equate to business days. Weekly rest days and holidays are not considered when calculating vacation days.
• The statute of limitations (SOL) for employees to take vacation days is eighteen months from when the vacation days were earned; otherwise, vacation days are deemed lost. The SOL of an eighteen-month term is divided into two segments: employees may take their vacation days in the six months after they are earned. After the six-month period, employees have one year to demand their vacation time from their employer before a court.
• Employees are entitled to decide how and when to take their vacation days. A policy in place that describes the process for employees to request, authorize, and take vacation days would assist in controlling said “how and when” to use vacation days.
• An employer’s vacation policy may not provide for less than the minimum mandatory benefits and terms specified by the FLL.
• Vacation days may not be paid out under any circumstance except when the employee is discharged (prorated amounts will be considered).
• If the employer refuses to allow employees to take vacation days, the employer will be subject to fines upon an inspection by the labor authority or upon a claim filed by an employee demanding from the employer the provision of vacation days.

Finally, although the vacation premium is a different benefit from vacation days, these two benefits are directly related. The vacation premium is equivalent to 25 percent of an employee’s base salary correspondent to the vacation period. The FLL does not clearly state a specific date of payment and/or whether the premium shall be paid when employees take their vacation days.

Ogletree Deakins’ Mexico City office will continue to monitor developments and will provide updates on the Cross-Border and Leaves of Absence blogs as additional information becomes available.

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