Labor Law for Household Employees in Mexico – What must we pay?

December 5, 2018 Update:
The Supreme Court just ruled that IMSS payments are required for all domestic workers. In a unanimous ruling, Mexico’s Supreme Court issued an amparo, (injunction), ordering the Mexican Social Security Institute (IMSS) to implement a pilot program in the first half of next year to ensure that domestic workers have access to the IMSS benefits they are now legally entitled to.  This ruling currently includes even part time mozos & muchachas.

In this landmark ruling, our Supreme Court Justices ruled against the current~previous article of the federal Social Security Law that previously stated that paying benefits to domestic employees was voluntary.    Under this latest SCJN ruling, IMSS benefits are now mandatory for all domestic workers.

The Supreme Court’s policy does not take effect until some currently undefined time next year, when IMSS creates the new pilot program & issues rules, publishing the requisitos & reglamentos in the D.O.F (Diario Oficial de la Federación).

For people unfamiliar with employer’s payments to IMSS (roughly 2.6% of the employee’s income), IMSS benefits for employees include … ~medical coverage, … ~maternity, disability, retirement & injury benefits,  … ~life insurance,  … ~daycare services for working mothers … +plus the National Workers’ Housing Fund Institute, (as government housing & credit opportunities) for acquiring property; … and the Retirement Savings System and retirement funds administrators (AFOREs), which provide retirement and pension plans to Mexican workers.

The Judges of the Supreme Court’s second chamber determined that there is no constitutionally valid reason to exclude domestic workers from the mandatory social security scheme, because the current law is discriminatory.

**2.6% based on an accounting websheet offered by accountants:

We will report more details, when IMSS issues their new rules on implementing the new program for payments to all domestic workers – including even part time mozos & muchachas.

Nov. 4, 2015 Updates:
Re IMSS … The very talented & highly-reliable Chapala lawyer, Lic. Spencer McMullen notes that:   “Domestic workers are an exemption in the law,  for them IMSS is not mandatory.”    … yet …  “The law doesn’t distinguish between part time and full time employees.

But … that exemption does not exclude/exempt us from paying Aguinaldos, Severance Pay, Vacation pay, etc.

Other key calculations:

Severance pay:
 1.  Severance
If the employee worked more than 28 days, it’s at least an automatic 90 days of salary.  See the “Finiquito” section below for specifics.

2.  Prima de antiguedad
12 days pay per each year worked.

3.  Vacation pay
Vacation pay for current year worked. …  Remember that this is the official Mexican Labor Law’s “Daily Rate” ** (see below) … and remember they should also receive this pay for all past years worked.

1st year – 6 days salary
2 years – 8 days
3 years – 10 days
4 years – 12 days
5 to 9 years – 14 days
10 to 14 years – 16 days
15 to 19 years – 18 days
20 to 24 years – 20 days
25 to 29 years – 22 days
30 to 34 years – 24 days
35 to 39 years – 26 days

4. Aguinaldo
The annual aguinaldo is the equivalent of 15 days of “Daily Rate” pay.

It is NOT a Christmas bonus.   It is a mandatory wage payment that is due by the 20’th of December.   The aguinaldo is equivalent to at least “15 days wages”, and may be pro-rated if the employee has been working for you for less than a full year.

** If a worker is hired to work by the week, the “Daily Rate” equals their weekly pay … divided by 7.   If he / she  is hired by the month, the “Daily Rate” is the monthly amount divided by 30. 

**Daily Rate Simplest Example…  If you have an employee who works two days a week ~ for the entire year ~ for $350 pesos each day = $700 pesos a week:

$700 pesos / 7 days = $100 pesos per day at their “Daily Rate”
$100 pesos “Daily Rate” x 15 days of Aguinaldo pay = $1500 pesos

Note that if they work only a part year:
An alternate way of calculating the aguinaldo is determined by multiplying the total days they worked in current year by 15, then divide by 365 days, and then multiply by the daily rate:

For a part-year worker coming in for 2 days a month for 9 months =>
18 days … x  … 15 days of Aguinaldo = 270
270 / 365 = 0.7392 …    0.74 x   $Daily Rate ($100 pesos?)   = $ _____

Note.  The “Daily Rate” is based on a full week.  For example, if your maid only works two days per week,  and gets paid $700 pesos per week ($350 pesos per day of work).  You take the weeks salary of $700 divided by 7  =  $100 pesos is the Daily Rate.

*** Finiquito:
Calculators for final severance benefits being paid to domestic and household help (muchachas y mozos):

**If the employee quits,  then the amount owed to them is small.
Under CALCULAR – select: ” SOLO FINIQUITO “.

LIQUIDACION + 20 DIAS  … is for an outright termination without documented cause.

LIQUIDACION is a mutually agreed upon termination.

Salario Diario:   Take the amount paid in a week and divide by 7 for daily rate.
For example, a person who works 2 days a week and makes $350 p / day. Take $700 pesos divided by 7  => a daily rate of $100 pesos.

Salario Diario Integrado:   This is the same as the daily rate, unless you are paying extra for healthcare etc.

Área geográfica donde trabajó:   generally “B”,
… unless you are in Zone “A” which includes Mexico City, Monterrey, Acapulco, Guadalajara, Puebla, etc and all of of Baja California and Baja California Sur.

As always:  Prepare a termination letter + a copy.  Be sure it is signed and witnessed.

Termination Pay:
It is best to contact a good labor lawyer to find out the latest rules and the local twists of your state,   but for general information,  consider these rules of thumb:

1.  When an employee is terminated, he is entitled to termination pay; unless:

1a. The employment was for a specified period of time, such as the period of building a house, or for house sitting for a winter while the owner is out of town. It is best to have the time period stipuled in writing.

1b. Termination for “just cause”. This can be a very complicated issue.  It is best to get the help of a labor lawyer, as the employee can wreak havoc by appealing to the labor review board.   “Just cause” is spelled out in detail in the law.

Termination pay shall include 3-months of salary plus 20 days for each year worked plus prorated vacation and Christmas pay.
20 days of salary means 20 times the daily rate (which is 1/7 of the weekly rate).
Example: A maid worked 2 days per week for $50 pesos per day for 4 years. That is $100 per week. There are 13 weeks in 3 months. Her daily rate is $100/7 = $14.29.

Her termination pay would be ($13 x 100) + (20 x $14.29 x 4) = $2443.20 … plus any Christmas and vacation pay that may be due.

If the termination payment cannot be made at the time of termination, regular salary shall continue until the termination is paid in full.

If the employee quits voluntarily, termination pay is sometimes considered to be not required.*** (See the *** section above for calculating the finiquito .)
For this reason, a common tactic to avoid termination pay is to induce the employee to quit.  …  Be careful with this because Mexican Labor law describes what an employer cannot do to harass a worker and his family.

According to multiple lawyers, the severance pay package is negotiable … but it must be at the written agreement of both parties,  and generally requires a good relationship with the employee, plus signed receipts and the signed & witnessed release.

Original Post

Full Article at: “Labor Law for Household Employees in Mexico – What must we pay? and What should we pay?” Yucalandia is pleased to welcome a guest author contributor, Solomon Freimuth, who, along with his partners at “Calderón & Asociados” has fine expertise in Mexican Law focusing on issues affecting expats. We look forward to your comments!

What is an employee?

Mexican labor law says that anyone who performs a subordinated, personal service in exchange for remuneration is an employee. There is a jurisprudencia, or established legal precedent based on decisions of the Mexican Supreme Court, that defines subordination as …

Includes information on Mexican workers, part time domestic workers, house-cleaners, gardeners, aguinaldo requirements, vacations, holidays, documenting workers pay, firing and severance issues…
* * * *
Full text of article can be read at: “Labor Law for Household Employees in Mexico – What must we pay? and What should we pay?”

* * * *
Feel free to copy while giving proper attribution: YucaLandia/Surviving Yucatan.
© Steven M. Fry

Read-on MacDuff . . .

This entry was posted in Uncategorized. Bookmark the permalink.

4 Responses to Labor Law for Household Employees in Mexico – What must we pay?

  1. Kathleen says:

    What do you know about the Onapaffa permit for foreign vehicles? Does having a permit mean that the vehicle’s customs record is deleted and/or the vehicle can be sold?
    Hope you can help, Kathleen

  2. mikopus says:

    Is there a law in Mexico that states we must pay funeral costs for household employees? I had an employee that recently died at home of a hear attack. He ony worked for me for 6 months.

  3. Pingback: IMSS Now Required for All Domestic Workers in Mexico | Surviving Yucatan

  4. Bert Cyr says:

    When the requirement to pay IMSS for domestic workers became a requirement IMSS had no process to enrol someone who worked 1-3 days per week for you. The Yucatán paper just had an article that says they now have a process to do this and it is easy, anyone have any details on this?

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.