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:
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
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.
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.
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.
Pres. Calderón signed a new Ley Federal de Trabajo this past Thursday. According to labor law experts, a number of rules governing expats and their employees have remained the same, while other sections have changed substantially.
Overall, the rules on aguinaldos and vacaciónes appear to have stayed the same, while there appear to be significant changes affecting expat employers with domestic or other workers regarding work rules, new interpretations on the rules for firing or disciplining employees for work problems. The experts are still sorting out the consequences of the rule changes, where initial interpretations are saying that there the law has loosened restrictions on employer’s abilities to discipline workers who are not doing their defined jobs, and looser restrictions (reduced protections) on the termination of employees.
Mexico’s new Federal Law on Work occupies 228 pages, with some overlapping clauses, so, we believe it best to NOT MAKE any definitive statements about the changes, until we hear from labor law experts and hear from our readers some first hand accounts about how the changes are actually working when dealing with problem-employees. Since it sometimes takes test-cases to ultimately determine how these changes actually affect ordinary employers, we will continue to monitor reports from across Mexico, and report them as “Updates” here in this article.
Alternately, if you do have employee problems that you want to address, we strongly suggest you contact a well-qualified labor attorney before taking any actions. Historically, worker’s rights in Mexico are substantially stronger than in the USA, Canada, or Europe, where it used to be nearly impossible to fire permanent full-time employees – while reports on the new Law say it includes new measures to address these problems.
In the meantime, please see our main article on Mexican Employees and Labor Rules at Labor Law for Household Employees in Mexico for instructions on the how to manage, and what to pay your Mexican household workers to avoid future Labor claims or unexpected lawsuits. Hints: You do owe them IMSS registration and payments if you direct any of your household help in their activities. If they act as independent contractors ~ without your directions and without you instructing them ~ … If you hire them on a project basis, which they complete independently… then they are not your employees, and the IMSS benefits and Aguinaldos may not be owed, but if you direct them, if you specify their work hours, if you instruct them on how to do the job, then they are your employees – and yes, they can sue after the fact for unpaid benefits.
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Finally, here’s our reminder that aguinaldos should be paid by December 20, in CASH: Gifts, food, turkeys, etc do not reduce the aguinaldo amounts owed to the household help.
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***If you got this far, you may deserve a bonus… We have an Excel spreadsheet Aguinaldo and Vacation pay calculator provided by a talented friend. Please contact us if you are interested in this calculator, though we make no representations or offers of accuracy or how it should be used. *grin*
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Disclaimer: This information is not meant as legal advice. It is for educational and informational purposes only. Government policies vary between States and offices, and Mexican Government officials have broad discretion in how they individually enforce policies, so, your personal experiences may vary. See a professional for advice on important issues.
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© Steven M. Fry
Read on, MacDuff.