Labor Law in Mexico
Introduction
Mexican labor law is primarily governed by the Federal Labor Law (Ley Federal del Trabajo, LFT), originally enacted in 1931 and substantially reformed in 1970, 2012, 2019, and 2021. The LFT is rooted in Article 123 of the Constitution, which guarantees workers’ rights, including the right to a fair wage, social security, unionization, collective bargaining, and strike. The 2019 labor justice reform transformed the labor dispute resolution system, and the 2021 subcontracting reform significantly restricted outsourcing practices.
Constitutional Foundation
Article 123 of the Constitution is the cornerstone of Mexican labor law. It establishes the right to dignified and socially useful work, maximum working hours (8 hours per day, 48 hours per week for day shifts), minimum wage, overtime compensation, mandatory profit sharing, the right to strike, and the right to unionize. Article 123 is divided into Section A (governing private sector employees) and Section B (governing public sector employees).
Individual Employment Relationship
The employment relationship is defined as the provision of personal services under the direction and dependency of the employer in exchange for remuneration. The LFT presumes the existence of an employment relationship regardless of the contract’s form. Employees are entitled to: a written employment contract, minimum wage (set annually by the National Minimum Wage Commission, CONASAMI), mandatory profit sharing (10% of pre-tax profits), paid vacations, Christmas bonus (aguinaldo, at least 15 days’ wages), and social security benefits.
Subcontracting Reform 2021
The 2021 subcontracting reform (Ley de Subcontratación) severely restricted outsourcing in Mexico. The reform prohibits the subcontracting of core business activities and specialized services except for activities not forming part of the corporate purpose or economic activity of the beneficiary. Companies providing specialized services must register with the Ministry of Labor and Social Welfare (STPS). Failure to comply results in significant tax penalties and criminal liability.
Labor Justice Reform 2019
The 2019 labor justice reform replaced the former conciliation and arbitration boards (Juntas de Conciliación y Arbitraje) with a new system of Labor Courts (Tribunales Laborales) under the judiciary and a specialized Federal Center for Labor Conciliation and Registration (Centro Federal de Conciliación y Registro Laboral). The reform requires mandatory pre-litigation conciliation before filing a lawsuit, establishes oral trials, and creates a specialized labor conciliation body at the federal level.
Collective Labor Relations
The LFT recognizes the rights of workers to form unions (sindicatos), engage in collective bargaining, and strike. The 2019 reform introduced union democratization measures, including the requirement for direct, personal, and secret voting for union leadership elections and collective bargaining agreement ratification. Union registration is now centralized through the Federal Center for Labor Conciliation and Registration. The legitimacy of strikes depends on compliance with procedural requirements, including strike notice and the achievement of a strike majority.
Conclusion
Mexican labor law provides extensive protections for workers, rooted in the constitutional guarantees of Article 123. The 2019 and 2021 reforms have modernized labor dispute resolution, restricted abusive outsourcing, and enhanced union democracy, aligning Mexico’s labor framework with international labor standards under USMCA commitments.