Table of Contents

• Introduction
• 1) Employment Contract and the Start of the Employment Relationship
• A) Employer’s Concept
• B) Company and Establishment Concept
• C) Worker and Work Concept
• D) Trusted Employees
• E) Minor Workers
• F) What an Employment Contract Must Contain
• G) It Won’t Produce Any Legal Effect
• H) Preference to Hire Mexican Workers
• I) Contractual Responsibility of the Worker
• J) Waiver of Rights in the Contract
• 2) Labor Subcontracting
• A) Express Prohibition
• B) Subcontracting of Specialized Services
• C) Formalities
• D) Registration
• 3) Duration of Labor Relationships
• A) For An Indefinite Period
• B) By Work
• C) For a Certain Period of Time
• D) By Season
• E) Trial Period
• F) Initial Training

Introduction

After discussing the ways in which work relationships can be terminated in Mexico in the entry Types of Employment Terminations in Mexico, it is now time to follow the opposite idea. That is, explain how the employment relationship begins, how an employment contract is formed, and how long it can last.

The issue is not minor because even among the Mexican business community, especially small and medium-sized companies, there is a lot of ignorance of labor laws which, as we have specified in other entries, is fatal when it comes to labor disputes. That is why at beLegal Abogados S.C we want to contribute our grain of sand to clear up the most basic doubts.

In this sense, within this entry, you will find topics related to how labor relations start and what the employment contract should contain. Furthermore, what are the only cases in which the subcontracting of workers is allowed and, finally, the duration of the employment relationships, that is, for a certain period, indefinite period, by work and season, as well as the modalities of initial training and trial period. All of this information was analyzed pursuant to Mexican Labor Law.

Without further ado, let’s get started:

1) Employment Contract and the Start of the Employment Relationship

In Mexico, an employment relationship exists when a person performs personal work subordinated to a person through the payment of a salary regardless of the act that gives rise to it. Therefore, even if it is stipulated that the contract is of a civil nature, for example, but this labor subordination is derived from it, the contract shall acquire the nature of employment. Finally, it does not matter whether the contract was made in writing or verbally.

By subordinate relationship, of course, the legal one must be understood, in the sense that the worker is not free to decide the means to achieve the objective, much less the methods. If that were the case, we could be facing a Contract for the Provision of Professional Services (civil), but not work. See the following labor binding precedent: SUBORDINATION. ESSENTIAL ELEMENT OF THE EMPLOYMENT RELATIONSHIP^[1].

A) Employer’s Concept

For the subordinate employment relationship and in terms of the Federal Labor Law, the employer is any individual or legal entity who uses the services of one or more workers.

On the other hand, if the worker, in accordance with the agreement with his employer or custom, uses the services of other workers ‘unrelated’ to the employment relationship, his employer shall also be the employer of the latter.

B) Company and Establishment Concept

For the purposes of labor matters, a company is understood to be the economic unit of production or distribution of goods or services, and an establishment is the technical unit that, as a branch, agency, or other similar form, is an integral part and contributes to the achievement of the company’s purposes.

C) Worker and Work Concept

Similarly, a worker is an individual who performs subordinate personal work for another individual or legal entity—a company.

Whereas work is understood as any human, intellectual, or material activity, regardless of the degree of technical preparation required by each profession or trade.

D) Trusted Employees

To identify when a worker is a ‘normal’ or trusted employee, the nature of his or her duties must be assessed, not necessarily the nominal position he or she holds.

In any case, the following shall always be trusted functions:

1.- Those of direction.

2.- Those of inspection.

3.- Those of Management.

4.- Those of oversight.

5.- Those that are related to the employer’s personal work within the company or establishment.

Finally, it’s important to highlight that directors, administrators, managers, and other people who exercise management or administration functions in the company or establishment shall be considered representatives of the employer and, as such, shall bind them in their relations with the workers. Therefore, if they decide to fire the worker, even without the consent of the employer, the employer may validly be sued for wrongful termination.

E) Minor Workers

According to the law, those over 15 years of age can freely provide their services, with the limitations established in the Federal Labor Law (working hours, overtime, dangerous jobs, etc.)

In any case, those over 15 and under 16 need authorization from their parents or guardians and, in their absence, from the union to which they belong, from the Labor Court, from the Labor Inspector, or, in the absence of these, from the mayor of their municipality.

In addition, those over 15 and under 18 years of age must obtain a medical certificate that certifies their fitness for work and undergo medical examinations periodically ordered by the corresponding labor authorities. Without these requirements, no employer shall be able to use their services.

Finally, the use of workers under 18 years of age is strictly prohibited in:

1.- In non-industrial establishments after 10 at night.

2.- In stores of intoxicating beverages for immediate consumption, bars or taverns, and nightclubs.

3.- In jobs that may affect their morality or good customs.

4.- In dangerous or unhealthy work that, due to the nature of the work, the physical, chemical, or biological conditions of the environment in which it is performed, or the composition of the raw material used, are capable of affecting the life, development and physical and mental health of minors.

F) What an Employment Contract Must Contain

Although we previously stated that the employment contract can even be verbal, the truth is that as an employer, you are obliged—and it benefits you more—for the contract to be expressed in writing in terms of article 26 of the Federal Labor Law^[2]. Also, it must contain at least the following:

1.- Name, nationality, age, sex, marital status, Unique Population Registry Code (CURP), Federal Taxpayer Registry (RFC), and address, both of the worker and the employer.

2.- Indicate whether the employment relationship is for a specific work or period, seasonal, initial training, or for an indefinite period and, where applicable, if it is subject to a trial period.

3.- Specify, in as much detail as possible, the service(s) that the worker must provide (functions)

It should be noted that if the functions of the worker are omitted to be determined, they shall only be obliged to perform work that is compatible with their strength, abilities, status, or condition and that is of the same type as those that form the purpose of the company or establishment.

4.- Indicate the place or places where the work must be provided.

5.- The duration of the work day.

6.- The method of payment and amount of the salary.

7.- The day and place of payment of the salary.

8.- The indication that the worker shall be trained according to the plans and programs established in the company.

9.- Other working conditions, such as rest days, vacations, and others agreed upon by the worker and the employer.

10.- The designation of beneficiaries for the payment of salaries and benefits accrued and not collected upon the death of workers or those generated by their death or disappearance resulting from a criminal act.

G) It Won’t Produce Any Legal Effect

That clauses be stipulated on the following topics:

1.- Jobs for teenagers under 15 years of age.

2.- A day longer than that permitted by law.

3.- An inhumane workday when it is notoriously excessive, given the nature of the work.

4.- Overtime work hours for those under 18 years of age.

5.- A salary below the minimum wage.

6.- A salary that is not remunerative, in the opinion of the Labor Court.

7.- A period of more than one week for the payment of salaries to laborers and farm workers.

8.- A place of recreation, inn, bar, cafe, tavern, or store to pay salaries, in the event that they are not workers of these establishments.

9.- The direct or indirect obligation to obtain consumer items in a store or specific place.

10.- The employer’s power to withhold wages as a fine.

11.- A lower salary than that paid to another worker in the same company for work of equal efficiency, in the same type of work or on the same day, due to age, sex, or nationality.

12.- Industrial night work or work after 10 p.m. for minors under 16 years of age.

13.- Waive by the worker of any of the rights or prerogatives set forth in the work regulations.

14.- Conceal an employment relationship with simulated legal acts to avoid compliance with labor and/or social security obligations. If you want to know more about social security obligations, we invite you to read the entry Employer’s Social Security Contributions and Obligations in Mexico.

15.- Register a worker with a salary lower than what they actually receive.

H) Preference to Hire Mexican Workers

In the Federal Labor Law, there is a preference for the national workers since it was stipulated that in every company or establishment the employer must employ at least 90% Mexican workers. Also, in the categories of technicians and professionals, the workers must be Mexican unless there are no workers in a specific specialty, in which case the employer may temporarily employ foreign workers in a proportion that does not exceed 10% of the workers of the specialty.

In any case, the employer and the foreign workers are jointly obligated to train the Mexican workers in the specialty in question.

On the other hand, doctors at the service of companies must be Mexican.

Lastly, this special provision is not applicable to directors, administrators, and general managers.

I) Contractual Responsibility of the Worker

It must be said that unlike the employer, who can be sued for breach of the employment contract by the worker, he cannot sue the worker, for example, because he has decided to quit his job and no longer wants to work. This is because, as a general rule, non-compliance with work regulations by the worker only gives rise to civil liability without coercion being imposed on him or her at any time.

J) Waiver of Rights in the Contract

The waiver that workers make of the wages earned, compensation, and other benefits derived from the services provided is void, whatever the form or name was given to it, whether in the employment contract itself or another subsequent document.

2) Labor Subcontracting

Since the reform of the Federal Labor Law in April 2021, an attempt has been made to limit ‘outsourcing’ in the law, which closed the gap for employers to hire personnel under this modality and thus avoid their employer’s liability. However, labor subcontracting was not completely eliminated but rather became more rigid. Here, we will tell you what the subcontracting hypothesis and minimum rules are.

A) Express Prohibition

As a result of the reform in question, the Federal Labor Law expressly prohibited the subcontracting of personnel, which is understood to be when an individual or legal entity provides its own workers for the benefit of another.

However, employment agencies do not fall into this category, which may intervene in the personnel hiring process in recruitment, selection, and training, among others. These agencies will not be considered employers since this character will only be held by those who benefit from these services.

B) Subcontracting of Specialized Services

In any case, the law allows subcontracting for specialized services or the execution of specialized works as long as these are not part of the corporate purpose or the predominant economic activity of the person who benefits from the subcontracting. Furthermore, as long as the contractor is registered in the special registry kept for this purpose by the Ministry of Labor and Social Welfare.

On the other hand, complementary or shared services or works provided between companies of the same business group shall also be considered specialized as long as they are not part of the corporate purpose or the predominant economic activity of the company that receives them. A business group shall be understood as established in article 2, section X^[3] of the Securities Market Law.

C) Formalities

The subcontracting of specialized services or the execution of specialized works must be formalized through a written contract that indicates the purpose of the services to be provided or the works to be executed, as well as the approximate number of workers who will participate in fulfilling said contract.

In any case, it’s important to emphasize that the employer who subcontracts specialized services or the execution of specialized works with a contractor who fails to comply with the obligations arising from the relationships with his workers shall be jointly and severally liable in relation to the workers used for said contracts.

D) Registration

Individuals or legal entities that provide subcontracting services must register with the Ministry of Labor and Social Security. To obtain registration, they must prove that they are up to date with their tax and social security obligations.

In any case, the registration in question must be renewed every three years to verify timely compliance with the payment of their contributions.

From the registration request to the registry, the Ministry of Labor and Social Welfare must issue a decision within 20 business days after receiving it, if not, the applicants may require it to issue the corresponding resolution within 3 business days following the presentation of the request. Once this period has elapsed without notification of the resolution, the registration shall be deemed to have been carried out for the legal effects to which it gives rise (positive ficta).

Finally, the Ministry of Labor and Social Welfare may at any time deny or cancel the registration of individuals or legal entities that do not comply with the minimum requirements provided for in the Federal Labor Law.

3) Duration of Labor Relationships

The Federal Labor Law recognizes different durations of employment relationships to give the employer greater flexibility in the performance of his activity. These categories are the following: A) for an indefinite period, B) for work, C) for a certain period of time, and D) for a season. In any case, there may be an E) trial period and F) initial training. Modalities that we will discuss below.

A) For An Indefinite Period

This is the general rule and does not merit further explanation. If you, as an employer, hire a worker and it is not established in the employment contract that it is one of the modalities mentioned above, the employment relationship shall be for an indefinite period, and you must comply with your obligations as an employer until the worker resigns, voluntarily separates, or is dismissed pursuant one of the hypotheses stipulated in the law.

B) By Work

This type of employment relationship duration is not very common, and, unfortunately, the lawmaker is very sparing in regulating it. In reality, it only states that the contract should stipulate as clearly as possible the work in question and that this type of duration of employment relationships could only be used when the nature of the work requires it.

Such could be the case of the construction of a civil work whose timing is uncertain and which, above all, implies the only source of income at that time for the employer. Thus, although the completion of the work is uncertain for the employer, it’s in his best interest to hire his workers for a specific job and not for an indefinite period of time, since if the work is completed and, therefore, his source of income, he would no longer have obligation to continue paying salaries even when there is no more work to be done.

To know a little more about construction contracts, we invite you to read our entry The Private Contract Construction in Mexico and Its Commercial and Labor Aspects.

C) For a Certain Period of Time

This modality, as its name indicates, implies that the employment relationship lasts for a fixed period of time in which, once concluded, there shall be no need to carry out a subsequent termination or liquidation procedure. However, this modality, in order to avoid simulations, is limited by law to operate in the following cases:

1.- When required by the nature of the work to be provided.

2.- When the purpose is to temporarily replace another worker.

3.- In other cases provided for by law, such as musicians and artists and other special workers regulated by the Federal Labor Law.

Notwithstanding the limitation on temporality, the law provides that if the term that has been set has expired but the subject of the work subsists, the employment relationship shall be extended for the entire time that said circumstance lasts.

D) By Season

In reality, this modality is regulated in an incipient manner, with scattered indications that it is applicable for special jobs, such as on the farm, for professional athletes, and a few others. In addition, it may be agreed to work in certain seasons of the year—without defining the minimum period of the season—for those tasks that are discontinuous and do not require the provision of services in months or even years.

E) Trial Period

This figure is only applicable to employment relationships that are for an indefinite period or that, when they have a limited duration, exceed 180 calendar days. This figure is intended to verify that the worker meets the requirements and knowledge necessary to carry out the work requested and that the relationship may not last more than 30 calendar days.

However, the trial period may be extended up to 180 days only for workers in management positions and other people who perform management or administrative functions in the company or for those who are going to perform specialized technical or professional tasks.

Meanwhile, during the trial period, the worker shall enjoy his full salary and social security benefits. However, at the end of the trial period and if the worker does not prove that he or she meets the requirements and knowledge necessary to perform the entrusted functions, in the opinion of the employer and taking into account the opinion—which is not binding—Joint Commission on Productivity and Training, the employment relationship shall be terminated without responsibility for the employer. A commission that, in any case, there is only an obligation to establish for companies that have more than 50 workers, in accordance with article 153-E of the Federal Labor Law^[4].

Finally, the trial period cannot be extended and must be stated in writing, otherwise, it shall be understood to be for an indefinite period, and the employment relationship cannot be terminated without it being considered a wrongful termination. Furthermore, if the trial period ends and the employment relationship continues, it shall become one for an indefinite period.

F) Initial Training

An employment relationship for initial training is understood to be one by virtue of which a worker is obliged to provide his subordinate services under the direction and command of the employer in order to acquire the knowledge or skills necessary for the activity to be carried out to be hired.

The validity of the employment relationship with initial training shall have a maximum duration of 3 months for workers in general and up to 6 in the case of workers for management, managerial positions, and other people who perform management or administration functions in the company. Like the trial period, the worker shall enjoy the payment of his full salary and the social security benefits contemplated in the law.

At the end of the initial training, if the worker does not prove competence, in the employer’s opinion, taking into account the opinion of the Joint Commission on Productivity and Training as well as the nature of the category or position, the training shall be terminated without liability for the employer.

In the same way, the initial training must be recorded in writing. Otherwise, the employment relationship shall be understood as for an indefinite period. Once the period has expired and the employer has not invoked the worker’s lack of competence, the relationship shall be for an indefinite period.

Finally, initial training is also non-extendable, and, like the trial period, these two modalities cannot be applied to the same worker on more than one occasion, nor in the case of different jobs or promotions, even when completed.

By beLegal abogados staff

Contact the firm at [email protected]

Or call our offices at (656) 271-41-43 for Spanish assistance or (656) 774-75-73 for English.

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^[1] Former Fourth Chamber of the Mexican Supreme Court of Justice. Seventh Judicial Epoch. Binding Precedent. Digital Registration: 242745.

^[2] Article 26.- The lack of the document referred to in articles 24 and 25 does not deprive the worker of the rights that derive from the work standards and the services provided, since the employer shall be held responsible for the lack of this formality.

^[3] Article 2.- For the purposes of this Law it will be understood: […]

Business group, the set of legal entities organized under schemes of direct or indirect participation of social capital, in which the same company maintains the control of said legal entities. Likewise, financial groups constituted in accordance with the Law to Regulate Groups shall be considered as a business group.

^[4] Article 153-E.- In companies that have more than 50 workers, Mixed Training, and Productivity Commissions shall be established, made up of an equal number of representatives of workers and employers, and they shall be in charge of:

I. Monitor, implement, operate and improve training and training systems and programs.

II. Propose the necessary changes in machinery, equipment, work organization and labor relations, in accordance with the best technological and organizational practices that increase productivity based on their current level of development.

III. Propose the measures agreed upon by the National Committee and the State Productivity Committees referred to in articles 153-K and 153-Q, with the purpose of promoting training, measuring and increasing productivity, as well as guaranteeing the equitable distribution of their benefits.

IV. Monitor compliance with productivity agreements.

V. Resolve any objections that workers may present regarding the distribution of productivity benefits.

In the case of micro and small businesses, which are those that have up to 50 workers, the Ministry of Labor and Social Security and the Ministry of Economy will be obliged to encourage their productivity by providing the programs referred to in the article. 153-J, as well as the training related to them. For this purpose, with the support of the academic institutions related to the topics of the aforementioned programs, they will convene, based on their branch, sector, federative entity or region, the micro and small entrepreneurs, the workers and unions that work in said companies.