Mexican Labor Law Basics for Chinese Business Owners

What should Chinese owners know first about Mexican labor law?

The core text is the Ley Federal del Trabajo (LFT), a federal statute whose current version we read on the Cámara de Diputados site, last reformed on 14 May 2026 (LFT). The law defines an employment relationship as personal subordinated work for a wage, whatever its form or name, and presumes the contract exists (arts. 20, 21). That is why calling someone a consultant or a partner does not by itself settle their status; a Mexican labor lawyer should review it.

Rights acquired by workers cannot be waived: a worker's renunciation of wages earned, compensation or other benefits is void, and any settlement must be in writing, itemize the facts and rights involved, and be ratified before a Conciliation Center or the Tribunal to be valid (art. 33). Treat any "sign here to waive" paper as something to show a lawyer first.

Foreign owners should also know about the nationality rule: in every company or establishment at least 90% of the workers must be Mexican, technicians and professionals must be Mexican unless none exists in a given specialty (foreigners may then be employed temporarily, up to 10% of that specialty, and must train Mexicans), and the rule does not apply to directors, administrators and general managers (art. 7). Immigration and work permits for foreign staff are a separate subject that we did not cover here.

Our guides on registering a company and the RFC and e.firma cover the steps that come before you can hire.

Does a Mexican employment contract have to be written?

When no collective contract applies, the working conditions must be put in writing, in at least two copies, one for each party (art. 24). The document must contain, among other items, the names, nationality, CURP and RFC of both parties, whether the relationship is for a specific work or term, seasonal, initial training or indefinite and whether it includes a probation period, the services, the place of work, the length of the workday, the amount and form of the salary, the day and place of payment, and the statement that the worker will be trained (art. 25).

If the paper is missing, the worker does not lose rights: the law charges the employer with the lack of formality (art. 26). Where the contract is silent, the relationship is treated as indefinite, and a fixed term can be agreed only when the nature of the work requires it, to temporarily replace another worker, or in the other cases the law provides (arts. 35, 37). A contract written in Chinese only, or copied from another country, should be reviewed against these articles.

How do trial periods work under the labor law?

A probation period may be agreed in relationships of indefinite duration or longer than 180 days. It cannot exceed 30 days, and only for management, directors, other posts with general direction or administration functions, and specialized technical or professional work may it extend up to 180 days (art. 39-A). The worker keeps salary, social security and the benefits of the post during probation. At the end, if in the employer's judgment (taking into account the joint commission's opinion) the worker has not shown the required knowledge, the law provides for termination without liability to the employer; applying this in practice should be reviewed by a lawyer.

Several limits protect the worker. Probation must be in writing, otherwise the relationship is treated as indefinite (art. 39-C). It cannot be extended or repeated for the same worker in the same company, even for a different post or a promotion, and the time counts toward seniority if the relationship continues (arts. 39-D, 39-E). The law also provides for an initial-training relationship of up to three months (six for management and specialized posts) (art. 39-B). Ask your lawyer which fits each role.

What do employees receive: vacation, aguinaldo and profit sharing?

Statutory entitlements at article level (general information; a lawyer calculates your case)
Entitlement	What the statute says	Where
Vacation	After one year of service, at least 12 working days of paid vacation, rising by 2 days per year to 20, then by 2 days per five years from the sixth year; at least 12 days taken continuously; cannot be paid in place of rest	{{c6_lft\|arts. 76, 78, 79}}
Vacation premium	At least 25% on the salary for the vacation days	{{c6_lft\|art. 80}}
Aguinaldo	At least 15 days of salary per year, paid before 20 December; proportional if the employee has less than a year	{{c6_lft\|art. 87}}
Profit sharing (PTU)	A percentage set by a national commission, applied to taxable income under the income tax law; paid within 60 days after the date the annual tax is due	{{c6_lft\|arts. 117, 120, 122}}
PTU split and limits	Half shared equally by days worked, half by wages; directors, administrators and general managers do not participate; capped at whichever is more favorable to the worker, three months of salary or the average profit share received in the last three years; new companies are exempt in their first year (art. 126 lists other exceptions; check with your accountant or lawyer)	{{c6_lft\|arts. 123, 126, 127}}

We did not find the PTU percentage in the statute (the law refers to the national commission's resolution), so we do not state it; ask your accountant or lawyer. Vacation must be granted within six months after the year of service is completed, and the employer must give each worker a yearly statement of seniority and vacation due (art. 81). Deadlines and amounts depend on the contract and the payroll, so have them calculated by a professional.

What does ending an employment relationship involve?

The law distinguishes ending a relationship for cause from dismissing without cause. The employer may rescind for justified causes the statute lists, such as dishonesty, violence, serious negligence or more than three unjustified absences in thirty days (arts. 46, 47). The employer who dismisses must give the worker a written notice that states the conduct and the dates; it is delivered personally at dismissal or communicated to the Tribunal within five business days, and without it the law presumes the separation was unjustified unless the employer proves otherwise (art. 47).

If a dismissal is not proven justified, the worker may ask for reinstatement or for compensation of three months of salary, plus back wages for up to twelve months and, if the proceeding drags on, interest at 2% a month on fifteen months of salary (art. 48). The law lists cases where the employer can pay compensation instead of reinstating, including workers with less than a year of seniority and trusted employees (art. 49), and sets the compensation for indefinite relationships at twenty days of salary per year of service, in addition to the three months and the back wages (art. 50). Permanent workers also have a seniority premium of twelve days of salary per year of service, payable on dismissal whether or not it was justified; the salary used has a cap of twice the regional minimum wage (arts. 162, 486).

These formulas are the starting point of a calculation, not a quote: salary base, seniority and other items change the result. Before any dismissal, speak to a labor lawyer. Any settlement must meet the requirements described above (art. 33).

What must the company register with IMSS and Infonavit?

An employer must register itself and its workers with the Instituto Mexicano del Seguro Social, report hirings, terminations and salary changes within no more than five business days, keep payroll records for five years, calculate and pay the contributions and allow inspections (Ley del Seguro Social art. 15). The IMSS can also register employers and workers on its own initiative, which does not release the employer from responsibility (art. 251, X).

For a company, the IMSS procedure for registration as an employer is free and can be done online with an e.firma. The online requirements listed on the IMSS page are the digital form, proof of address of the workplace, the first and last pages of the deed with the registry stamp, and the power of attorney of the legal representative; a company formed abroad with an establishment in Mexico presents its constitutive document formalized before a notary (IMSS, trámite IMSS-02-001). The page states no deadline for the procedure.

For housing, the employer must contribute five percent of workers' salaries to the national housing fund, and register itself and its workers with the Infonavit (art. 136; Ley del Infonavit art. 29).

Can you hire staff through an outsourcing or staffing company?

Since the 2021 reform, the LFT prohibits "subcontratación de personal": a person or company providing its own workers for the benefit of another. Employment agencies may take part in recruiting, selecting and training, but are not employers; that role belongs to whoever benefits from the service (art. 12). What the law allows is specialized services or works that are not part of the client's corporate purpose or main economic activity, provided the contractor is registered in the public padrón (art. 13).

Such an arrangement must be formalized in a written contract stating the object and the approximate number of workers, and the client is jointly liable to those workers if the contractor fails its labor duties (art. 14). The contractor must be registered with the STPS, renewing every three years (art. 15); the STPS runs the REPSE platform, accessible with an e.firma, where the public padrón can be searched and the list of canceled registrations is published (STPS, REPSE). Before signing with a provider, check its entry in the padrón and ask a labor lawyer whether the service qualifies as specialized.

What should you ask a Mexican labor lawyer first?

Bring a short list: Which contract type fits each role, and is a probation period appropriate? How do the 90% nationality rule and our foreign staff interact? What is our payroll calendar for aguinaldo and PTU? How do we register with the IMSS and Infonavit, and who files? Which of our current arrangements, if any, could be seen as subcontracting? What is the process and cost exposure if we ever need to end a relationship? You can verify a lawyer with the public tools described in our guide on checking Mexican professionals.

Xin Puente connects Chinese companies with independent licensed Mexican professionals and coordinates in Chinese; we are not a law firm and do not give legal advice, and you contract and pay the lawyer directly. If you would like to see which route fits your plan to hire, the free assessment is a no-pressure place to start.

Frequently asked questions

Does a Mexican employment contract have to be in writing?

When no collective contract applies, the working conditions must be put in writing, in two copies at least, and the law lists their content; if the document is missing, the lack of formality is charged to the employer and the worker keeps their rights (LFT arts. 24, 25, 26).

How long can a probation period be?

Up to 30 days in indefinite relationships, or up to 180 days for management and specialized technical or professional posts; it must be in writing, cannot be extended or repeated and counts toward seniority (LFT arts. 39-A to 39-E).

What is the aguinaldo and when is it paid?

An annual payment of at least 15 days of salary, due before 20 December; employees with less than a year of service receive a proportional part (LFT art. 87).

What does it cost to dismiss an employee?

We found no single official figure. The statute sets components, such as twenty days of salary per year of service, three months of salary, back wages and a seniority premium of twelve days per year (on a salary capped at twice the regional minimum wage), and the result depends on the case (LFT arts. 48, 50, 162). A labor lawyer calculates it.

Can I hire Chinese staff for my Mexican company?

In every company, at least 90% of workers must be Mexican, with a limited temporary exception for specialized technicians and professionals and an exception for directors, administrators and general managers (LFT art. 7). Immigration rules are a separate subject for a Mexican immigration lawyer.

Can I use an outsourcing company to supply workers?

Providing personnel is prohibited; only specialized services that are not part of the client's corporate purpose or main activity, supplied by an STPS-registered contractor, are allowed, and the client is jointly liable if the contractor fails its labor duties (LFT arts. 12 to 15; STPS, REPSE). Ask a labor lawyer about your case.

Sources

Rules and figures change. Before you decide, check the official sources and confirm with a licensed professional.

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