On September 27, 2022, Mexico’s Senate’s Commission of Labor Rights approved a proposal to amend the Federal Labor Law to increase employee annual vacation days. The increase is a six-day period for each bracket of years of seniority.
This chart shows the vacation days before and after the reform:
For this reform to be mandatory, the initiative must be approved by the Senate and the Chamber of Deputies and be published by the Federal Executive in the Official Gazette of the Federation.
As a consequence of the reform, we recommend taking the following actions:
- Prepare a vacation chart to identify if the company is up-to-date with paying or granting its employees the vacation days they are entitled. The accumulated vacations might represent an important impact on the company if the reform is passed.
- If any employees have accumulated vacations, we recommend implementing a vacation payment and strategy as soon as possible.
- Although the vacation premium is not increasing (it remains at 25%), the increase of vacation days will represent more payment of such premium which may have an effect on the base salary for the payment of social security quotas
- The company must analyze the impact of the reform for possible increases in (a) quotas paid to the Mexican Institute of Social Security (IMSS, its Spanish acronym), (b) quotas paid to the National Workers’ Housing Fund Institute (INFONAVIT, its Spanish acronym), and (c) payroll taxes.
- Prepare and implement a vacation policy that allows the company to manage employees’ vacations to avoid accumulating vacation days.
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