How much leave do I have in a year? Do I have to work on holidays, and will I be paid more for doing so? Whether you are a business owner or a fresh entrant into the job market, it is crucial to be aware of your country’s labor laws, especially those pertaining to employee benefits.
Importance of Employee Benefits
Employee benefits can be a great pull or push factor for any business. For business owners, offering a full suite of benefits can protect you from violating any labor laws. It also serves to entice and retain employees by presenting a healthy work environment, where employees are respected and valued for the work that they do.
On the other hand, employees can decide whether or not they wish to join a company based on the benefits they offer. It is not uncommon for workers to seek companies offering beyond the legal obligations in terms of benefits. Employees can also negotiate a better package if they are fully aware of what they are entitled to.
Common Employee Benefits in Mexico
Generally, employee benefits can be grouped into three main categories. While it might be unheard of for a company to offer all of the benefits mentioned in this list, offering good selection from each of these categories is often sufficient for a company to meet the benchmark of, and be classified as a “good” company.
Bonuses and Other Means of Extra Pay
- Vacation Pay and Bonus
Most companies start off their employment contracts offering 10-15 days of paid vacation leave per year. This number may be increased as the period of employment lengthens. Legally, this table presents the obligations surrounding paid leave.
|Years in Employment||Number of Paid Days Leave Added (Starting from 0)|
|2 – 4||2 days per year|
|5+||2 days per every 5 years|
On top of paid time off, a vacation premium or bonus, better known as Prima, must be offered to employees on top of their regular pay during their vacation days. While the Federal Labor Laws require a minimum of 25%, companies generally offer anywhere from 50%-100% to their employees.
It is usually up to the employer on whether the actual Prima is paid during the vacation leave itself, after 1 year of service or after employment has ended. In addition, all unused days leave must be paid or compensated when employment ends, such that no leave or pay will be forfeited on termination.
- Christmas Bonus
The giving of Christmas bonuses is a widespread practice around the world, usually seen as a good gesture on the part of employers, in time for the year-end and holiday season. In Mexico however, Christmas bonuses, or Aguinaldo, are statutorily provided for and not an optional extra for businesses.
By 20th December, a sum amounting to 15 days of pay must be given to employees for the holidays. It is not uncommon to see companies going beyond the legal requirement and offering up to 45 days of pay. Should the duration of employment be less than a year, this number would be prorated based on the employee’s hire date.
- Paid Holidays
There are 7 legal holidays in Mexico. Election days also fall into the category of legal holidays, and employees required to work on any of these days are entitled to double their daily pay.
- Day of Rest and Sunday Premium
Federal Labor Law requires that employees are entitled to 1 paid day of rest after 6 working days, which can fall on any day of the week. Should an employee be required to work on this day, they will be entitled to double their daily pay.
The Prima Dominical mandates that those who are regularly scheduled to work on Sundays must be paid a premium of 25% of their daily pay, and if their day of rest falls on a Sunday where they have to work, employees are entitled to double pay + the 25% premium.
b) Security Benefits
Social security benefits are mostly managed by the Mexican Social Security Institute, but about 70% of the revenue used to provide them comes from employer contributions. Contributions to these plans support employee savings and retirement plans, as well as government housing subsidies.
Additionally, medical, dental and vision insurance are very common employee benefits that supplement the employees existing insurance plans, and generally serve to cover everything from disability to death, sometimes even covering funeral costs.
c) Non-monetary Welfare Benefits
- Food Coupons
Grocery coupons, or Vales de Despensa, are a common benefit utilized by employers. Essentially, employees are provided with a prepaid card once a month for their personal use.
- Maternity and Paternity Leave
Pregnant women can enjoy 84 days of leave, while fathers are awarded 5 days of leave after their child is born.
- Dining Hall Service
It is common for some companies to provide an adequate facility where food is prepared, warmed, and served to employees at a discounted price.
Finally, to maintain a harmonious employer-employee relationship, it is vital that business owners and employees stay up-to-date about their country’s employee benefits.
Good worker benefits will help you retain valued talent in your business. And we all know that a low turnover rate will keep productivity within your company at its peak.