The 2021 labor reform changed the landscape for employers in Mexico. Business owners who did not update their contracts, outsourcing arrangements, and safety protocols are operating with legal exposure.
Subcontracting and Outsourcing After the 2021 Reform
The 2021 labor reform eliminated traditional personnel outsourcing. Only subcontracting of specialized services is now permitted, provided the service provider is registered in the REPSE (Registry of Specialized Service and Work Providers). Without this registration, both the client and provider may be fined, and workers may claim a direct employment relationship with the client company.
Profit Sharing (PTU): What Changed
Under the reform, the maximum profit-sharing (PTU) cap was set at 90 days of the employee's salary or the average of the previous three years, whichever is more favorable to the employee. For employers, this means calculating more carefully and maintaining a reserve fund for the May payment.
Employment Contracts: Essential Elements
Every individual employment contract must include:
- Detailed job description and responsibilities
- Base salary and payment method
- Specified work schedule (hours, days, shifts)
- Vacation period per law (minimum 12 days from the first year as of 2023)
- Confidentiality and data protection clause where the role requires it
How to Shield Your Business from Labor Claims
Labor claims in Mexico are common and costly. The companies that defend themselves most effectively are those with: complete, signed employee files; attendance records; well-drafted individual contracts; written discipline and termination policies; and training certificates. A complete employee file can reduce a $500K MXN claim to zero.