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Employment contracts and policies in Mexico

Contract terms in Mexico

Contract extension in Mexico

Fixed-term contracts in Mexico

Working hours in Mexico

Remote work in Mexico

Tailored employment contracts in 100+ countries

Employment contracts in Mexico

Employment contracts in Mexico are an essential part of the hiring process and are regulated by the Federal Labour Law (FLL). These contracts formalise the relationship between employers and employees, outlining the terms and conditions of employment.

In this guide, we will cover everything you need to know about creating a compliant employment contract in Mexico, including contract terms, policies, and the different types of contracts available.

Employment contracts and policies in Mexico

Employment contracts in Mexico must be in writing, as verbal agreements are not sufficient under the law. Written contracts protect both employers and employees by clearly defining the terms of the employment relationship.

According to Article 25 of the FLL, employment contracts must include the following details:

Employee’s name and personal information.
Job description and duties.
Work location.
Salary, including payment frequency and method.
Benefits, such as vacation, bonuses, and health insurance.
Working hours and rest periods.
Duration of the agreement (if applicable).
Any probationary or training periods.

Probationary period in Mexico

Probationary periods are allowed under Mexican labour law for specific types of employment contracts:

For employees hired under an indefinite-term agreement or a fixed-term agreement lasting at least 180 days, the probationary period can be up to 30 days.
For executive, managerial, or administrative roles, the probationary period can be extended to a maximum of 180 days.

During the probationary period, employers have the opportunity to evaluate the employee’s performance, skills, and suitability for the position. If the employee does not meet expectations, the employer can terminate the employment within this period without the need for severance pay, provided the termination is justified and documented.

Mandatory employment policies

Employers in Mexico are required to establish and maintain written policies that address key aspects of the workplace, particularly as the size of their workforce grows. These include:

Training and productivity policies: Employers must develop policies to promote employee training, skill development, and productivity improvement. These policies help employees grow professionally while contributing to the company’s success.
Health and safety policies: Employers are responsible for ensuring a safe working environment by creating and maintaining health and safety policies. These policies must comply with national safety standards and be reviewed annually to address any changes in regulations or workplace conditions.
Internal work policies: Companies can establish internal work policies to define general workplace rules, such as attendance, conduct, and disciplinary measures. These policies provide a clear framework for expected behaviour and help maintain order within the organisation.

Third-party approval in Mexico

In certain situations, employment contracts require approval from external authorities, such as the labour board. If the employee is between 15 and 18 years old, labour board approval is mandatory. This ensures additional protections for minors, such as limitations on working hours and types of tasks they can perform.

For cross-border employment, labour board approval is also required. This situation typically arises when a Mexican company employs individuals to conduct tasks in another country.

Contract terms in Mexico

According to Mexican labour law, all employment agreements must be in writing. Verbal agreements are not valid under the law and can leave both parties unprotected. A written contract serves as an official document that outlines the working relationship and ensures compliance with legal requirements.

Moreover, employees cannot waive their statutory rights. Even if an employee agrees to terms that contradict their legal entitlements, such as forgoing benefits or accepting wages below the minimum standard, these provisions would be considered null and void. This protection ensures that employees receive mandatory benefits, such as minimum wage compliance, paid vacation leave, social security coverage, and overtime pay for additional hours worked.

Contract extension in Mexico

In Mexico, extending an employment contract, particularly for independent contractors, comes with specific guidelines to ensure compliance with labour laws.

There are no legal restrictions on the duration of a contract with a genuine independent contractor as long as certain conditions are met. To qualify as an independent contractor:

Multiple clients: The contractor should ideally work with multiple clients, demonstrating independence and avoiding exclusivity with one company.
Specialised skills: The contractor must possess specific expertise or skills that justify their engagement. This ensures the contractor is hired for tasks that require unique knowledge.
Non-employee tasks: The company must prove that the tasks assigned to the contractor cannot reasonably be performed by existing employees.

For individuals or companies providing specialised services or works in Mexico, additional requirements must be met to comply with local labour laws. These rules are in place to prevent the misclassification of employment relationships and ensure that such arrangements are legitimate. The government closely monitors these agreements to protect workers and uphold compliance.

Contractors offering specialised services to third parties must register on the Registro de Prestadores de Servicios Especializados y Obras Especializadas (REPSE) platform, managed by the Secretaría del Trabajo y Previsión Social (Ministry of Labour and Social Security). This registration confirms that the services provided are genuinely specialised and not part of the hiring company’s core business activities. It also ensures that the contractor operates independently, without being subject to the hiring company’s direct control or supervision, as would an employee.

If you’re planning to hire talent in Mexico through a workforce provider, it’s crucial to choose one registered with REPSE. A REPSE license signifies that the provider complies with Mexico’s labour and tax laws, particularly those related to outsourcing specialised services. Working with a REPSE-registered provider, such as CXC, ensures workers’ rights, benefits, and protections are respected, while helping your business avoid legal risks or penalties.

To obtain and maintain REPSE registration, contractors must demonstrate that they are up to date with their tax payments and social security obligations. This ensures that contractors operate legally and contribute to government-mandated programs.

REPSE registration is not indefinite. Contractors must renew their registration every three years, providing updated documentation to prove ongoing compliance.

Fixed-term contracts in Mexico

Fixed-term contracts are a common way for employers to hire workers for temporary roles or specific projects. However, these contracts come with specific rules to ensure they are used fairly and in compliance with Mexican labour laws.

A fixed-term contract is an employment agreement where the duration is limited to a specific period or tied to the completion of a particular task. These contracts are ideal for situations where the employer has a temporary need for staff, such as seasonal work or project-based roles.

To legally establish a fixed-term contract in Mexico, employers must meet the following conditions:

Justification of the role: The employer must provide a valid reason for hiring an employee on a fixed-term basis. This could include replacing a worker on leave, such as maternity or medical leave, completing a specific project or undertaking, and addressing seasonal workforce needs, like holiday shopping.
Clarity in the contract: The contract must clearly outline the specific duration of the employment, the tasks, or objectives the employee is expected to complete, and any terms related to early termination or extension of the agreement.

Typically, a fixed-term contract automatically ends when the agreed period expires, or the specific task or project is completed. Once the contract ends, the employer is not obligated to provide severance unless termination is handled improperly, or the terms of the contract were not fulfilled.

If the employee continues to perform their duties beyond the end date of the fixed-term contract and the employer does not renew or modify the agreement, the employment relationship is automatically converted to an indefinite-term contract. This means the employee is now entitled to the benefits and protections of a permanent position and the employer must adhere to the regulations for indefinite employment.

Working hours in Mexico

The standard working hours in Mexico are 48 hours per week, typically divided into 8 hours per day over a six-day workweek. However, the law recognises three distinct types of work shifts, each with different limits:

Day shift: This covers work hours between 6 am and 8 pm. Employees can work up to 48 hours per week under this schedule, equating to 8 hours per day.
Night shift: This applies to work done between 8 pm and 6 am. The maximum working hours for a night shift are reduced to 42 hours per week, or 7 hours per day, due to the increased demands of working at night.
Mixed shift: A mixed shift includes hours that overlap between day and night periods. The weekly limit for a mixed shift is 45 hours, or about 7.5 hours per day, to account for the challenges of working across different time zones.

While these are the general rules, specific agreements—such as employment contracts or collective bargaining agreements—may allow for different arrangements, provided they do not violate labour laws.

Overtime in Mexico

Overtime work in Mexico is carefully regulated to protect employees from excessive workloads and ensure fair compensation. Any work performed beyond the standard shift hours is considered overtime. It must be documented and agreed upon, either in the employment contract or through collective agreements.

Employees can work a maximum of 3 overtime hours per day, but only for up to 3 consecutive days.

These limitations aim to prevent overwork and ensure employee well-being. Overtime pay is calculated based on two factors: the total number of overtime hours worked during the week and the number of hours worked after a regular shift in a single day.

First 9 hours of overtime (per week): Paid at double the regular hourly rate (200%).
Over 9 hours of overtime (per week): Paid at triple the regular hourly rate (300%).
Daily limit: The first 3 overtime hours worked after a normal shift are considered double-pay hours. Any additional hours beyond this limit are automatically paid at the triple rate. For example, if an employee works 10 overtime hours in a week, the first 9 hours are paid at double their normal hourly rate, and the 10th hour is paid at triple the rate.

Meanwhile, employees in managerial or executive roles may be exempt from overtime pay and limitations, as their responsibilities often involve irregular or extended hours. However, this should be clearly outlined in their employment contracts.

Working week in Mexico

Monday – Saturday

Remote work in Mexico

Remote work, or teleworking, has become a popular option in Mexico, prompting the government to update federal labour laws to protect the rights and responsibilities of both employers and employees. These regulations apply to any worker who spends at least 40% of their paid working time outside the employer’s workplace, whether at home or another location chosen by the employee. The laws ensure that remote work is clearly defined and managed, creating a balanced and legally compliant arrangement for all parties involved.

To comply with the law, employers must formalise teleworking arrangements in a written employment contract. This contract should state that the employee will be working remotely, specify the percentage of time spent teleworking, and detail the terms and conditions of the arrangement. Key aspects such as working hours, job responsibilities, communication protocols, and performance evaluation criteria must also be included to ensure clarity and accountability.

In addition, employers have significant responsibilities to support their remote workers. They are required to provide, install, and maintain the tools and equipment necessary for employees to perform their duties effectively, such as computers, software, and phones. Additionally, employers must cover telework-related costs, such as internet services, electricity, or any other expenses associated with working remotely. Ensuring safe and healthy working conditions, even in a remote setup, is also an employer’s duty. This might include providing ergonomic guidelines or equipment to minimise the risk of injury. Employers are further expected to implement data protection measures to safeguard sensitive information used by remote workers.

On the other hand, employees also play a vital role in making teleworking successful. They must take good care of the equipment provided by the employer and use it responsibly. Compliance with the company’s policies and procedures, particularly those related to data security and confidentiality, is crucial. Additionally, employees should maintain a suitable workspace that allows them to meet their job responsibilities effectively.

Employers are required to document all teleworking arrangements carefully. This includes keeping written agreements updated and recording any changes in the working conditions.

Tailored employment contracts in 100+ countries

Like all countries, Mexico has its own rules and regulations when it comes to employment contracts — failing to comply can result in serious legal and financial risks for your business.

Thankfully, our team is experienced in drawing up tailored, compliant contracts in Mexico (and more than 100 countries worldwide). And as a REPSE-registered provider, we’re not only licensed but also fully equipped to help your company expand into Mexico seamlessly. Our certification, combined with deep expertise in contingent workforce management, enables us to offer unparalleled support and practical solutions for businesses looking to grow in the Mexican market.

That means that, when you work with us, you won’t need to waste time worrying about whether you’ve got it right. Instead, you can focus on what matters: growing your business.

Read about EoR services

FAQ's

How do employment contracts work in Mexico?

An employment contract in Mexico is a written agreement that sets out the terms of the working relationship between an employer and an employee. It is governed by the Federal Labour Law (LFT), which is the primary piece of legislation covering all employment relationships in the country.

Mexico operates on a strong employee-protection model. This means a few things matter from day one:

Employment is presumed. Under Article 21 of the LFT, if someone provides work for you in exchange for pay, an employment relationship is assumed to exist, regardless of whether a written contract is in place.

Contracts cannot reduce statutory rights. Any clause in a labour contract in Mexico that attempts to waive an employee’s minimum legal entitlements is automatically void.

There is no employment-at-will. Employment relationships may only be terminated in accordance with the grounds and procedures established under the LFT. Where no statutory cause exists, termination may trigger severance and other statutory termination payments.

Employers should also ensure that employment contracts comply with Mexico’s teleworking (teletrabajo) framework where employees work remotely more than 40% of the time, including provisions relating to equipment, expense reimbursement, and health and safety obligations.

In summary, a labour contract in Mexico documents the agreed terms, but the LFT sets the floor. You can offer more than the law requires; you cannot offer less.

Are written employment contracts required in Mexico?

Yes. Article 24 of the LFT requires that working conditions be recorded in writing, and each party must receive a copy. While the absence of a written contract does not eliminate an employee’s rights, it creates a serious problem for the employer.

A written employment contract should clearly outline:

Job title and duties.

Salary and payment terms.

Working hours and schedule.

Place of work.

Employee benefits and entitlements.

Contract duration (if fixed term).

Probationary terms, where applicable.

Teleworking provisions where applicable.

Data privacy, confidentiality, and company policy acknowledgements where relevant.

While an employment relationship can still exist without a written contract, the absence of one creates significant risks for employers.

If a dispute goes to a labour tribunal, the burden of proof shifts to the employer when no written contract exists. The tribunal will presume the terms most favourable to the employee. That is a risk no employer should take.

What happens if there is a labour dispute?

If a case reaches a labour tribunal and no written contract exists:

The burden of proof generally falls on the employer.

The tribunal may presume the employee’s claims are correct unless the employer can prove otherwise.

Any ambiguity is typically interpreted in the employee’s favour.

As an employer in Mexico, best practice is to issue a written employment contract before the employee’s first working day. Keep a signed copy on file.

What types of employment contracts are there in Mexico?

Mexico’s Federal Labour Law recognises several types of employment contracts. The right one depends on the nature of the work and how long it is expected to last.

Contract Type	When It Applies?
Indefinite (tiempo indeterminado)	The default. Used when there is no defined end date for the work. If a contract does not specify a term, it is automatically indefinite.
Fixed-term (tiempo determinado)	Used when the work is tied to a specific time period or a temporary need. Subject to strict conditions (see Q5).
Project-based (obra determinada)	Used when the work ends once a specific project or task is completed.
Seasonal (por temporada)	Used for work that recurs at certain times of year, such as agriculture or tourism.
Initial training (capacitación inicial)	Used when the employee needs to acquire specific skills before performing their full role. Duration is capped at three months, or six months for senior or specialised roles.
Trial period (periodo de prueba)	Attached to indefinite contracts to assess whether an employee meets role requirements. Capped at 30 days, or 180 days for managerial and technical roles.

Important to note: If the employment contract in Mexico does not specify a type, the LFT treats it as indefinite by default. Trial period and initial training contracts must be documented in writing, or they are also treated as indefinite.

Employers should avoid relying on fixed-term contracts as a workforce planning tool. Mexican labour authorities generally favour indefinite employment and will assess the underlying business reality rather than the contract label.

What must be included in an employment contract in Mexico?

Article 25 of the LFT sets out the minimum information every employment contract in Mexico must contain. Missing any of these puts the employer at a disadvantage in any future dispute.

Required contract clauses

Employee and employer details
Full name, nationality, age, sex, marital status, CURP (unique population registry code), RFC (tax ID), and address of both parties.

Contract type: Whether the relationship is indefinite, fixed-term, project-based, seasonal, or subject to a trial or initial training period.

Job description: The services to be provided, described as precisely as possible.

Work location: The place or places where the employee will carry out their duties.

Working hours: The length and schedule of the working day.

Salary: The amount, form, and frequency of payment, plus any additional benefits.

Rest and vacation days: Entitlements as agreed, which must meet or exceed the LFT minimums.

Training: A statement confirming the employee will receive training in line with the company’s plans and programs.

Teleworking provisions: where remote work arrangements fall within the scope of Mexico’s teleworking regulations.

Information regarding employer-provided equipment and expense reimbursement obligations where applicable.

What cannot you include?

A labour contract in Mexico cannot include clauses that:

Waive the employee’s right to statutory severance or benefits.

Require the employee to accept conditions below the LFT minimums.

Restrict statutory labour rights or protections granted under Mexican labour law. Any such clause is automatically null and void under Mexican law, even if the employee signed it.

Every employment contract in Mexico must contain the minimum information required under Article 25 of the LFT, including the parties’ details, contract type, job duties, work location, working hours, salary, benefits, and training provisions.

Employers in Mexico should also ensure that all contract terms comply with Mexican labour law, as any clause that reduces or waives an employee’s statutory rights will be unenforceable. A well-drafted employment contract not only supports compliance but also helps prevent disputes by clearly defining the rights and obligations of both the employer and employee from the outset.

For companies hiring employees in Mexico, ensuring employment contracts meet LFT requirements is a critical step in maintaining labour law compliance and reducing legal risk.

When can employers use a fixed-term contract in Mexico?

A fixed-term contract in Mexico is only permitted in specific situations. The LFT does not allow employers to use it simply because they prefer a shorter commitment or want more flexibility.

Under the Federal Labour Law, a fixed-term labour contract in Mexico is valid in two scenarios:

The nature of the work requires it. The role is tied to a specific task, project, or time-limited need, such as covering a product launch, a construction phase, or a defined service contract.

The employee is covering for another worker. For example, covering maternity leave, sick leave, or a sabbatical.

What this means for employers in Mexico?

If neither condition applies, the contract will be treated as indefinite, regardless of what the document says. Mexican labour tribunals look at the actual nature of the work, not just the label on the contract. There is no universal statutory rule that all fixed-term contracts must be limited to one year. The duration must be objectively linked to the legitimate temporary need that justifies the fixed term.

Watch out: Using a fixed-term contract to avoid indefinite employment obligations, when the role is ongoing in nature, is a common compliance mistake. If the work continues after the fixed term ends and no new contract is issued, the relationship automatically becomes indefinite.

Fixed-term contracts in Mexico are the exception, not the rule. Under the LFT, employers can only use them when the work is genuinely temporary or when an employee is replacing another worker for a defined period. Simply preferring a shorter commitment or wanting greater flexibility is not a valid reason. If the role is ongoing in nature, Mexican labour authorities are likely to treat the employment relationship as indefinite, regardless of the contract wording.

For employers hiring in Mexico, correctly classifying employees and using fixed-term contracts only when legally justified is essential for labour law compliance. Misusing fixed-term arrangements can lead to disputes, unexpected employment obligations, and potential liability for wrongful termination.

Can a fixed-term contract be renewed in Mexico?

A fixed-term contract in Mexico can be renewed, but only if the original justification still applies. If the temporary need is genuinely ongoing, such as an extended project or a continued absence cover, a renewal is permissible.

However, there are clear limits:

The renewal must remain objectively linked to the legitimate temporary reason that justified the original fixed-term arrangement.

Consecutive fixed-term contracts for the same ongoing role are not permitted. If an employer repeatedly renews a fixed-term contract for work that is clearly permanent in nature, Mexican courts will reclassify the relationship as indefinite.

The practical risk

Chaining fixed-term contracts together for the same employee in the same role is one of the more common ways employers find themselves facing unjustified dismissal claims in Mexico. Once a tribunal determines the work was continuous and permanent, the employee is entitled to full severance as if they had been on an indefinite contract from the start.

If the work is ongoing, it is more reliable, and legally safer, to use an indefinite contract from the beginning.

Before deciding on a contract type, think about how long you will realistically need the role. If the position supports an ongoing business need, an indefinite contract is usually the better choice. Using the right contract from the start can save time, reduce compliance risks, and help avoid issues if the employment relationship ends later on.

When hiring in Mexico, it is always worth planning beyond the immediate need and choosing a contract structure that matches the long-term nature of the role.

Can an employer change the terms of an employment contract in Mexico?

An employer cannot unilaterally change the terms of an employment contract in Mexico. Any modification to agreed working conditions requires the employee’s written consent.

This applies to changes such as:

Salary reductions.

Changes to working hours or schedule.

Changes to the work location.

Modifications to job duties or role responsibilities.

Reductions in benefits.

What happens if an employer makes changes without consent?

If an employer imposes changes without agreement, the employee has the right to treat the change as a constructive dismissal (rescisión de contrato) under Article 51 of the LFT.

The financial consequences will depend on the circumstances of the case and applicable statutory termination payments under the LFT. Employers should avoid presenting a fixed severance formula, as entitlement calculations can vary depending on the legal basis of the claim and the employee’s circumstances.

The one exception: Collective bargaining agreements (CBAs) may allow for certain modifications within defined parameters, but only where such flexibility has been explicitly negotiated with the union. In addition, employers may implement changes required by law, regulatory reform, or workplace health and safety obligations, provided statutory requirements and employee rights are respected.

If business needs require a change to an employee’s contract, document the agreement in writing and have the employee sign a contract amendment. A verbal agreement is not enough.

Whether you are adjusting compensation, updating responsibilities, or relocating an employee, it is best to have open discussions early and document any agreed changes properly. Taking a collaborative approach helps maintain trust, creates a clear record for both parties, and reduces the likelihood of misunderstandings later on.

For employers managing teams in Mexico, having a clear process for reviewing and updating employment terms can make workforce changes much smoother as the business evolves.

What is the difference between a probation period and an initial training contract in Mexico?

These are two distinct legal mechanisms under the LFT, and they are not interchangeable. Both allow employers to assess a new hire before committing to an indefinite relationship, but they serve different purposes and have different durations.

Trial period (periodo de prueba)

A trial period is used to assess whether an employee already has the knowledge and skills required to do the job.

Duration: Up to 30 days for standard roles.

Extended to 180 days for managerial, directorial, or specialised technical roles.

Purpose: To verify the employee meets the role’s existing requirements.

Applies to: Indefinite contracts only.

Initial training contract (capacitación inicial)

An initial training contract is used when the employee needs to acquire the skills or knowledge required for the role during the contract period itself.

Duration: Up to 3 months for standard roles.

Extended to 6 months for senior or specialised roles.

Purpose: To train the employee to a required competency level.

Applies to: Indefinite contracts only.

Key rules that apply to both

Both must be in writing. Without a written record, the contract is treated as indefinite from day one.

The statutory maximum periods established under the LFT cannot be exceeded.

Employers should avoid using successive trial or training arrangements in a manner that could be viewed as circumventing indefinite employment protections.

Full employment rights apply throughout, including social security registration (IMSS), salary, holidays, and vacation accrual.

If employment continues after the period ends, the relationship automatically converts to an indefinite contract, and the trial or training period counts towards seniority.

The key difference in plain terms: A trial period tests whether someone can already do the job. An initial training contract gives them the time to learn how.

Does Mexican employment law apply to remote workers hired from abroad?

Yes, if the employee is physically based in Mexico. Mexican employment law applies based on where the work is performed, not where the employer is located. A foreign company hiring someone who lives and works in Mexico must comply with the LFT, regardless of whether the employer has a legal entity there.

What this means for remote hiring?

If you hire a worker in Mexico, even remotely, the following apply:

The employment contract in Mexico must comply with the LFT.

The employee is entitled to all statutory benefits, including the aguinaldo (Christmas bonus), vacation days, profit-sharing (PTU), and social security (IMSS) contributions.

Employers engaging workers through an Employer of Record (EOR) structure will typically satisfy social security registration obligations through the EOR’s local entity.

The telework rules add another layer in Mexico

Since 2021, Mexico’s Federal Labour Law includes a dedicated chapter on telework (Articles 330-A to 330-K). If an employee works remotely for more than 40% of their working time, the arrangement is legally classified as telework, and additional obligations apply.

Under NOM-037-STPS-2023, which came into full effect in December 2023, employers with teleworking employees in Mexico must:

Provide equipment (laptop, ergonomic furniture) or reimburse the cost.

Pay an allowance to cover internet and electricity expenses.

Maintain a written telework policy.

Verify that the employee’s remote workspace meets health and safety standards.

Respect the employee’s right to disconnect outside working hours.

NOM-037 may apply where the teleworking arrangement falls within its scope and employers should assess applicability on a case-by-case basis. However, NOM-037 does not apply to employees based permanently outside Mexico, even if they report to a Mexican employer.

How can CXC simplify employment contract management in Mexico?

Managing employment contracts in Mexico takes more than a template. Between the LFT requirements, telework obligations, mandatory benefits, and the risk of misclassification, there is a lot that can go wrong, especially for companies hiring across multiple countries at the same time.

CXC helps global employers hire and manage workers in Mexico compliantly, without the need to set up a local legal entity.

What we handle for you

Compliant employment contracts: We draft and manage employment contracts in Mexico that meet LFT requirements, covering contract type, mandatory clauses, and local benefit entitlements.

Payroll and statutory benefits: We manage payroll in local currency and ensure all mandatory contributions are made correctly, including IMSS, INFONAVIT, and profit-sharing (PTU).

Telework compliance: If your workers are remote, we help you navigate NOM-037 obligations, from written telework policies to equipment and expense reimbursements.

Ongoing contract management: When terms need to change, we handle the documentation, so amendments are legally sound.

Worker classification and engagement assessments: We support employers in evaluating whether an engagement should be structured as employment or an independent contractor relationship and identify potential compliance risks.

With over 30 years of experience managing contingent and permanent workforces across 100+ countries, we know what compliant hiring in Mexico looks like, and we make sure your contracts reflect it.

Ready to hire in Mexico without the compliance guesswork?

Get in touch with our team to find out how we can support your team.

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