Labor Reform to be Effective in 2023: Dignified Vacations

December 30th, 2023

On December 15, 2022, the Mexican Senate approved the ruling on vacation time for its legislative procedure, which seeks to increase the vacation period for all working people in Mexico. This new regulation was published in the Official Federal Gazette on December 27, 2022; however, it will take effect until January 1, 2023.

SUMMARY

1. The vacation days that the employees will be entitled to per year will correspond to those shown in the following table:

Years Worked Vacations Days
Year 1 12 days
Year 2 14 days
Year 3 16 days
Year 4 18 days
Year 5 20 days
From 6 to 10 years 22 days
From 11 to 15 years 24 days
From 16 to 20 years 26 days
From 21 to 25 years 28 days
From 26 to 30 years 30 days
From 31 to 35 years 32 days

2. The employees in their first year of work increase their vacation from 6 days they used to have in the past to 12 days of vacation per year at least.

3. The employees have the right to decide on the distribution of their vacation days, how they divide them and when they want to take them.

4. Employees´ vacations must be granted after the first year of work and within six months following the completed working year. However, vacations expire one year after 6 months of work.

5. Employees who provide seasonal or discontinuous services are also entitled to vacation days, in proportion to the number of days they worked during the year.

6. Those employees who have a job year anniversary in 2023 will also enjoy the new vacation period established in the reform.

7. The reform starts to take effect for vacation calculations as of January 1, 2023.

ARTICLES BEING REFORMED:

Amended articles read as follows:

“Article 76.- Those employees with more than one year of service will have an annual period of paid vacations, which in no case may be less than twelve working days, and which shall increase by two working days, until reaching twenty days, for each subsequent year of service.

From the sixth year onwards, the vacation period shall increase by two days for every five days of service.”

“Article 78.- From the total period of vacations corresponding to the employee in accordance with the provisions of Article 76 of this Law, the employee shall have at least twelve days of continuous vacation. The foregoing period, at the sole decision of the employee, may be distributed in the manner and time required by the employee.”

TRANSITORY ARTICLES:

“FIRST. – This decree shall be effective as of January 1, 2023, or on the day following its publication in the Official Gazette of the Federation, if such publication is in the year 2023.”

REQUIREMENTS TO BE FULFILLED BY THE EMPLOYER

  • Update vacation time periods in individual and collective bargaining agreements so that they refer to the law.
  • The employer must assume the labor costs, which include the payment of vacation bonus of 25% above the corresponding salaries and the respective changes in the availability of personnel.
  • The employer must submit an annual certificate of seniority in which the corresponding vacation period must be included.

IMPLICATIONS ON SOCIAL SECURITY

The Basic Contribution Salary (BCS) is comprised of the daily contribution, bonuses, payments, benefits in kind or any other benefits and gratuities. Once the vacation bonus is increased, the BCS increases before the IMSS. Consequently, the employer’s contribution to the IMSS will be increased. This means that workers will benefit from increased pensions, subsidies and an increased contribution. But for the employers this means that they will have more costs being required to comply with the labor reform.

It is important to conduct an analysis inside the company to review whether it is necessary to modify documents or generate strategies to reduce costs generated as a result of the reform.

MORE INFORMATION

Contact: jbravo@j-bravo.com.

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