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Minimum Employment Standards in Mexico - by Ana Torriente


Sources of Law

Constitutional Law
The Federal Labor Law
Decisional Law

General Principles
Definitions of Key Parties and Concepts
Composition of the Work Force
Working Terms and Conditions
The Work Contract
Employment Abroad
Agreements Prohibited by Operation of Law
Duration of Employment
Working Hours
Age Requirements
The Employment of Women
Pregnant Employees
Maternity Leave
Rest Days
Equal Pay
Integrated Salary
Year-end Bonus (Aguinaldo)
Minimum Wage
Protective Norms/Salary Privileges
Protection of the Worker's Salary
Workers' Rights to Share in the Profits of the Employer
Job Placement and Training
Housing for Workers
Worker's Compensation Benefits
Social Security Benefits
Suspension of the Employer-Employee Relationship
Rescission of Employer-Employee Relationship
Right of Indemnification
Termination of the Employer-Employee Relationship
Right to Strike
Adjudication of Labor-Management Disputes
Civil and Criminal Penalties

End Notes


Prior to the Mexican Revolution of 1910 and the enactment of Constitutional Article 123 in 1917, working conditions in Mexico were oppressive for much of the labor force. Work days were 14 hours long or more. Workers were paid pitifully low salaries, which necessitated the entry into the work force of women and minor children, whose working conditions were often worse than those of male workers. There were no safety or hygiene requirements in the workplace. There was no system of compensation in the event of injury or disease arising out of the employment, nor was there any system of benefits for old age or death. Workers did not have a right to a weekly paid rest day. Wages were not necessarily paid in cash; instead, the employer often provided "tiendas de raya"(1) which provided the worker with goods, the cost of which were deducted from the worker's pay.

Following the Mexican revolution in 1910, the constitutional congress that met in Querétaro, Mexico produced what is known as the First Declaration of Social Rights (Primera Declaración de Derechos Sociales). Article 27 of the Constitution regulates the distribution of property. Article 123 sets forth a comprehensive scheme for the protection of the Mexican worker.

Sources of Law

A. Constitutional Law

Article 123, Title 6 of the Mexican Constitution establishes minimum employment standards in Mexico, including working hours, minimum wages and compensation for improper dismissals. Section A governs relations between employers and employees in general, whereas Section B estahlishes the rights of employees of the federal government and of the Federal District.

B. The Federal Labor Law

The Federal Labor Law (Ley Federal de Trabajo) is the regulatory law implementing the constitutional protections established in Constitutional Article 123. The Federal Labor Law (hereinafter "FLL") was originally enacted on August 18, 1931 and has been amended on various occasions, most recently in 1988.

The Federal Labor Law is applicable in all of the states of the Republic of Mexico. Neither the individual states nor the Federal District have enacted state legislation governing the area of labor.

C. Decisional Law

There are jurisprudential precedents interpreting the labor laws. Initial or first instance decisions are issued by local or federal Conciliation and Arbitration Boards or Special Boards composed of a representative from labor, one from management and one from the government. Those decisions may be appealed to the federal circuit court (colegiado de circuito) through a petition for direct amparo relief (amparo directo).

General Principles

Article 1 of the FLL provides that the FLL shall be observed throughout the Republic of Mexico and will govern the employment relations contemplated in Article 123 of the Mexican Constitution. Article 2 provides that labor standards shall ensure harmony and social justice in the relations between workers and employers.

Article 3 of the FLL recognizes the unequal bargaining power which exists between the employer and the employee. Article 3 provides that labor standards shall ensure harmony and social justice in the relations between employers and employees. The intent of the law is therefore to afford greater protection to the worker because he/she is the weaker half of the employeremployee relationship and, in case of doubt, the more favorable interpretation should be made in favor of the employee.

Article 18 of the FLL provides that, in interpreting the labor laws, the objectives indicated in Articles 2 and 3 should be taken into account. Where matters are in doubt, the interpretation to be followed is that most-favorable to the worker.

Article 5 of the FLL establishes that the standards set by the labor regulations are considered to be of "public order. The parties to an employment contract may therefore not deviate from these standards. Any stipulation or agreement regarding employment must be made pursuant to the labor laws, otherwise the standards found in the labor law must be applied. Any stipulations contrary to the labor law will be deemed null and void.

Article 6 of the FLL provides that all treaties executed and approved in accordance with Article 133 of the Constitution and the respective implementing laws will be applicable to labor relations to the extent that they benefit the worker.

Definitions of Key Parties and Concepts:

The FLL provides specific definitions of the key parties and concepts in the employment relationship.

-Employer: Defined as any individual or legal person that makes use of the services of one or more workers. Directors, managing directors, managers and, in general, all persons who exercise directorial or managerial functions in the undertaking or establishment, would be considered representatives or agents of the employer. (FLL Article 10).

-Worker: Any individual who personally performs subordinate work for another person, whether that person is an individual or a corporation. (FLL Article 8).

-Confidential Employee: A worker who performs a special kind of work involving supervisory activities are involved. (FLL Article 9).

-Work: Defined as any human, intellectual or manual activity, irrespective of the degree of technical training required for each occupation or trade. (FLL Article 10).

-Working Hours: Defined as the time during which the worker shall be available at the employer's service for the performance of the work. (FLL Article 11).

-Intermediary: Any person who contracts or intervenes in contracting for the services of another person or other persons for the performance of work for an employer. (FLL Article 12).

-Enterprise: The economic unit of production or distribution of goods or services. (FLL Article 17).

-Establishment: The technical unit which, as a branch, agency or the like, is an integral part and contributes to the achievement of the Enterprise's objects. (FLL Article 16).

-Employment relation: The personal performance of work under the authority of another person, in return for payment of remuneration. (FLL Article 20).

-Individual contract of employment: Irrespective of its form or title, this is a contract by which a person undertakes to perform a personal service for another under his/her management and supervision in return for payment or remuneration. (FLL Article 20).

Composition of the Work Force:

Article 7 requires Mexican employers to employ at least 90% Mexican workers in their enterprises. All technical and professional workers must be Mexican, unless there are no Mexican workers qualified in a particular specialty. In that case, the employer may employ foreign workers, but only to the extent of 10% of the labor force engaged in the specialty. It is then incumbent upon the employer and the foreign workers to train the Mexican workers in the specialty. All doctors in the service of employers must be Mexican nationals.

Article 7 is not applicable to directors (CEOs), administrators and general managers. (Note: NAFTA Chapter 16 permits exchanges of workers between the NAFTA countries as long as there is reciprocity).

Working Terms and Conditions:

Article 56 of the FLL establishes general provisions governing the employment relationship. This article provides that working conditions cannot be inferior to those established in the labor law. The employer must take into account the importance of the work performed and must ensure that equal conditions prevail for equal work. The employer may not differentiate on the grounds of race, nationality, sex, age, religion or political opinion, except as provided by law (differences for pregnant women and minors). Note: Article 4 of the Mexican Constitution, as amended by Decree published December 31, l974, provides that men and women are equal under the law. See also FLL Article 164).

If the employer fails to comply with the requirements of Article 56, the worker may petition the conciliation and arbitration board ("CAB") for modification of the unlawful conditions. (FLL Article 57) The employer may also seek modification of the working conditions where economic conditions dictate.

Articles 21 and 26 of the FLL require working conditions to be set forth in writing by the employer if there is no collective labor agreement. Nonetheless, in the absence of such a contract, the employment relation shall be presumed between the person . performing a personal service and the person receiving such services and this situation does not deprive the employee of this rights derived from the labor standards and the services performed.

The Work Contract:

Pursuant to FLL Article 25, the written contract of work conditions must specify:

1- The name, age, nationality, sex, marital status and address of the worker and employer;

2- Whether the employment relation is for a specific task or for a specific period or without limit of time;

3- The service or services to be rendered (to be indicated with specificity);

4- The place or places where the work is to be performed;

5- The working hours;

6- The nature and amount of wages;

7- The date and place of payment of wages;

8- A declaration that the worker will be trained in accordance with the established procedures of the enterprise and in accordance with the terms of the labor laws; and

9- Other working conditions, such as rest days, vacations and other issues upon which the worker and employer may agree.

Employment Abroad:

Extra protection is provided to a Mexican national who contracts to work for a foreign employer for foreign work or work on foreign soil. First, the labor contract must be signed by a competent municipal authority and countersigned by the consul of the nation to which the employer is to go. In addition to the ordinary specifications to be contained in the contract, it must clearly specify that the expense of repatriating the employee should be borne by the foreign employer.

Where employers use intermediaries to contract workers, the employer remains responsible for all obligations. Such workers have the same rights as regularly employed workers and the intermediaries may not take a commission or charge fees from their salaries.

Agreements Prohibited by Operation of Law:

The Constitution expressly prohibits the inclusion of certain terms and conditions in a labor contract. Where included in a contract, the following conditions will be considered null and void and of no binding effect upon the parties:

- Stipulating an excessively long work day

- Fixing wages that are not remunerative in the judgment of Conciliation and Arbitration Boards ("CABs")

- Stipulating a period of over 1 week before payment of a day's wages

- Stipulations indicating the place of payment of wages as a place of recreation such as an inn, cafe, bar or store, except where the employee is employed in such an establishment.

- Stipulations imposing upon the employee the direct or indirect obligation to acquire consumer goods in specified stores or places.

- Stipulations permitting the employer to retain the employee's wages or a portion thereof as a fine.

- Stipulations constituting a waiver on the part of the employee to indemnification to which he/she might otherwise be entitled because of workplace injuries, occupational diseases, damages occasioned by the non-performance of the contract or because of unjustified dismissal.

- Any other stipulations waiving any right designed to protect the female worker.

Duration of Employment:

The presumption in the labor law is that the employment duration is for an indefinite period of time. (FLL Article 35). On the other hand, Article 40 of the FLL establishes that in no case may a worker be obligated to accept employment for more than one year. Under certain circumstances, the law allows the employment relation for a specified duration or for specified work:

- Where the nature of the work mandates a specific time period

- Where the object of the work relationship is to substitute another worker

- In all other cases provided for by law.

FLL Article 37 provides that a "contract of specified duration may be made only in the following cases: (l) where the nature of the work to be done so requires; (2) when the contract is to provide a temporary substitute for another employee; and (3) in the other cases provided for by the labor laws.

Working Hours:

The working day is defined by FLL Article 58 as that period during which the employee is available to the employer to render services. The FLL states that working hours can be fixed freely by the agreement of employer and employee. (FLL Art. 59) The agreement may not, however, exceed the maximum work day fixed by the FLL and the hours of work must be arranged to enable the workers to have Saturday afternoons off or reach some similar arrangement. (Id.)

Working hours are grouped according to the following classifications: day work; night work and mixed hours. Day work is the work performed between 6 a.m. and 8 p.m. Night work is the work performed between 8 p.m. and 6 a.m. Mixed work hours are working hours that include both day and night work, provided that the period of night work is less than 3 and-one-half hours. If there are more than 3 1/2 night hours, the shift will be considered to be night work. (FLL Articles 60, 63, 64).

Article 61 sets forth the maximum duration of the work day: Eight hours for day work; seven for night work; and seven and one-half in the case of mixed hours. The work week is six days long.

If the employee works continuous daily hours, he/she shall receive a rest period of at least half an hour during the work day. The worker must be permitted to actually leave the work area during the rest period. If the worker cannot leave the work area during rest periods and meal times, such periods shall be deemed to be hours actually worked and shall be included in the daily hours of work. (FLL Articles 63, 64) For decisional law, see Ad 2902/81, Adrián Quezada Trejo and others, 17/VIII/81. 5 votes.

The working day may be extended in case of an emergency which places the lives of workers, the employer, or the viability of the enterprise in imminent danger. The working day may be extended only for the time necessary to avoid or prevent this danger. (FLL Article 65).

In contrast, the United States Fair Labor Standards Act, 29 U.S.C. Section 207 (a)(1), sets the maximum workweek at 40 hours and provides that employers must pay employees one and one-half times their regular pay rate if they work overtime. Subsection 207(a)(1) provides, in relevant part:

Except as otherwise provided in this section, no employer shall employ any of his employees who in any workweek is engaged in commerce or in the production of goods for commerce for a workweek longer than forty hours, unless such employee receives compensation for his employment in excess of the hours above specified at a rate not less than one and one-half times the regular rate at which he is employed.

Age Requirement:

Mexican labor law provides that it is unlawful to employ children under the age of 14 years. These provisions are based upon the assumption that it is the duty of society and the children's parents to first tend to the development of minors. Children between the ages of 14 and 16 may work under certain circumstances. They should have completed their compulsory education, except in cases approved by the CAB. The maximum working day for children between 14 and 16 years of age is six working hours. (See Constitutional Article 123 (A)(III)).

Minors under 16 may not engage in unhealthy or hazardous work, industrial night work or work of any kind after 10 o'clock at night. (See Constitutional Article 123(A)(II)). Minors between the ages of 14 and 16 may not work if they have not completed their compulsory education, unless the CAB deems it beneficial in that there is a connection between the work and schooling. Such minors must have permission from their parents or guardians to work. Individuals over the age of 16 may contract their services freely, subject to the limits set forth in the labor law.

Minors between the ages of 14 and 16 must obtain a medical certificate certifying their ability to work. They must also subject themselves to the periodic medical examinations required by the Labor Inspection Department (Inspección del Trabajo). Without such a certificate, no employer may lawfully utilize the minor's services (FLL, Article 174).

FLL Article 178 prohibits minors between the ages of 14 and 16 from working overtime, on Sundays or on paid rest days. If this provision is violated, the employer will be required to pay the minor 200% of the minor's regular salary. Minors between the ages of 14 and 16 are entitled to at least 18 paid vacation days per year. (FLL Article 179).

FLL Articles 175 and 176 set forth certain types of hazardous work in which minors may not engage. Article 176 provides that minors under 18 may not engage in industrial night work.

Children under the age of 18 cannot be hired for purposes of working outside of Mexico, except in the case of individuals with technical or professional training, artists, sportspersons and specialized workers. (FLL Article 29)


The labor laws permit workers to work past their regular working schedule where exceptional circumstances require. Up to nine hours of overtime may be worked, not to exceed three hours a day or three times a week. Overtime work performed during this time should be paid at an additional one hundred per cent. Any time worked over nine hours of overtime per week must be paid at a rate of two hundred percent of the worker's ordinary rate. (FLL Articles 66, 67) Pursuant to FLL Article 68, no worker may be compelled to work longer hours than those permitted under the labor law. The amount of overtime payment due to the worker does not form part of the salary for purposes of indemnity except where it is paid in a fixed, permanent form. See Ad 5784/77. Ferrocarriles Nacionales de México, 3/VII/78. Unanimity of 4 votes.

While 29 U.S.C. Section 207(a)(1) sets forth the general rules that overtime is paid at time and a-half, exemptions are made for a number of occupations, including employers engaged in handling, slaughtering, dressing of livestock, cotton ginners and compressors, employers engaged in first processing of fruits and vegetables. The purpose of the exemption is to enable such employers' to avoid the burden of overtime in those seasonal or peak periods when they must work to take care of the product on market, the amount of which depends on factors beyond their control. Walling v. Swift & Co., 131 F. 2d 249 (C.C.A. I11. 1942).

In practice, overtime in Mexico is often not paid. Where the worker receives overtime, it is usually paid at the rate of double pay.

The Employment of Women:

FLL Article 164 provides that women shall have the same rights and obligations as men. Constitutional Article 123(A)(VII) establishes the principle of equal pay for equal work regardless of gender. Nevertheless, the labor laws establish a special protective scheme for maternity.

FLL Article 166 provides that, when the health of a woman or her fetus/child would be endangered during the pregnancy or nursing period, she may not engage in unhealthy or dangerous labor, night industrial work or work in commercial or service establishments after 10 o'clock at night. These rights are without prejudice to the female employee's salary, benefits and other rights under her employment agreement. This prohibition, however, has the effect of denying the female employee the ability to earn greater income by forbidding her from working overtime.

Pregnant Employees:

Women during pregnancy may not perform physical labor requiring considerable effort and which could be hazardous to their health.

Maternity Leave:

Pregnant employees are entitled to six weeks' leave prior to the approximate date of childbirth and to six weeks' leave thereafter. During this time period, they are entitled to receive their full wages and retain their employment and the rights acquired under their labor contract. During the nursing period, nursing mothers are entitled to two extra paid half-hour rest periods for nursing their children. (Constitutional Article 123(A)(V); FLL Article 170, paras. II, IV and V).

The six weeks' maternity leave may be extended to the time necessary if it is impossible for the female worker to return to work due to her pregnancy or postnatal recovery During the regular six week maternity leave, the female worker is entitled to her full wages. In the case of extended maternity leave, the worker will be entitled to half pay for no more than 60 days. (FLL Article 170). With regard to paid maternity leave, the Mexican Social Security Institute (Instituto Mexicano de Seguridad Social, hereinafter "IMSS") subsidizes 60% of the female worker's salary; therefore, the employer need only pay the difference.

The IMSS provides nursery services for children of workers from 43 days to 4 years of age. (FLL Article 171). This system was established as a social service charged against the IMSS and was published in the Diario Oficial on March 23, 1973.

Finally, FLL Article 172 requires the employer to provide a sufficient number of chairs for working mothers. In fact, this is an obligation the employer owes to the workers regardless of sex or maternal/gestational status. (FLL Article 132 (V)).

Rest Days:

Article 69 of the FLL states that workers are entitled to at least one rest day, preferably on Sunday, receiving full pay every six days. If, for some reason, the worker is obligated to work on a Sunday, he will be entitled to an extra bonus of 25% of the ordinary rates.

Reportedly, rural farm workers (trabajadores del campo), at least in Sinaloa, often do not receive the required paid rest day.

In industries requiring continual work, the employer and employee may agree upon those days in which the worker may enjoy his/her day of rest.

The preferred day of rest under the FLL is Sunday. Workers who work on Sundays will receive at least an additional 25% in pay over the salary on other weekdays. (FLL Article 71).

FLL Article 72 provides that a worker may not be obligated to work on his/her rest days. If this provision is not observed and the employee is compelled to work, the employer must pay the worker double time for the work actually performed, in addition to the wages to which he/she is entitled for working on the rest day.

Article 74 establishes the following holidays:

January 1st
February 5th
March 21st
May 1st
September 16th
November 20th
December 25th
The first day of December every six years, when the new President of Mexico takes office
Election days, which are determined by the federal laws and the local electoral body, in the case of ordinary elections

On the above holidays, the employers and workers decide how many employees shall be required to work. If no agreement can be reached, the matter is submitted to the permanent conciliation board, or, failing this, to the conciliation and arbitration board. The workers required to work shall be entitled to double pay for time worked on the above holidays. (FLL Article 75).


Article 76 of the FLL states that workers who have been in the service of an employer for more than one year shall be entitled to receive an annual vacation leave, which shall in no case be less than 6 working days, and shall be increased by two working days (up to a maximum of twelve) for each subsequent year of service. After the fourth year, the vacation period shall be increased by two days for every five years of service.

Even though the right to payment of vacation time arises after the worker has completed one year of service, in cases where this requisite is not met, the worker is entitled to be paid a proportional share of this benefit. For case law, see Vol. XVIII, page 21. Ad 2366/64. Guadalupe Atilano Cornejo. Unanimity of 4 votes. (Report, 4th Chamber 1981. Decision 220, page 168).

FLL Article 77 provides that seasonal or occasional workers will be entitled to vacation time on a pro rated basis, in proportion to the number of days worked each year.

Workers must take at least 6 days of vacation time in an uninterrupted period. FLL Article 79 specifically provides that it will be considered unlawful to pay compensation in lieu of providing vacation leave. If the employment relationship ends before the worker finishes his/her first year of service, he/-she will be entitled to compensation for accumulated vacation time. (Article 79). In practice, many workers accept compensation for vacation time.

Vacation must be given within the six months following the date on which the worker completed his/her year of service. The employer must issue yearly to each worker a record stating his/her seniority, length of service and, based on that, the period of leave entitlement and the date(s) on which the leave may be taken. (FLL Article 81).

Workers who perform casual or discontinuous work and seasonal workers are also entitled to an annual vacation. Their vacations are granted in proportion to the number of days worked in a year. (FLL Article 77).

In all cases, the worker will be entitled to a bonus (prima) of not less than 25% of the wages payable in respect of the vacation period. (FLL Article 80) Employers generally comply with this provision of the labor law.


FLL Article 82 defines wages as:

The remuneration which the employer is obligated to pay to the worker in exchange for his/her work.

The wage shall be sufficiently rewarding, and in no case less than the amount fixed by labor law as a minimum. In fixing the amount of the wage, the quantity and quality of the work must be taken into consideration. FLL Article 86 reflects the constitutional principle of equal pay for equal work under equal working conditions.

Wages are set by agreement between the parties. Wages must be paid every week in the case of persons engaged in manual work, or every 15 days in the case of all other workers. (FLL Article 88). In practice, certain types of office and managerial personnel are paid on a monthly basis.

FLL Article 83 provides that wages may be fixed according to a unit of time, on a piecework or commission basis, in a lump sum or in any other manner. Where salary is based on unit of time, it is necessary to specify the time the work period is to last, and the schedule to be met, in order to determine whether the work is day work, night work, or mixed. If the wage is fixed on a piecework basis, the nature of the work shall be specified as well as the quantity and quality of the material, the state of any tools and equipment which the employer may provide for executing the work, and the amount of time for which the tools and equipment will be made available to the employee. No deductions from the employee's pay may be made on account of any normal wear and tear to the tools and implements as a result of the work. (FLL Article 83).

Equal Pay:

Equal wages must be paid for equal work, regardless of sex or nationality. (Constitutional Article 123 (A)(VII)).

U S. workers are protected from discrimination in pay on the basis of gender by the Fair Labor Standards Act, 29 U.S.C. Section 206(d)(1), the Equal Pay Act of 1963 and Title VII, which also prohibits discrimination in the terms and conditions of employment on the basis of race, color, national origin, religion and handicap. 29 U.S.C. Section 206(d)(1) provides, in pertinent part:

No employer having employees subject to any provisions of this section shall discriminate, within any establishment in which such employees are employed, between employees on the basis of sex by paying wages to employees in such establishment at a rate less than the rate at which he pays wages to employees of the opposite sex in such establishment for equal work on jobs the performance of which requires equal skill, effort and responsibility, and which are performed under similar working conditions, except where such payment is made pursuant to (i) a seniority system; (ii) a merit system; (iii) a system which measures earnings by quantity or quality of production; or (iv) a differential based on any other factor other than sex.

The FLSA provision was intended as a "broad charter of women's rights in the economic field and was designed to eliminate all wage discrimination based on sex which Congress had found in 1963 to exist on a substantial scale. Grumbine v. U.S:, 586 F. Supp. 1144 (D.C.D.C. 1984).

Integrated Salary:

Pursuant to FLL Article 84, a worker's salary is integrated not only with the cash received as his/her base salary, but also with bonuses or tips, housing (whether the employer directly provides housing or pays a quota to INFONAVIT), commissions, fringe benefits (such as a company car, etc.) and any other monies or in-kind benefits given to the worker in exchange for his/her work.

Wages must be remunerative and in no event may they be lower than the established minimum wage. In fixing the amount of wages, the quantity and quality of the work shall be taken into account. If the salary is based on piece work, the compensation paid must be calculated so as to yield at least the minimum wage over the course of a normal 8-hour workday. (FLL Article 85).

Year-end Bonus (Aguinaldo):

This is a monetary bonus that employers give to employees at Christmastime. The right to the aguinaldo is established in Article 87 of the labor law which states that workers shall be entitled to an annual bonus to be paid before the 20th day of December. The bonus must be equal to at least 15 days' wages.

FLL Article 87 provides that workers who have not yet completed their year of service at the time of distribution of the aguinaldo are entitled to receive a portion of the aguinaldo commensurate to the period of their employment.

Minimum Wage:

The term minimum wage is defined as the smallest cash payment which a worker should receive for services performed during a working day. (FLL Article 90) The term minimum salary refers to a minimum daily wage, not a minimum hourly wage.

There are two classes of minimum salaries, general and professional. Workers are guaranteed a minimum wage, which may be for general or professional work, distinguishing between rural and city employment. Delivery of the minimum wage to the worker is guaranteed by the provision establishing that the minimum wage shall be free from attachment, compensation or deduction. Evasion by an employer of payment of the minimum salary renders the employer subject to a criminal penalty for salary fraud under Articles 386 and 387, Section XVII of the Federal Penal Code.

Minimum wages may be general for one or more geographic area, which may be applied to a specific profession, office or specific work, in one of these geographic areas. (Article 91) The general minimum wage for a geographic area will govern all workers in that area, regardless of their economic activity, profession, office or specific work. (Article 92).

Article 94 provides that the minimum wage will be set by a National Commission composed of representatives of workers, employers and the government. The Commission may avail itself of special commissions of a consulting nature which it may deem necessary to its proper functioning. Article 570 provides that the minimum wage will be set every year and will go into effect on January 1 of the next year.

The Commission has a technical department (Dirección Técnica) which conducts surveys and studies regarding the minimum wage to determine the general condition of the economy, the principal changes in the development of economic activities and changes in the cost of living for Mexican families. The Department also takes into account the inflation rate and the expected average rate of productivity in the economy.

The National Minimum Wage Commission (Comisión Nacional de los Salarios Mínimos) has divided Mexico into three geographic areas: A, B and C, according to the authority given to it by Article 96. The minimum wage varies according to which area the worker is located. Because the minimum wage varies, workers are beginning to migrate toward the areas where wages are higher. For example, in Monterrey, Nuevo Leon, in area "B", the wages are higher than in certain other surrounding areas in the State of Nuevo Leon, which are classified as area "C", so a significant number of workers are coming to the city from outlying areas to look for work, a problem which may, of course, precipitate a scarcity of jobs in that city.

Area "A" is composed of: all municipalities in the States of Baja California and Baja California Sur; the municipalities of Guadalupe, Juárez and Praxedis G. Guerrero of the State of Chihuahua; the Federal District; Acapulco de Juárez in the State of Guerrero; the municipalities of Atizapán de Zaragoza, Coacalco, Cuautitlán, Cuautitlán-Izcalli, Ecatepec, Naucalpan de Juárez, Tlalnepantla de Baz and Tultitlán of the State of México; the municipalities of Agua Prieta, Cananea, Naco, Nogales, Plutarco Elías Calles, Puerto Peñasco, San Luis Río Colorado and Santa Cruz of the State of Sonora; the municipalities of Camargo, Guerrero, Gustavo Díaz Ordaz, Matamoros, Mier, Miguel Alemán, Nuevo Laredo, Reynosa, Río Bravo, San Fernando and Valle Hermoso of the State of Tamaulipas; and the municipalities of Agua Dulce, Coatzacoalcos, Cosoleacque, Las Choapas, Ixhuatlán del Sureste, Minatitlán, Moloacán and Nanchital de Lázaro Cárdenas del Río in the State of Veracruz.

Area "B" is composed of: the municipalities of Guadalajara, El Salto, Tlajomulco, Tlaquepaque, Tonalá and Zapopan in the State of Jalisco; Apodaca, Garza García, General Escobedo, Guadalupe, Monterrey, San Nicolás de los Garza and Santa Catarina in the State of Nuevo Léon; the municipalities of Altar, Atil, Bácum, Benjamin Hill, Caborca, Cajeme, Carbó, La Colorada, Cucurpe, Empalme, Etchojoa, Guaymas, Hermosillo, Huatabampo, Imuris, Magdalena, Navojoa, Opodepe, Oquitoa; Ptiquito, San Miguel de Horcasitas, Santa Ana, Sáric, Suaqui Grande, Trincheras,and Tubutama in the State of Sonora; the municipalities of Aldama, Altamira, Antiguo Morelos, Ciudad Madero, Gómez Farías, González, Mante, Nuevo Morelos, Ocampo, Tampico and Xicoténcatl of the State of Tamaulipas; and the municipalities of Coatzintla, Poza Rica de Hidalgo and Tuxpan of the State of Veracruz.

Area "C" is composed of: all of the municipalities of the States of Aguascalientes, Campeche, Coahuila, Colima, Chiapas, Durango, Guanajuato, Hidalgo, Michoacán, Morelos, Nayarit, Oaxaca, Puebla, Querétaro, Quintana Roo, San Luis Potosí, Sinaloa, Tabasco, Tlaxcala, Yucatán and Zacatecas; all of the municipalities of the State of Chihuahua except for Guadalupe, Juárez and Praxedis G. Guerrero; all of the municipalities of the State of Guerrero except Acapulco de Juárez; all of the municipalities of the State of Jalisco except for Guadalajara, E1 Salto, Tlajomulco, Tlaquepaque, Tonalá and Zapopan; all of the municipalities of the State of México except tor Atizapán de Zaragoza, Coacalco, Cuautitlán, Cuautitlán-Izcalli, Ecatepec, Naucalpan de Juárez, Tlalnepantla de Baz and Tultitlán; all of the municipalities of the State of Nuevo Léon except for Apodaca, Garza García, General Escobedo, Guadalupe, Monterrey, San Nicolás de los Garza and Santa Catarina; the municipalities of Aconchi, Alamos, Arivechi, Arizpe, Bacadéhuachi, Bacanora, Bacerac, Bacoachi, Banámichi, Baviácora, Bavispe, Cumpas, Divisaderos, Fronteras, Granados, Huachinera, Huásabas, Huépac, Mazatán, Moctezuma, Nácori Chico, Nacozari de García, Onavas, Quiriego, Rayón, Rosario, Sahuaripa, San Felipe de Jesús, San Javier, San Pedro de la Cueva, Soyopa, Tepache, Ures, Villa Hidalgo, Villa Pesqueira and Yécora of the State of Sonora; the municipalities of Abasolo, Burgos, Bustamante, Casas, Cruillas, Güémez, Hidalgo, Jaumave, Jiménez, Llera, Mainero, Méndez, Miquihuana, Padilla, Palmillas, San Carlos, San Nicolas, Soto la Marina, Tula, Victoria and Villagrán of the State of Tamaulipas and all of the municipalities of the State of Veracruz except for Agua Dulce, Coatzacoalcos, Coatzintla, Cosoleacque, Las Choapas, Ixhuatlán del Sureste, Minatitlán, Moloacán and Nanchital de Lázaro Cárdenas del Río, Poza Rica de Hidalgo and Tuxpan.

The labor law establishes that the minimum wage shall be sufficient to meet the normal requirements of a head of a family of a material, social and cultural order and to meet the obligatory educational requirements of his/her children. Despite this provision, in Mexico it is almost impossible to survive on this kind of salary.

There is a growing trend in Mexico to eliminate the differences in minimum salaries based on geographic areas. It is probable that in the near future there will be only two different minimum salaries and one general minimum salary for the whole of Mexico. The term general minimum salary is understood as the amount which must be paid to a worker for performing the simplest activity for which no specialized education is required.

The minimum daily wage for general employment was set for January 1, 1995 as follows:

N$= New Pesos

Area "A": N$16.34
Area "B": N$15.18
Area "C": N$13.79

The Commission also set the minimum salaries for specific professions, offices and specialized activities. (See Table at Appendix A).

Given the high rate of inflation in Mexico and the precipitous devaluation of the peso, the general minimum daily salary was raised by decree published in the Diario Oficial on March 31, 1995:

N$= New Pesos

Area "A": N$18.30
Area "B": N$17.00
Area "C": N$15.44

The minimum wage for specific professions, offices and specialized activities was also increased by the March 31, 1995 decree. (See Table at Appendix B).

This action by the Commission precipitated many complaints because, at the same time that the minimum wage was raised by approximately 12%, the Mexican government raised the value added tax on consumer goods (IVA) by 10-15%.

In Mexico, the minimum wage is no longer a valid point of reference, because no employer pays minimum wage; workers cannot survive on such a small amount. Where a kilo of meat costs 22 pesos and the minimum wage is 15-20 pesos a day, the pay rate is obviously woefully inadequate. Generally, on the average employers pay workers some 15-20% over the minimum wage rate. Because wages are nevertheless so low, more and more members of the family are forced to work to help sustain the household and, despite the provisions in the labor law prohibiting minor children from working, child labor has begun to proliferate again in Mexico.

Frequently, employers will agree to pay workers more than the minimum wage, but will register the worker with social security as earning the minimum wage, so that the employer's premiums will be lower. Article 21 of the Social Security Law entitles workers to request their registration information from the Social Security Administration and communicate to the Administration any modification in their salary and any other change in their job conditions.

Minimum wages may be general for one or more geographic areas which may cover one or more states, or occupational groups for a given branch of economic activity or for individual occupations, trades or special work, within one or more geographic areas. (FLL Article 91) The general minimum wages shall be valid for all the workers in the geographic areas concerned, irrespective of the branch of economic activity, occupations, trades or special work.

Pursuant to FLL Articles 94, 95 and 96, minimum wages are fixed by the National Board of Minimum Wages. This board is composed of workers, employers and government representatives which may receive help from special consultative committees. This Board determines the division of the Mexican territory into geographic areas, which shall consist of one or more municipalities in which the same general minimum wage shall apply, without there necessarily existing a territorial continuity between said municipalities.

By law, minimum wages cannot be the subject of set off, discount or reduction, except in the cases mentioned in FLL Article 97:

1) Alimony or maintenance payments ordered by the competent authority in favor of spouse, children, parents or grandparents and grandchildren, decreed by the competent authority.

2) Rental payments to the employer for worker's housing provided by the employer. Article 151 provides that such rent cannot exceed .5% monthly of the cadastral value of the property. In no event may the amount deducted for rent exceed 10% of the worker's salary.

3) Installment payments toward loans originating from the National Worker Housing Fund (Fondo Nacional de la Vivienda para los Trabajadores), intended for the acquisition, repair, enlargement or improvement of residential housing or for the payment of loans acquired for those purposes. Those workers who have been granted a credit for the acquisition of houses located in multiple family dwellings financed by the Institute of the National Workers Housing Fund, 1% of the salary to which Article 143 of this law refers will be discounted which shall be intended to cover the costs expended for administration, operation and maintenance of the multiple family housing. These discounts must have been freely agreed to by the worker and may not exceed 20% of the worker's salary.

4) Installment payments in connection with loans guaranteed by the Development and Guarantee Fund for the Protection of Worker's Consumption of Consumer Goods. (Fondo de Fomento y Garantia para el Consumo de los Trabajadores, hereinafter "FONACOT") referred to in Section 103 bis of this law, taken out for the purchase of durable consumer goods or for the payment of services. Such deductions must have been freely agreed to by the worker and in any event may not exceed 10% of his/her wages.

The minimum wage in the United States is flied by statute. The Fair Labor Standards Act, 29 U.S.C. Section 206(a) has set the minimum wage at $4.25 per hour. Subsection 206(a) reads:

Every employer shall pay to each of his employees who in any workweek is engaged in commerce or in the production of goods for commerce, or is employed in an enterprise engaged in commerce or in the production of goods for commerce, wages at the following rates:

(1) except as otherwise provided in this section, not less than $3.35 an hour during the period ending March 31, 1990, not less than $3.80 an hour during the year beginning April 1, 1990, and not less than $4.25 an hour after March 31, 1991.

Protective Norms/Salary Privileges:

Workers may freely dispose of their salaries. Any stipulations or measures to the contrary will be void. (FLL Art. 98). The worker's right to receive salaries cannot be renounced or waived. (FLL Article 99).

The salary shall be paid directly to the worker, except where is impossible for the worker to receive it directly; in such case the worker may designate an agent to collect the salary on his/her behalf in a writing witnessed by at least two persons. (FLL Article 100).

The salary must be paid in legal tender. The salary cannot be paid in goods, vouchers, chips, tokens or other objects intended to be representative of the monies owed to the worker.

There are, however, enterprises in which the labor agreement gives the worker vouchers or slips which may be exchanged for merchandise, especially foodstuffs. This arrangement does not constitute a violation of FLL Article 101 where, instead of substituting the worker's salary, the vouchers or slips actually increase the salary to the extent that these fringe benefits become part of the worker's salary.

FLL Article 102 requires that all payments in kind be appropriate for the personal use of the worker and his family and in reasonable proportion to the amount of the wage paid in cash. This provision contemplates the use of vouchers or slips that may be exchanged for merchandise, but requires the following characteristics: (1) they must be fringe benefits that complement the worker's salary; (2) they must be merchandise that is truly useful to the worker; and (3) cash must constitute the main part of the salary, so that if these in-kind benefits do not exist, the worker will still be able to acquire the merchandise.

FLL Article 103 provides that stores which distribute clothing, foodstuffs, and articles for the home, may be created by agreement between workers and employers of one or more enterprises in according with the following:

- Purchase of the merchandise shall be entirely voluntary and the workers may not be coerced to buy in any manner whatsoever.

- The purchase price of the goods shall be fixed by agreement between the workers and employers, but in no event may they exceed the official price for the goods or, in the absence of an official price, the current market price for the goods. Price modifications for goods shall also follow this principle.

- The agreement shall determine the degree of participation which the workers shall have in the administration and management of the store.

Article 103 bis provides that the government shall regulate the formation of the Fondo de Fomento y Garantía para el Consumo de los Trabajadores which will provide financing for the stores contemplated by Article 103 and will manage other institutions to grant and guarantee low cost and convenient credit to facilitate workers' purchase of goods and services.

Protection of the Worker's Salary:

Constitutional Article 123(A)(X) establishes that workers must be paid in legal tender, thereby effectively eliminating the tiendas de raya.

A worker's salary may not be garnished or subjected to a fine. (FLL Arts. 105, 107). Deductions from a worker's salary may be made only in the following circumstances:

- Repayment to the employer of cash advances or for overpayment or purchase of goods produced by the enterprise. The amount deductible may in no event exceed one month's salary and the deduction taken is that agreed to by the worker and the employer, but in no event to exceed 30% of the minimum salary.

- Payment of rent to the employer in accordance with FLL Article 151, not to exceed 15% of the worker's salary.

- Installment payments toward loans originating from the National Worker Housing Fund. (FLL Article 110).

A worker's salary may not be garnished except in the case of court-ordered support payments. The employer is not bound to honor any other type of garnishment request. (FLL Art. 112). Any assignment of a worker's salary in favor of the employer or any third party shall be deemed void. (FLL Art. 104). Debts which a worker contracts with his employer shall not be subject to interest. (FLL Article 111).

Salaries must be paid on the premises where the worker renders his/her services. Payment must take place on a working day, either during or immediately after the work day. (FLL Art. 109). Wages are generally paid on a Saturday, typically called a día de raya.

Wages earned by workers in the prior year and indemnifications to which the workers may be entitled shall take precedence over any other debts of the employer, including mortgages on real property, tax liens and those held by the Mexican Social Security Administration against the employer's assets. (FLL Art. 113).

Workers will not be required to file creditor's claims in bankruptcy or other legal proceedings. The CAB will attach and foreclose upon the assets necessary to pay the requisite salaries and indemnification. (FLL Art. 114). The beneficiaries of a deceased worker shall be entitled to all the worker's accrued salaries and benefits and may pursue an action for those benefits. (FLL Art. 115).

Workers' Right to Share in the Profits of the Employer:

Article 123(A)(IX) of the Mexican Constitution and Article 117 of the Federal Labor Law provide that all workers who have been employed for 60 days or more are entitled to share in the profits of enterprises with which they are employed in the percentage determined by the National Commission for the Sharing of Profits (Comisión Nacional para la Participación de los Trabajadores en las Utilidades de las Empresas). (FLL Article 127(VIII)). Profit is defined as taxable income. (FLL Art. 120).

All workers who have been employed for 60 days or more have the right to participate in profits of the enterprise, although not in its management. The percentage is fixed by the Comisión Nacional para la Participación de los Trabajadores en las Utilidades de las Empresas and is determined based on the annual income tax statement filed by the corporate employer. The percentage was fixed at 10% by decree published in the Diario Oficial dated February 28, 1985.

The Commission was established on April 11, 1984. There is also a Council composed of a President, who is a representative of the government. He/she is assisted by two individuals appointed by the Department of Labor (Secretaría de Trabajo y Previsión Social). The Commission is further composed of an equal number (not less than 2 nor more than 5) of representatives of workers and employers. (FLL Article 579).

The percentage is fixed by the Comisión Nacional para la Participación de los Trabajadores en las Utilidades de las Empresas and is determined based on the annual income tax statement filed by the corporate employer. The percentage was fixed at 10% by decree published in the Diario Oficial dated March 4, 1985. Article 25 of the Federal Tax Law provides that employers may not lower their taxable income by deducting other payments or contributions to workers. The percentage of the workers' share in the profits will be taken from the taxable income without making any deductions from the amount or differentiating between types of enterprises, in accordance with Article 586(V) of the Federal Labor Law. As a practical matter, employers rarely share profits with their workers, finding excuses allowing them to avoid paying out the profits and having to pay taxes on those profits.

Workers may file objections to the statement presented by the employer to the Secretaría de Hacienda y Crédito Publico. The employer shall provide a copy of its annual statement to the Secretaría within 10 days from the date of the employer's submission of the statement. The annexes which accompany the statement shall be made available to the workers for inspection in the Secretaría and in the employer's offices for the next 30 days. The workers may not reveal the information contained therein to third parties. Within the next 30 days, the "sindacato titular" of the collective agreement or the majority of the workers may present their position to the Secretaría. The decision issued by the Secretaría may not be appealed by the workers. Notwithstanding this provision, the workers may file an amparo petition in accordance with Articles 103 and 107 of the Constitution. There is case law tending to take jurisdiction over these disputes away from the Secretaría, giving it to the Conciliation and Arbitration Board.

Within 30 days from the date of the decision, the employer must implement the Secretaría's decision, regardless of whether the employer decides to challenge the decision. If the employer is successful in challenging the Secretaría's decision, any overpayment to the workers may be deducted from their share of the profits the next fiscal year. (FLL Art. 121).

The appropriate share of profits must be distributed to the workers within 60 days following the date on which the employer must make its annual tax payment, even where there is a pending objection interposed by the workers. (FLL Art. 122).

The following employers are exempt from the profit sharing provisions of the FLL:

- new businesses, during their first year of operation

- new businesses dedicated to the development of a new product, during their first two years of operation

- new mining enterprises during the period of exploration

- private charitable institutions, recognized by law, which have served humanitarian ends and are non-profit enterprises

- the Mexican Social Security Administration and public, decentralized institutions serving cultural or charitable ends

- Businesses which have less capital than that set by the Secretaría del Trabajo y Previsión Social for certain branches of industry. (Article 126).

Job Placement and Training:

Employment placement services for workers shall be free, whether the service is performed by a municipal office, labor exchange or other official or private institution. In offering this service, the labor demand will be considered. All conditions being equal, priority will be given to persons providing the only income for the family Constitutional Article 123 (A)(XXV). Enterprises of all types are obligated to provide training for their workers. Constitutional Article 123 (A)(XIII).

Housing for Workers:

Every enterprise, including agricultural, mining, industrial or other, is obliged to provide comfortable and hygienic housing for its workers. To meet this obligation, enterprises must pay the National Worker Housing Fund an amount equal to five per cent of the amount paid in worker salaries. (Article l36). The National Worker Housing Fund is intended to create financing systems that enable workers to obtain credit at low cost to acquire property or to construct, repair or improve their housing. (FLL Article 137). The resources of the Fund shall be administered by a tripartite committee composed of representatives of the labor force, employers and the government. (FLL Art. 138).

Constitutional Article 123(A)(XII) establishes the employer's obligation to provide its workers with comfortable and hygienic housing by paying quotas to INFONAVIT. The Constitution provides for the creation and maintenance of INFONAVIT. When the work premises are situated outside of population centers, the employer must establish schools, clinics and other indispensable services. When the population of these centers exceeds 200 inhabitants, the employer must reserve a tract of land of not less than 5,000 square meters for markets, buildings designated for municipal services and recreation centers.

Worker's Compensation Benefits:

When workers suffer an accident or contract an occupational disease, the employer must pay a corresponding indemnity, to compensate the worker for his/her loss of earnings, whether the injury resulted in death, or temporary or permanent disability. Employers have this obligation even though they contracted for the employee's services through an intermediary. Employers are also obligated to comply with applicable norms regarding hygiene and safety and to take the precautions necessary to prevent accidents in the workplace, in order to protect the life and health of its workers. Constitutional Article 123 (A)(XXIX).

Social Security Benefits:

Finally, Constitutional Article 123(A)(XXIX) provides for the enactment of a social security law. Such law is considered to be of public interest and is to include insurance against disability, old age, life insurance, unemployment benefits, against sickness and accidents, infant care services, and other forms of insurance for the protection and well-being of factory workers, rural workers and non-salaried workers and other workers in other social sectors and their families. Similarly, cooperative societies established for the construction of low-cost and hygienic housing to be purchased by workers in installments wiI1 be considered of social utility.

Suspension of the Employer-Employee Relationship:

Pursuant to FLL Article 42, causes for the temporary suspension of the obligations of rendering services and of payment are:

- The worker's contagious disease

- Temporary disability from a non-work related injury or disease

- Imprisonment or arrest of the worker

- Appointment of the worker to the CAB

Rescission of Employer-Employee Relationship:

The employer or employee may rescind the work relation for just cause at any time, without incurring liability. Just cause for the employer to rescind the relationship include: employee misconduct; falsification of qualifications (30 days only); insubordination, drunkenness, immoral acts at workplace, threatening the safety of other corkers, breaching confidentiality of trade secrets, excessive absenteeism (more than 3 days in a 30 day period) without good cause. The rescission must be communicated to the worker. (FLL Article 46).

The worker may appeal to the CAB. If the CAB finds there was no good cause for the rescission, the worker shall be entitled to back pay up to the date of the award, and to reinstatement. There is no right to reinstatement where the worker has been employed less than one year, the CAB determines that it is impossible to establish normal relations, confidential workers, domestic workers and seasonal/occasional workers. (FLL Articles 48, 49).(2)

The worker may rescind the relation without incurring liability, if the employer has tricked the worker, threatened or ill treated the worker, reduced the worker's salary, if the worker failed to receive agreed upon payment employer's failure to prove a safe workplace. The worker may leave his employment within 30 days from the occurrence of the condition and will have right to the compensation provided for in FLL Article 50.

Right of Indemnification (FLL Article 50):

If the employer has rescinded the work relationship without good cause, the worker is entitled to compensation according to the following scheme:

- If the worker was employed for a specified time less than one year, he/she may receive compensation in an amount equal to half the salary received for services rendered; if the employee was employed for a specified time which is greater than 1 year, worked for the employer for over 1 year, then he/she is entitled to six month's salary for the first year of service and 20 days of salary of each subsequent year of services rendered.

- If the relation was for an indefinite period of time, the worker is entitled to compensation in the amount of 20 days' salary for each year of services rendered.

- In addition, the worker will be entitled to three months' salary and to back pay from the date of the dismissal up to the date that the employer pays compensation.

In case of improper dismissals, to determine the amount of the wage payable to workers, the employer must take into consideration the integrated wage (namely, the base salary plus the value of the bonuses, fringe benefits and in-kind benefits contemplated in FLL Art. 84) with respect to the day on which the right to such benefit commenced. Where the wage is fixed on a weekly or monthly basis, it shall be divided by 7 or 30, as the case may be, for the purpose of determining the daily wage. (FLL Article 89)

In the case of salary paid on a piecework basis, and, in general, where the worker's salary is variable, the daily rate shall be the average amount of remuneration received over the thirty days prior to the event triggering the right of indemnification. If the worker's base salary had increased over the thirty day period, the base salary will be the average of the compensation obtained since the date of the increase.

Termination of the Employer-Employee Relationship (FLL Articles 53, 434):

The parties' relationship may be terminated for the following reasons:

- Mutual consent

- The death of the worker

- Completion of the work or expiration of the term of employment

- Physical or mental disability or incapacity of the worker which renders it impossible for him/her to render services

- Acts of God (force majeur) not under the control of the employer, or the employers death or disability which renders the termination of the work necessary, unforeseen costs, exhaustion of mining materials, legally declared bankruptcy.

If the worker suffers a non-related disability, he/she is entitled to one month's salary, plus 12 days' salary for each year of service (in accordance with FLL Article 162) or, if possible and desired by the worker, that other suitable employment be found in addition to the compensation.

If termination by the employer is found to be without good cause, the employee is entitled to the compensation set forth in FLL Article 48.

Right to Strike:

Constitutional Article 123(A)(XVI) establishes the rights of workers and employers to freely associate and organize in defense of their respective interests.

Article 123(A)(XVII) guarantees the right of employees to strike and establishes the right of employers to lockouts. Lockouts are lawful only where a production surplus renders it necessary to suspend production to maintain prices level with costs. Prior approval of the lockout must be obtained from the local Conciliation and Arbitration Board.

Strikes are lawful when they have as their purpose the attaining of an equilibrium among the various factors of production, harmonizing the rights of labor with those of capital. If the strike is in the area of a public service, the workers must give the Conciliation and Arbitration Board 10 days advance notice as to the date agreed upon for the suspension of work. Constitutional Article 123 (A)(XVIII).

Strikes will be considered unlawful when the majority of workers engage in acts of violence against persons or property, or in the event of war, when the workers work for establishments or services of the government.

Adjudication of Labor-Management Disputes:

Disputes between employers and employees are subject to the decisions of a Conciliation and Arbitration Board. Constitutional Article 123(A)(XX). The Board shall be composed of an equal number of representatives of workers and employers, with one government representative. If an employer refuses to submit the dispute to arbitration or to accept the decision of the CAB Board, the labor contract shall be considered terminated and the employer will be required to indemnify the worker in the amount of three months' wages. Constitutional Article 123(A)(XXI). The employer shall also incur any liability arising from the dispute. This provision is not applicable in the case of actions covered in which the following refusal is made by workers, the labor contract shall be considered terminated.

An employer who dismisses a worker without justifiable cause or because he has entered an association or joined a union, or for having taken part in a lawful strike, shall be required, at the election of the worker, to fulfill the employment/labor contract or to indemnify the worker in the amount of three months wages. The law specifies those cases in which an employer may be exempted from fulfilling the contract by payment of an indemnity.

The employer must also pay a worker three months wages if the worker is forced to leave his/her employment due to the employer's lack of honesty or because of ill treatment by the employer or the employer's extended family. An employer remains liable even where the ill treatment is attributable to his subordinates or to members of the employer's family acting with his consent, express or implied.

Wages or salary earned by workers and indemnity compensation shall have priority over all other obligations of the employer in the event of receivership or bankruptcy. Constitutional Article 123(A) (XXIII).

An employee is solely responsible for debts which he/she contracted and which are payable to the employer, his associates, members of the employer's family or the employer's dependents. Payment of the employee's debt may not be exacted from members of the worker's family, nor can the debt be demanded for an amount exceeding the wages of the employee for one month. Constitutional Article 123 (A)(XXIV).

Civil and Criminal Penalties:

FLL Article 993 provides that penalties for violations of the law are administrative and pecuniary. The basis for calculating the fine is the applicable minimum salary. FLL Article 993 provides that a fine of 15 to 155 times the minimum wage will be imposed on the employer who does not comply with Article 7, the norm determining the minimum percentage of Mexican workers in the company or enterprise.

Article 994 provides that a fine of 3 to 155 times the minimum wage will be imposed upon an employer who violates Arts. 61 (maximum work day), 69 (weekly day of rest), 76 (The vacation period due to permanent workers) and 77 (The vacation time due to noncontinuous and seasonal workers). Violation of the employer's obligation to share in the distribution of profits (Article 123(1X) of the Constitution and Arts. 117 to 131 of the FLL) will carry a fine of from 15 to 315 times the minimum wage. A penalty of 3 to 95 times the minimum wage will be imposed upon the employer who fails to comply with certain general obligations such as the obligation to maintain a safe workplace, to grant proof of services, to permit the performance of citizenship obligations, to provide the two-weekly proofs and to establish the Article 123 schools.

A fine of 3 to 155 times the minimum wage will be imposed on employers who violate the norms relating to the work of women and minors. (Art. 992) Non-performance over the course of one week of the norms related to remuneration of work and time off contained in a collective agreement will be punished by fines of 15 to 315 times the minimum wage. If the non-performance continues for two or more weeks, the fines will accumulate, but the fines will increase by 25%. (Article 1000)

Shipowners, shipping companies or charterers have the obligation to provide their workers with healthy, abundant food when passengers are provided with food, or when they sail for more than six hours or are in an unpopulated place. Such violations are punishable by a fine of 3 to 31 times the minimum wage. (Article 996) If there is a refusal to repatriate the worker or transfer the worker to the contracted place in accordance with Article 204(IX), Article 996 imposes a fine of 3 to 155 times the minimum wage against the non-performing employer.

An employer who violates the norms protecting field workers (Arts. 311 to 330) or domicile workers (Arts. 311 to 330) may be fined from 15 to 155 times the minimum salary. (Article 997) With regard to domestic workers, an employer has the obligation to provide a domestic worker who lacks education attendance at a primary school. An employer who violates this provision may be fined 3 to 15 times the minimum wage.

Article 1001 provides that a fine of 3 to 30 times the minimum wage will be imposed on an employer who violates the norms contained in the International Labor Regulation.

The Federal Labor Law does not provide any criminal penalties, nor does it provide for injunctive relief.

In contrast, the Fair Labor Standards Act, provides for civil and criminal penalties and injunctive relief for violations of the provisions in the Act. 29 U.S.C. Section 215 sets forth certain prohibited acts, including violations of 29 U.S.C, Sections 206, 207, 211(c)and (d), 212 and 214.

29 U.S.C. Section 216(a) provides that "any person who wilfully violates any of the provisions of Section 215 will, upon conviction, be subject to a fine of up to $10,000 or imprisonment of up to six months, or both. The penalty of imprisonment may only be imposed for an offense committed after the conviction of such person for a prior offense under Subsection 216. An employer who violates Section 206 or 207 will be liable to the employee for the amount of unpaid minimum wage or overtime compensation due and for an equal amount as liquidated damages.


1. The term "tiendas de raya" refers to company owned or operated stores. Historically, employees were forced to shop at these stores for basic supplies. The storekeepers would place checkmarks or "rayas" next to the employee's name and deduct the cost of the goods from the employee's wages. Often, this system translated to a type of indentured servitude, because the employee never received his/her wages, but simply ended up in debt to the tienda de raya for the cost of the staples the worker's family needed to survive.

2. For a discussion of the structure and functioning of CABs, see the earlier study by the NLCIFT, "Labor Law Enforcement in Mexico and the Role of the Federal and State Conciliation Boards."