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MEXICAN SENATE APPROVES REFORM TO INCREASE VACATION DAYS

Mexico, November 9th, 2022.

On Thursday, November 3, 2022, the Mexican Senate unanimously approved by 89 votes, an amendment to Articles 76 and 78 of the Federal Labor Law (the «Law») to increase vacation allowance for all employees in Mexico.

The amendment was then sent to the Lower Chamber, which will be responsible for the discussions of the proposal and, if applicable, approve it.

This proposed reform, called «Dignified Vacations», seeks to increase vacation periods from 6 to 12 days starting from the first completed year of work, adding 2 days per each year of work until 20 are reached.

Subsequently, as off the sixth year, 2 days will be increased once completing 5 years of services.

The approved reform includes a chart in which the years of work are correlated to the vacation days that would correspond to such employees, as follows:

Years of Work

Vacation days

1

12

2

14

3

16

4

18

5

20
From 6 to 10

22

From 11 to 15

24

From 16 to 20

26

From 21 to 25

28
From 26 to 30

30

From 31 to 35

32

 

In our opinion, the above chart does not reflect the wording of the proposed article, as it seems that the 20 days will be applicable to employees who have been working for the company for 5 to 9 years, as Article 76 of the Federal Labor Law is currently interpreted.

It is important to mention that the chart that appears in the resolution of the Senate will not be incorporated in the text of the Law and therefore, it will not be binding. Although it is evident that the legislator’s intention is that vacation days increase in accordance with the chart, if the Lower Chamber does not correct the text, it is expected that this will eventually be interpreted by our courts.

In view of the foregoing, our recommendation is that, if the Lower Chamber approves the reform as it currently stands, employers should grant vacation days in accordance with the chart contained in the reform proposal, since the labor authorities will probably interpret the article in this sense.

In addition, it is important to note that the increase in vacation days will also impact the payment of the vacation premium, which cannot be less than 25% of the salary that corresponds to the  days taken as vacation.

Likewise, the vacation premium is one of the benefits that integrates the salary for severance purposes.

Also, under the Social Security Law, it will integrate the base salary for the purpose of payment of dues to the IMSS, SAR and INFONAVIT.

Given that it is a payment derived from the employment relationship, it will also have an impact on local payroll taxes.

As previously mentioned, the initiative approved by the Senate also seeks to amend Article 78 of the Federal Labor Law, which, if approved, will provide that employees must continuously enjoy at least twelve days of vacation.

The obligation of employees to enjoy their vacations in a continuous manner is not new, however, it is something that is not common in practice since generally employees enjoy these in an interrupted manner. Even so, it is important to mention that the labor authorities will pay special attention to this provision by virtue of the right to disconnect from work.

This amendment does not only seek that employees enjoy vacation days in a continuous manner, but also that they disconnect completely during this period. The purpose is to improve their mental health, since Mexico is one of the countries with the highest anxiety and fatigue due to work stress, as 75% of Mexicans suffer from it, surpassing countries such as China and the United States.

If the reform is finally approved, it will enter into full force and effect on January 1, 2023, or on the following day of its publication in the Official Gazette if this is done during 2023, being applicable to all labor relations in force as of that date.

This informative note was prepared with the assistance of Regina Torres Septién Beltrán del Río.