Mexico — Termination & Severance

Mexico's termination and severance regime rests on Article 123, Section A, Fraction XXII of the Constitución Política de los Estados Unidos Mexicanos and its implementing statute, the Ley Federal del Trabajo (Federal Labour Law, "LFT"). Article 123 establishes that in the event of despido injustificado (unjust dismissal), the worker has the right at the worker's election either to reinstatement in the position or to an indemnización (indemnity) equivalent to three months' salary. This constitutional election means that an employer who cannot prove just cause for dismissal faces either the obligation to rehire the employee or to pay a statutory minimum indemnity, with the worker controlling which remedy applies.

The LFT implements this framework in Articles 47–51. Article 48 LFT grants the dismissed worker the right to request, before the Autoridad Conciliadora (Conciliation Authority) or the Tribunal (Labor Court) if conciliation fails, either reinstatement in the prior role or indemnización of three months' salary calculated at the rate in effect on the payment date. If the employer fails to prove the stated cause for rescission (termination for cause) in the proceeding, the worker is entitled—regardless of which remedy was initially requested—to salarios vencidos (back pay) for the period from dismissal through judgment, capped at twelve months. If the proceeding extends beyond twelve months or the judgment remains unfulfilled at that point, Article 48 further requires the employer to pay interest on fifteen months' salary at 2 percent monthly, compounded at the moment of payment.

Article 49 LFT lists narrow exceptions to the reinstatement obligation. The employer may substitute the indemnización calculated under Article 50 for reinstatement when: (I) the worker has less than one year of service; (II) the tribunal finds, considering the circumstances, that the worker's direct and permanent contact with the employer makes normal continuation of the relationship impossible; (III) the worker holds a puesto de confianza (position of trust—a managerial or confidential role); (IV) domestic workers (trabajo del hogar); (V) temporary workers (trabajadores eventuales); or (VI) platform-digital workers (personas trabajadoras de plataformas digitales), added by the December 24, 2024 reform. In all other cases, the worker's election to demand reinstatement is enforceable by court order.

Article 50 LFT specifies the indemnización amounts when reinstatement is waived or unavailable:

• Fixed-term contracts under one year: salary for half the service period.
• Fixed-term contracts over one year: six months' salary for the first year plus twenty days' salary per each subsequent year of service.
• Indefinite-term contracts: twenty days' salary per year of service (Article 50, Fraction II, as amended December 24, 2024).
• Plus the constitutional three months' salary (Article 50, Fraction III).
• Plus back pay (salarios vencidos) and interest under Article 48, if the dismissal was unjustified and the employer lost the proceeding.

For platform-digital workers, Article 50, Fraction IV (added December 24, 2024) provides that indemnización consists of three months' salary plus twenty days' salary per year of service (computed based on time actually worked per Article 291-D LFT), plus back pay and interest under Article 48.

Article 51 LFT provides the mirror image: grounds on which a worker may terminate the relationship without liability (rescisión sin responsabilidad para el trabajador). These grounds include the employer's fraud in hiring (Fraction I), violence, harassment, or immoral acts by the employer or representatives (Fraction II), unsafe working conditions (Fraction VII), and other employer misconduct. If a worker invokes Article 51 and the employer contests and loses, the worker receives the same indemnity package as in an unjustified employer-initiated dismissal.

Article 47 LFT enumerates the employer's just-cause grounds for rescission without liability. These include worker dishonesty, repeated absences (more than three in thirty days without permission), insubordination, intoxication or drug use at work, and other serious misconduct. The employer must deliver written notice to the worker stating the specific conduct and the date(s) it occurred (Article 47, final paragraphs). Failure to provide this written notice creates a presumption that the dismissal was unjustified. The causes listed in Articles 47 and 51 are exhaustive; any termination outside those enumerated grounds is per se unjustified and triggers the Article 48/50 protections.

Mexico does not recognize at-will employment for standard employment relationships governed by Article 123(A) of the Constitution. The Constitution and LFT together create a strong presumption of job security, backed by the reinstatement right and substantial indemnity for unjustified dismissal. A foreign employer hiring in Mexico—whether through a local entity or an employer-of-record arrangement—should plan for the reality that terminating an employee without one of the enumerated statutory causes will result in either a court-ordered reinstatement or a severance package comprising the three-month constitutional indemnity, the Article 50 statutory severance (twenty days per year for indefinite contracts), and—if the case proceeds to litigation—up to twelve months' back pay plus compounded interest on fifteen months' salary.

Source: Constitución Política de los Estados Unidos Mexicanos, Art. 123, Apartado A, Fracción XXII Source: Ley Federal del Trabajo, Arts. 47–51

Article 47 LFT establishes not only the enumerated grounds for termination without employer liability but also the strict procedural requirements that an employer must satisfy to make a rescisión con causa justificada (termination for cause) effective. The statute imposes a mandatory written-notice regime, and failure to comply—regardless of whether a substantive just cause exists—creates a presumption of unjustified dismissal that shifts the burden to the employer to prove the dismissal was justified. In practice, non-compliance with the notice formalities is one of the most common reasons employers lose unfair-dismissal proceedings and are ordered to pay the full Article 48/50 severance package or reinstate the worker.

Content of the *aviso de rescisión*

The employer who dismisses a worker for cause must deliver a written notice (aviso escrito) that states clearly:

1. The conduct or conducts that motivated the rescission, and
2. The date or dates on which the conduct was committed.

Article 47, penultimate paragraph (as reformed November 30, 2012 and May 1, 2019) requires specificity. Generic language such as "lack of integrity" or "poor performance" is insufficient; the notice must identify the precise act (e.g., "absent without permission on March 5, 6, and 8, 2026" or "threatened a co-worker with physical violence in the warehouse on March 10, 2026 at approximately 2:00 p.m."). This requirement serves two purposes: it allows the worker to prepare a defense in any subsequent conciliation or tribunal proceeding, and it prevents post-hoc fabrication or shifting of the alleged cause.

Timing and delivery of the notice

The notice must be delivered personally to the worker in one of two ways:

• At the moment of dismissal, handed directly to the worker with the employer requesting acknowledgment of receipt (firma de recibido), or
• **Via the labor tribunal within five working days** (cinco días hábiles siguientes) if the worker refuses to accept the notice or cannot be located.

If the employer chooses the second route, Article 47 requires that the employer file the notice with the Tribunal competente (since the 2017 constitutional reform and the 2019 implementation of the new labor-justice system, this is the Tribunal Laboral in the federal or local jurisdiction, replacing the former Junta de Conciliación y Arbitraje) and provide the worker's last registered domicile so that the tribunal can effect personal service (notificación personal).

The five-working-day clock starts on the date of the dismissal. "Working days" (días hábiles) exclude Saturdays, Sundays, and the official rest days enumerated in Article 74 LFT (New Year's Day, the first Monday of February, Constitution Day, May 1, Independence Day, the third Monday of November, Revolution Day, Christmas, and electoral holidays). If the employer misses the five-day window—for example, by waiting six working days to file with the tribunal—the procedural defect alone triggers the presumption of unjustified dismissal.

Legal consequences of failure to deliver notice

Article 47, final paragraph (added November 30, 2012) states unequivocally:

> "La falta de aviso al trabajador personalmente o por conducto del Tribunal, por sí sola presumirá la separación no justificada, salvo prueba en contrario que acredite que el despido fue justificado."

Translation: The failure to give notice to the worker personally or through the tribunal will, by itself, presume the termination was unjustified, unless the employer can provide contrary evidence proving the dismissal was justified.

This is a rebuttable presumption, but it imposes a heavy burden. If the employer never delivered or filed the aviso, the labor authority (Conciliation Center or Tribunal) will begin the proceeding with the assumption that the dismissal was despido injustificado, and the employer must overcome that presumption with documentary or testimonial evidence proving both the existence of the Article 47 cause and the timeliness of the decision. In practice, tribunals are skeptical of employers who assert "we had cause but forgot to notify"—the constitutional principle of in dubio pro operario (doubt favors the worker) often resolves evidentiary ties against the employer.

Moreover, Article 47, penultimate paragraph (as reformed) provides that the statute of limitations (prescripción) for actions arising from the dismissal does not begin to run until the worker receives the notice personally. This means that if the employer dismisses a worker for cause but never delivers the aviso, the worker's right to file an unfair-dismissal claim remains open indefinitely (subject to the general two-month statute of limitations in Article 518 LFT once the worker has actual knowledge of the dismissal, but proving "actual knowledge" without formal notice is difficult for the employer).

The thirty-day outer time limit for employer action

Although Article 47 does not expressly state it in the notice paragraphs, Article 517 LFT establishes that the employer's right to invoke a cause for rescission expires thirty calendar days after the employer becomes aware of the cause. This is a separate timing requirement: the employer must both decide to dismiss within thirty days of learning of the misconduct and deliver or file the written notice either at the moment of dismissal or within five working days thereafter. If the employer waits more than thirty days after learning of the employee's three unexcused absences (for example) to issue the aviso, the cause is extinguished even if the notice formalities are perfect.

Practical implications for cross-border employers

A foreign company hiring in Mexico—whether through a local subsidiary, a branch, or an employer-of-record arrangement—must plan for this two-step formality:

1. Document the cause contemporaneously. When misconduct occurs, the employer should prepare an acta administrativa (administrative record) signed by witnesses and, ideally, by the worker (though the worker's refusal to sign does not invalidate the acta). The acta establishes the date and details of the conduct.

1. **Draft and deliver the aviso de rescisión within the statutory windows.** Use the documented facts to prepare a written notice that names the Article 47 fraction, describes the conduct in detail, and states the date(s). Attempt personal delivery at the moment of dismissal. If the worker refuses, file with the tribunal within five working days and keep proof of filing (the tribunal will issue a receipt and will serve the worker at the registered address).

Failure to execute these steps—even when the employer has video evidence of theft or a confession of the misconduct—will result in the dismissal being treated as unjustified, obligating the employer to pay the Article 50 indemnity (three months' salary plus twenty days per year of service for indefinite contracts, plus prima de antigüedad) and, if the case proceeds to judgment, up to twelve months' back pay under Article 48.

Source: Ley Federal del Trabajo, Art. 47 Source: Ley Federal del Trabajo, Art. 517

Mexico's labor law grants workers a separate statutory payment distinct from the Article 50 indemnity: the prima de antigüedad (seniority premium), governed by Article 162 LFT. The prima is a lump-sum payment calculated at twelve days of salary for each year of service (Article 162, Fraction I) and is triggered by a broader set of events than the Article 50 severance indemnity. Employers terminating a relationship in Mexico—whether voluntarily or involuntarily, for cause or without cause—must budget for the prima de antigüedad as a separate line item in the total separation package, and the payment obligation extends even to scenarios where the Article 50 indemnity does not apply (for example, voluntary resignation after fifteen years of service). As of June 2026, the statutory formula remains twelve days per year, with a cap at double the minimum wage for indemnity calculations; legislative proposals to raise or eliminate the cap and to reduce the fifteen-year voluntary-separation threshold have not been enacted.

Formula and cap

Article 162, Fraction I establishes the baseline formula: twelve days of salary per year of service. Unlike many Latin American jurisdictions that express severance multiples in months, Mexico uses a daily-salary base. A worker with ten years of service receives 120 days' salary (10 years × 12 days) as the prima de antigüedad.

The critical limitation appears in Article 162, Fraction II, which cross-references Articles 485 and 486 LFT. Article 485 provides that the salary base for indemnities "shall not be less than the minimum wage." Article 486 imposes a cap: "If the salary received by the worker exceeds double the minimum wage of the geographic area of application corresponding to the place where the work is performed, that amount [double the minimum wage] shall be considered the maximum salary" for indemnity purposes. In other words, when the worker's actual integrated salary exceeds double the statutory minimum wage, the employer calculates the prima de antigüedad using double the minimum wage as the ceiling, not the worker's true salary.

In practice, federal labor tribunals and the Ministry of Labor (STPS) apply the Unidad de Medida y Actualización (UMA)—an inflation-indexed reference unit published annually by INEGI—in place of the salario mínimo when calculating indemnity caps, following constitutional and statutory amendments that de-linked the minimum wage from non-wage legal references. The LFT text of Articles 485 and 486 has not been amended to replace "minimum wage" with "UMA," but authoritative tribunal precedent and STPS guidance treat the UMA as the operative floor and ceiling for indemnity calculations. The UMA is indexed each February; employers should consult the most recent INEGI publication to determine the current cap.

For workers whose actual salary is below double the applicable reference (UMA or minimum wage, depending on interpretive framework), the prima is calculated on the actual integrated salary (Article 162, Fraction II read with Article 485).

Triggering events

Article 162, Fraction III lists the core events that obligate the employer to pay the prima de antigüedad:

1. Voluntary separation by the worker after fifteen years of service. A worker who resigns (renuncia) with at least fifteen years of tenure receives the prima. Workers with fewer than fifteen years who resign voluntarily do not receive the prima under the current statutory text.

1. Worker-initiated rescission for employer fault (Article 51 LFT). When the worker terminates the relationship invoking one of the just-cause grounds in Article 51 (employer violence, unsafe conditions, wage non-payment, etc.), the worker receives the prima regardless of tenure. No fifteen-year minimum applies; even a worker with six months' service who successfully invokes Article 51 is entitled to twelve days' salary for that partial year.

1. Employer-initiated dismissal, justified or unjustified. Article 162, Fraction III states that the prima "shall be paid to those who are separated from employment, independently of the justification or unjustification of the dismissal." This means that whether the employer dismisses for cause under Article 47 (and proves it in the subsequent conciliation or tribunal proceeding) or dismisses without cause (and pays the Article 48/50 package), the worker receives the prima de antigüedad. The prima is therefore not a penalty for unjustified dismissal; it is a universal separation benefit triggered by the termination itself.

1. Death of the worker (Article 162, Fraction IV). The prima is payable to the worker's beneficiaries listed in Article 501 LFT (spouse, children, parents, or other dependents, in that order of priority), regardless of the worker's tenure. Even a worker who has served only three months is entitled to a pro-rated prima, paid to the surviving family.

1. Permanent partial or total incapacity from an occupational risk (Article 162, Fraction V). When a workplace injury or occupational disease renders the worker permanently incapable of continuing in the role, the worker receives the prima calculated on total years of service at the moment of the incapacity determination.

1. Other scenarios (Article 162, Fraction VI). Article 162, Fraction VI references additional scenarios in which the prima may be payable, though the statutory text does not enumerate them with the same specificity as Fractions III–V. In practice, this fraction is rarely invoked outside collective-bargaining contexts, and practitioners should treat Fractions III–V as the exhaustive list for individual employment relationships governed solely by the LFT.

Interaction with Article 50 indemnity

The prima de antigüedad is cumulative with, not a substitute for, the Article 50 statutory severance. When an employer dismisses a worker unjustifiably and the worker waives reinstatement or falls within one of the Article 49 exceptions, the total severance package comprises:

• The Article 50 indemnity: for indefinite-term contracts, twenty days per year of service (Article 50, Fraction II, as amended December 2024) plus the constitutional three months' salary (Article 50, Fraction III);
• The prima de antigüedad: twelve days per year of service under Article 162;
• Back pay (salarios vencidos) capped at twelve months, plus compounded interest on fifteen months' salary at 2% monthly, if the dismissal is found unjustified after litigation (Article 48).

The prima is a significant component of the total liability—often 30–40% of the Article 50 package for medium-tenure employees—and is frequently overlooked by foreign employers estimating termination costs. Because the prima is capped at double the minimum wage (or UMA) while the Article 50 indemnity for indefinite contracts is calculated on the worker's actual salary without a statutory cap for the twenty-days-per-year component, high earners receive a proportionally smaller prima relative to the Article 50 payment.

"Workers of planta" restriction and interpretive practice

The opening line of Article 162 states that "workers of planta [permanent workers] have the right to a prima de antigüedad, in accordance with the following rules." Article 127, Fraction II LFT defines trabajadores de planta in a manner that historically excluded trabajadores de confianza (managerial or confidential employees). This created an interpretive question: are managers excluded from the prima?

In practice, Mexican labor tribunals have construed the triggering events in Article 162, Fraction III (employer-initiated dismissal, worker-initiated rescission, death, incapacity) broadly to include all categories of workers—managers, temporary workers, and platform-digital workers (added December 2024)—when the separation is not a voluntary resignation. The "planta" language in the opening paragraph is generally understood to limit only the voluntary-separation-after-fifteen-years entitlement; managers dismissed by the employer or who resign under Article 51 still receive the prima. Legislative proposals dating to the 1980s have sought to strike the word "planta" to eliminate ambiguity; as of mid-2026, the text remains unchanged. Employers should assume that the prima is payable to all employee categories on dismissal or death, but that the fifteen-year voluntary-separation rule may be subject to narrower interpretation for non-planta roles.

Cap controversies and pending reforms

The double-minimum-wage cap (or double-UMA cap under current practice) imposed by Articles 485–486 has generated sustained legislative criticism. A November 2022 initiative (Morena caucus, LXV Legislature) proposed eliminating Article 162, Fraction II entirely, arguing that capping the prima at double the minimum wage when the worker earned a substantially higher salary violates constitutional guarantees of trabajo digno (decent work) and the prohibition on regressive labor-rights reforms. The initiative noted that the cap was borrowed from the workplace-injury indemnity framework and is conceptually inappropriate for a time-based seniority payment.

A parallel April 2025 initiative sought to reduce the fifteen-year voluntary-separation threshold to seven years, citing labor-market data showing median job tenure in Mexico under six years.

Neither reform has been enacted as of June 2026. Employers must apply the current statutory text: twelve days per year, capped at double the applicable minimum-wage reference (interpreted as UMA by tribunals), and the fifteen-year bar for voluntary resignations. Employers should monitor the Diario Oficial de la Federación for amendments.

Practical takeaways for cross-border employers

1. Budget the prima separately. When modeling headcount costs in Mexico, treat the prima de antigüedad as a distinct accrual. For indefinite-term employees, the combined Article 50 + Article 162 liability is approximately thirty-two days per year of service (20 + 12) plus the three-month constitutional cushion, subject to the cap for the prima component.

1. The prima is not fault-dependent. Even a for-cause dismissal that satisfies Article 47 and is upheld by the tribunal triggers the prima. The only scenario in which the employer avoids the prima is voluntary resignation by a worker with fewer than fifteen years.

1. Death and incapacity. The prima is payable on death or permanent occupational incapacity regardless of tenure. Employers should ensure that any supplemental life-insurance or occupational-risk coverage accounts for this statutory minimum, which is distinct from IMSS death benefits under the Social Security Law.

1. Settlement drafting and ratification. Any convenio de terminación (settlement agreement) presented to the Conciliation Center for ratification under the 2019 labor-justice reform should itemize the prima de antigüedad as a separate line. Article 33 LFT provides that waivers of labor-law rights are valid only when made before the competent labor authority (Conciliation Center or Tribunal) with the worker's informed, voluntary consent. A settlement agreement that purports to release all claims without specifying the prima may be challenged later as an invalid waiver, and the tribunal may order a supplemental award. Best practice is to list the prima, the Article 50 components, any unpaid wages, vacation, and aguinaldo separately, and to have the worker ratify the agreement before the Conciliation Center with legal representation or advisement.

1. Annual indexation. The cap adjusts each year with the UMA (published by INEGI in February). Employers should refresh severance calculators each Q1 to reflect the updated ceiling.

Source: Ley Federal del Trabajo, Arts. 33, 162, 485, 486