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Article | Global News Briefs

Mexico: Proposed increase in employer-paid annual leave

Health and Benefits|Wellbeing|Total Rewards
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By Jorge Gutierrez | April 29, 2022

Proposal would double paid vacation days for workers in Mexico after one year of employment in an attempt to boost employee wellbeing.

Employer Action Code: Monitor

The senate is considering legislation to increase statutory annual leave under the Federal Labor Law (Ley Federal del Trabajo – LFT), doubling the current minimum leave entitlement after one year of service and bringing Mexico closer to meeting the International Labour Organization’s recommendation of at least three weeks’ annual leave (18 workdays based on the statutory six-day workweek).

Key details

Under the LFT, employees are entitled to six workdays of employer-paid annual leave after one year of service, increasing by two days per subsequent year of service until reaching 12 days, and then increasing by two days for each five years until reaching 20 days. The draft bill would increase the minimum entitlement after one year of service to 12 workdays, increasing by two days per subsequent year of service until reaching 20 days, and then by two days for each five years until reaching the maximum statutory entitlement of 26 days. The following chart compares the current leave entitlements with the proposed changes:

Comparison of the current leave entitlements and the proposed changes
Current Proposed
Service (completed years) Leave (workdays) Service (completed years) Leave (workdays)
1 6 1 12
2 8 2 14
3 10 3 16
4 12 4 18
5 – 9 14 5 20
10 – 14 16 6 – 10 22
15 – 19 18 11 – 15 24
20 – 24 20 16 – 20 26

The bill would also double the minimum period of leave that must be taken as a single block from six to 12 workdays. A separate, competing proposal would provide employees with a minimum of 10 workdays’ annual leave after six months of service.

Employer implications

Average annual working hours in Mexico are one of the highest among Organization for Economic Cooperation and Development (OECD) states (2,124 compared with the OECD average of 1,687). At the same time, the initial statutory annual leave entitlement is one of the shortest. The World Health Organization also ranks Mexico as having the highest level of work-related stress in the world. Among companies surveyed by WTW, the average leave entitlement after one year of service is 11.5 workdays, which is close to the proposal, but the gap then widens (e.g., average of 16.4 days after five years and 22.0 days after 20 years). The leave periods of some companies that today substantially exceed minimum requirements would become merely compliant under the proposal, while many other companies would be forced to increase and accelerate their leave offerings.

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Jorge Gutierrez

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