Mexico: A Labour & Employment: Monterrey Overview
The Ongoing Transformation of Mexico’s Labour Landscape
After nearly a decade of sustained labour reforms, Mexican employers require predictability and legal certainty to manage employment relationships while navigating economic stagnation and heightened scrutiny from the USA under the United States-Mexico-Canada Agreement (USMCA).
The 2019 Labour Reform redefined the way that employers interact with unions, aligning Mexico’s labour framework with international labour standards to fulfil the country’s commitments under the USMCA. While the reform is still maturing, subsequent legislative changes have continued to increase labour costs and administrative burdens for employers.
Domestic workers’ rights, the labour subcontracting reform, substantial increases in minimum wages, the extension of mandatory paid vacation leave, the “Chair Law”, platform work and the reduction of working hours are among the reforms that have transformed the Mexican labour landscape.
Mexican employers need to move from simply implementing reforms to institutionalising compliance as a strategic priority, not only to mitigate domestic litigation risks and exposure under the USMCA but also to build a workplace culture that attracts and retains qualified talent.
Conditions Affecting Mexican Employers
One of the most significant developments affecting employers is the 2024 judicial reform, which introduced the election of federal judges, including Supreme Court justices, by popular vote. The reform has raised concerns about judicial independence, politicisation of the judiciary and potential impact on the rule of law. Additional uncertainty stems from the election of judges who, in some cases, have limited experience in the areas they will oversee. This reform has contributed to a more uncertain business environment, affecting investment decisions.
Furthermore, the USA recently announced its decision not to extend the USMCA in its current form for an additional 16-year term, triggering the Agreement’s sunset clause, which provides for annual reviews over the following ten years. If no consensus is reached by the end of that period, the Agreement will end. Although the USMCA remains fully in force, negotiations are under way as the three countries seek renewed consensus.
The ongoing revision has created uncertainty for businesses, particularly regarding long-term planning, including hiring strategies, workforce reductions, new investments, and potential relocation of operations outside Mexico. This is especially relevant for the automotive and manufacturing sectors, whose operations are deeply integrated into North American supply chains and depend on stable tariff treatment.
Recent Legislative Developments
Mexico recently amended the Constitution and the Federal Labour Law (FLL) to gradually reduce the workweek to 40 hours, a limit that must be reached by 1 January 2030. Employers may not reduce salaries despite the reduction in weekly hours. As working time is now defined weekly, employers and employees may agree on how to allocate those hours according to operational needs, while ensuring at least one weekly rest day. Daily shifts, however, may not exceed 12 hours, including overtime.
The reform also progressively increases double rate overtime from nine to 12 hours per week by 2030 and introduces a cap on triple rate overtime, limiting such hours to four per week, a restriction already in force. This represents a significant change, as triple rate overtime was previously unlimited, often raising concerns about labour exploitation.
Beginning next year, employers will be required to implement electronic attendance-control systems that record each employee’s entry and exit times. The Ministry of Labor and Social Welfare (STPS) will issue general rules defining the scope of this obligation and any applicable exceptions. This reform is expected to increase labour costs while requiring employers to maintain productivity and operational efficiency.
The Substantive Equality reform requires employers to foster a work environment free of discrimination and violence. It also establishes a mandatory training duty: companies must incorporate programmes aimed at preventing and eliminating violence against women into their annual training plans. This implies designing and delivering courses addressing gender-based violence and integrating these obligations into internal policies and practices.
The Labour Certificate for Agricultural Exports (CLA) is one of the newest compliance instruments in Mexico’s labour framework, consistent with Mexico’s commitments under the USMCA. Although formally in force, it remains in a pilot phase and is not yet fully operational. Its purpose is to certify compliance with labour and social security obligations across the value chain of agricultural products destined for exportation. As a non-tariff restriction, it must be declared in the customs declaration at clearance.
The Chair Law is a recent reform to the FLL intended to protect workers who perform their duties standing for prolonged periods. Now fully in force, it requires employers to provide enough chairs with backrests so that employees can carry out their tasks seated whenever the nature of the job allows it. When work cannot be performed sitting down, employers must guarantee periodic rest breaks in designated seating areas. In practice, employers have struggled with implementation, particularly regarding the number and duration of these breaks – an issue that has become more complex with the upcoming reduction of weekly working hours.
Labour and Employment Trends Challenging Employers
Over the past year, there has been an increase in cases where employees simultaneously pursue labour and civil actions, seeking both severance pay for unfair dismissal and compensation for damages arising from workplace gender-based violence, harassment and discrimination. Certain isolated judicial criteria have determined that both claims may be decided within the same labour proceeding through the application of a gender-perspective and intersectional analysis, which prevents revictimisation and recognises the evidentiary obstacles that victims face. Judges are also required to apply a gender-perspective approach in cases involving workplace sexual harassment, dismissals during pregnancy or breastfeeding, and voluntary resignations by pregnant employees.
The System for Complaints and Occupational Accidents (SIQAL), launched by the STPS in September 2025, is a digital platform that enables the confidential reporting of labour irregularities and workplace accidents. It is open to any citizen and ensures anonymity and the protection of personal data. SIQAL structures reports into three modules: complaints regarding working conditions, notifications of occupational accidents and allegations of violations of individual employment contracts or collective bargaining agreements.
SIQAL creates new exposure for employers: complaints may lead to an increase in extraordinary inspections and related fines. Failure to address concerns raised through SIQAL may trigger labour unrest, including unionisation efforts, and can result in terminations attributable to the employer, potentially giving rise to severance obligations.
The Rapid Response Labour Mechanism (RRM) under the USMCA is a facility-specific dispute mechanism for the expedited enforcement of workers’ freedom of association and collective bargaining rights. It allows the USA to initiate fast-track investigations and impose trade-related sanctions, such as suspension of preferential tariffs or denial of entry of goods, when a facility in Mexico is believed to be denying labour rights, including interference with union organising, retaliation against union supporters or promotion of employer-dominated unions.
Since May 2021, the USA has filed 48 RRM petitions, largely targeting the automotive and mining sectors. These cases often advance even while parallel Mexican proceedings remain unresolved, outpacing domestic review. As a result, employers can face RRM exposure based on untested allegations, creating significant commercial and reputational risks, regardless of the outcome.
Looking Ahead
Mexico is expected to advance legislative reforms aimed at supporting workers with family responsibilities and expanding care-leave entitlements. Current proposals contemplate longer maternity and paternity leaves, strengthened breastfeeding protections and a new leave to assist relatives during illness. Additional initiatives include bereavement leave and pregnancy-loss leave. Together, these measures are likely to reshape employer obligations in the near term.