April 24, 2023

Erika Collins Speaks to SHRM About Mexico's Paid Vacation Law

In “Employees in Mexico Gain More Paid Vacation Days,” the Society for Human Resource Management (SHRM) turned to international labor and employment partner Erika Collins for insight on what employers need to know about Mexico’s updated paid vacation law.

Collins noted that employees will receive another two paid days off per year until they reach 20 days, and after six years, they’ll be entitled to another two days every five years. Further, the new regulations also anticipate that employees will be eligible for at least 12 continuous vacation days.

“Global employers must review their vacation policies in order to ensure they are compliant with the new regulations and, where applicable, carry out the corresponding adjustments to ensure that employees’ vacation days are adjusted accordingly,” Collins said.

Additionally, Mexican labor law requires employers to pay a vacation premium — a bonus of at least 25% of the base salary — so that vacation days are paid at a 125% salary rate at a minimum, Collins explained. The increased vacation days could translate into a significant economic impact for employers that now have to provide for more paid vacation days, she added.

Collins also shared three key points that employers should keep in mind:

  1. Ensure the company’s vacation policy is compliant with the new regulation.
  2. When carrying out any change to an existing policy, ensure these changes do not negatively affect the employees or impinge on their acquired rights.
  3. Agreements should be reached with employees to ensure the correct flow of vacation period to avoid business disruptions. These agreements should allow for employee consent since the new regulation contemplates an employee’s prerogative to determine how and when they take their vacation days.

“The main economic impact … is linked with the vacation premium, which should now be calculated over the new vacation days entitlement,” Collins said. Because 2023 is a transition year for the vacation entitlement, reviewing the amount paid to employees for this concept in the event of termination is of paramount importance to ensure accrued vacation days are taken into consideration, she concluded.

The full article is available for SHRM subscribers.

Full Article

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