Leave policy in Mexico

Mexico has some of the most employee-friendly labor laws in Latin America. While this creates strong protections for workers, employers should make sure they understand the requirements before onboarding employees. 

The Ley Federal del Trabajo (LFT) sets out leave entitlements in Mexico that aren’t optional. These usually involve vacation, sick leave, maternity, paternity, and adoption. These are typically well-defined, and non-compliance carries penalties.

With Mexico attracting growing interest from international businesses looking to build teams in Latin America, getting these requirements right from the start is critical.

If you’re building a team in Mexico, read on to understand the country’s leave requirements and how an Employer of Record (EOR) can help you onboard, pay, and manage employees compliantly.

Vacation/annual leave in Mexico

Employees in Mexico get at least 12 days of annual paid leave after completing one year of employment. This number increases progressively with an increase in the number of years of service. 

On top of accrued days, every employee gets a vacation premium (prima vacacional), a 25% bonus on their salary for each vacation day. 

This is mandatory, not discretionary. It’s paid even if the employee doesn’t take all their annual leave in Mexico that year.

What happens to unused vacation days?

Any unused vacation days may be carried over up to 2 years. 

However, when someone leaves the company, any accrued but unused vacation days must be paid out in the final settlement. Article 79 of the LFT makes this non-negotiable; it doesn’t matter whether they resigned or were let go.

Public holidays in Mexico

The holiday calendar Mexico follows federally lists 8 mandatory paid days off each year, plus Election Day when it falls. Employees can’t be required to forfeit pay on these days. 

If they work a public holiday, the law requires triple pay, i.e., their normal daily wage plus double on top.

Unofficially, much of the country also pauses for Day of the Dead (Nov. 1–2) and Holy Week. These aren’t on the federal list, but many employers factor them in when structuring time-off policies.

Sick leave in Mexico

Employees are entitled to 52 weeks of paid sick leave. The first three days are paid at 100% by the employer.

From the fourth day, sick leave in Mexico runs through the Instituto Mexicano del Seguro Social (IMSS), Mexico’s public social security system. 

Employers don’t pay for sick leave directly. What they do pay is their IMSS contribution every month, and IMSS takes it from there. 

For how those contributions fit into the overall payroll structure, see Payoneer Workforce Management’s guide to Mexico payroll.

When an employee is sick with a non-work-related illness, IMSS covers 60% of their registered salary starting from day four. 

Maternity leave in Mexico

Maternity leave in Mexico is 12 weeks total. These are usually split into six weeks before the due date and six weeks after delivery. 

IMSS funds 100% of the employee’s salary throughout. 

In case of any disability or medical condition that requires hospitalization of the child, the leave can be extended.

To meet the eligibility requirements, an employee must be a Mexican citizen. If the employee is a foreigner, they need to have a valid work permit. 

The employee must have worked for at least 30 weeks in the 12 weeks before the leave begins.

Paternity leave in Mexico

Paternity leave in Mexico gives fathers five paid days off following a birth. Unlike maternity leave, this one comes out of the employer’s pocket, and IMSS doesn’t fund it.

A lot of companies, especially those competing for skilled talent, go beyond that voluntarily. It’s worth reviewing what comparable employers in the market are offering, since leave policy is increasingly part of the hiring decision for candidates.

Other types of leave in Mexico

The LFT recognizes several other situations where employees are legally entitled to time away from work. These include: 

Adoption leave

Employees who adopt get 6 weeks of adoption leave.

Sunday premium

The LFT treats Sunday as the natural rest day. Any employee who works on a Sunday gets a 25% premium on top of their regular wage for that day. This is separate from public holiday pay and applies to any Sunday worked.

Unused leave at termination

When an employee leaves, whether by resignation, mutual agreement, or dismissal, all accrued and unused vacation days must be paid out. 

This is part of the final settlement and applies to all departing employees. The leave entitlements in Mexico that weren’t taken don’t disappear; they convert to cash.

Explore Payoneer Workforce Management in Mexico

Getting the leave policy in Mexico right takes more than reading a summary. The LFT is detailed, IMSS enrollment has its own process, and statutory entitlements stack up quickly. 

For companies that are planning to engage talent in Mexico without setting up a local entity, partnering with a global Employer of Record (EOR) in Mexico offers a quicker path.

Payoneer Workforce Management assists companies in onboarding and managing local talent in Mexico. 

The platform helps streamline payroll and administer statutory benefits, with support to stay aligned with local leave laws in Mexico.

As an Employer of Record, Payoneer Workforce Management helps with:

• Locally compliant employment contracts
• Navigate employer contributions
• Time sheets and benefits administration
• Payroll processing in Mexican pesos (MXN)

Book a demo today!

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