Termination & Severance in Mexico: Employer Obligations

Modified on: Thu, 25 Sep, 2025 at 12:56 PM

TABLE OF CONTENTS

Termination With Cause
- Legal Requirements:
- Financial Obligations:
Termination Without Cause
- Required Severance Includes:
- Reinstatement Rights:
Best Practices for Employers
Summary

Employment in Mexico is governed by the Federal Labour Law (FLL), which strongly protects employee rights and emphasizes long-term employment relationships. While termination is legally permitted under certain conditions, it must be handled with care, proper documentation, and full compliance with local regulations.

This article outlines the key differences between termination with cause and termination without cause, and provides guidance for employers navigating these situations.

Before initiating any offboarding, please contact the Horizons Support team to ensure the process is fully compliant and handled with the appropriate guidance.

Termination With Cause

Termination for just cause is allowed under Article 47 of the FLL, which lists specific types of misconduct that justify dismissal. Examples include:

Dishonesty, fraud, or breach of trust
Acts of violence, harassment, or offensive behavior
Repeated unjustified absences
Refusal to follow reasonable instructions
Serious violations of workplace policies or safety procedures

Legal Requirements:

Employers must issue a written notice specifying the cause(s) and the date(s) of the misconduct.
The notice must be delivered either directly to the employee or to the Conciliation and Arbitration Labor Board, which will notify the employee.
The employer must provide the employee’s last known address for notification purposes.
The right to terminate for cause expires after 30 days from the date the employer became aware of the misconduct.

Financial Obligations:

If termination is upheld as justified, the employer is only required to pay accrued benefits, such as:

Unpaid wages
Proportional vacation and vacation premium
Christmas bonus (aguinaldo)

Important: Employers must have sufficient evidence to support the claim of just cause. If not, the termination will be considered without cause, triggering severance obligations.

Termination Without Cause

Termination without cause occurs when an employer ends the employment relationship without a legally valid reason under the FLL. In these cases, the law mandates severance payments to protect the employee.

Required Severance Includes:

90 days’ salary as constitutional indemnification
20 days’ salary per year of service
Seniority premium: 12 days’ salary per year worked (capped at twice the minimum wage)
Accrued benefits: vacation, vacation premium, and Christmas bonus

Reinstatement Rights:

Employees dismissed without cause may choose to be reinstated in their former role instead of receiving severance. Employers may offer compensation in lieu of reinstatement, but this must be agreed upon and documented.

Best Practices for Employers

Document everything: Keep detailed records of employee performance and any incidents.
Act promptly: Termination for cause must occur within 30 days of the employer learning of the misconduct.
Provide written notice: Always issue a formal dismissal letter outlining the reasons.
Use separation agreements: These can help clarify mutual consent and protect both parties, but must be ratified by the Labor Board.
Prepare for conciliation: Before litigation, a conciliation hearing is required. If unsuccessful, the employee may proceed with legal claims.

Summary

Type of Termination	Requirements	Employer Obligations
With Cause	Must prove misconduct and notify employee or Labor Board	Pay accrued benefits only
Without Cause	No legal justification required	Pay full severance and accrued benefits; employee may request reinstatement

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Mexico