If you are new to hiring or are looking for a job and want to know everything about the vacation premium in Mexico, from what it is and how it is calculated, throughout this post we will be answering several of these questions.
Employing in some countries around the world will mean that you will need to offer a new set of benefits for your workers who comply with local labor laws, and that includes paid time off and bonuses. Some employers may be in the practice of offer bonuses or vacation pay as an optional benefit, but many countries like Mexico establish them as a requirement by law.
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In this article you will find:
What is the Vacation Premium in Mexico?
Known as a Premium, the vacation premium is a additional cash benefit given to employees to use on vacation. It is calculated as a minimum of 25% of the daily salary multiplied by the number of vacation days. Some employers award more than the minimum. In other words, the vacation premium is the amount the employee pays in addition to their regular pay during vacation days.
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For example, if an employee's daily rate is $ 100 pesos per day (approximately 5 US dollars), his pay during the vacation period will be $ 125 pesos per day. Most companies will offer a vacation premium between 50% and 100%; some reach 150%.
Employees with at least one year of service are entitled to six days of paid vacation. Vacation time will increase by an additional two days for each year of service through the fifth year. After five years, employees are entitled to two additional days to each other during five years of service. Most companies will start employees with 10-15 days of vacation and keep the fixed days until legal requirements are brought up to date.
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Holidays in Mexico
There are seven mandatory paid holidays in Mexico:
- January 1 - New Years Day
- First Monday in February in observance of February 5: the day the Mexican Constitution came into effect in 1917
- Third Monday of March in observance of March 21 - Celebration of the birth of Benito Juárez, the Mexican president who served five terms and resisted the French occupation, overthrew the empire and restored the Republic.
- May 1 - Labor Day
- September 16 - Independence Day
- Third Monday of November in commemoration of November 20 - Anniversary of the Mexican Revolution
- December 25 - Christmas Day
State and federal election days are also considered holidays. In most cases, the elections will be held on a Sunday and the designation as a holiday. would affect only those employees for whom Sunday is a scheduled work day regularly. The presidential inauguration that takes place on December 1 every six years is also considered a legal holiday. Employees who must work on any of these days (holidays) are entitled to double pay.
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Contrary to common belief in the United States, "Cinco de Mayo," which commemorates the Battle of Puebla, where Mexico defeated the French on May 5, is not a commonly observed holiday or celebrated.
Other holidays that may be observed (which are not official) include:
- February 24 - Flag Day
- Good Friday and Easter Sunday
- May 10 - Mother's Day
- September 1 - State of the Union
- October 12 - Celebrate the arrival of Columbus to the Americas
- November 2 - Day in honor of the dead
- December 12 - Day of the Virgin of Guadalupe
What is Aguinaldo in Mexico?
A Christmas bonus (or Aguinaldo) is mandatory in Mexico and must be paid before December 20 so that the employee can use it for vacations. The amount is equal to 15 working days of salary plus tax deductions, but a formula in which the annual gross annual salary is divided by 365 days and that amount is multiplied by 15 days.
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In other words, the Christmas bonus is an annual bonus that must be paid no later than December 20 of each year. Federal Labor Law requires that the bonus be not less than 15 days of pay (based on the Base Daily Pay Rate) regardless of the years of service.
In the event that the employee has been working in the company for less than a year, the amount is prorated based on the date of hire. As part of their benefits package, companies often go beyond 15 days and provide 15-30 days; some will even reach 45 days.
Example:
$ 60,000 gross per year / 365 days = $ 164.38 x 15 days = $ 2465.70
The full amount of the bonus is awarded to any employee with more than one year of service, and those with less will receive a prorated amount, known as a proportional bonus. Any unpaid accrued bonus must be paid if there is a termination or resignation.
Day of rest
Under Mexico's Federal Labor Law, employees are entitled to one paid day of rest for every six days of work, in addition to the seven required paid holidays. This seventh day can fall on any day of the week; however, employees whose regularly scheduled work shift falls on Sunday must receive a 25% premium above what they are paid on other days. This day is known as "Prima Dominical".
Workers who must work on the seventh day, holiday or any other day of rest are entitled to double wages. If that day falls on a Sunday, the worker is entitled to double salary plus the 25% premium.
It is important to note that work on a rest day is different from overtime and does not count towards accrued overtime that requires triple pay.
