Countries › Mexico › Guide › 7. Labor and employment › Dismissal and severance in Mexico: just causes, the written notice rule, three months plus 20 days a year, seniority premium, back wages and collective terminations

Dismissal and severance in Mexico: just causes, the written notice rule, three months plus 20 days a year, seniority premium, back wages and collective terminations

Last verified: 2026-10-26 · Status: Stable

Mexico has no at will employment: an employer may dismiss without liability only for a cause listed in LFT art. 47, notified in writing at once or through the labor court within five business days, otherwise the dismissal is presumed unjustified. A worker dismissed without proven cause may choose reinstatement or three months of integrated salary, plus back wages of up to 12 months and then 2 percent monthly interest; where the employer may refuse reinstatement it also pays 20 days per year of service, and every permanent worker who leaves gets a seniority premium of 12 days per year at a capped salary. Workers who resign for the employer's fault receive the same compensation, plant closures pay three months plus seniority premium, and layoffs from new technology four months plus 20 days a year.

USD conversions use MXN 18.5026 per US dollar, the US Federal Reserve H.10 noon buying rate in New York for 16 October 2026 (FRED series DEXMXUS), the latest observation available when this page was verified. Conversions are for orientation only.

Key facts

Compensation for unjustified dismissal	3 months of salaryLFT arts. 48 and 50, as of 2026-10-26 · in force
Additional compensation where reinstatement is refused (indefinite contracts)	20 days of salary per yearLFT art. 50, section II, as of 2026-10-26 · in force
Maximum back wages before interest	12 monthsLFT art. 48, as of 2026-10-26 · in force
Deadline to communicate the dismissal notice through the labor court	5 business daysLFT art. 47, as of 2026-10-26 · in force
Seniority premium	12 days per year of serviceLFT art. 162, as of 2026-10-26 · in force
Seniority premium salary cap, 2026 (twice the general minimum wage)	630.08 MXN per dayLFT art. 486; CONASAMI resolution, DOF 9 December 2025, as of 2026-10-26 · in force
Compensation for layoffs from new machinery or processes	4 months of salary plus 20 days per yearLFT art. 439, as of 2026-10-26 · in force
Limitation period for dismissed workers' claims	2 monthsLFT art. 518, as of 2026-10-26 · in force

The rule

1. Just causes for dismissal. Either party may rescind at any time for just cause without liability. The employer's causes include: false certificates or references (only within the first 30 days); dishonesty, violence, threats, insults or mistreatment against the employer, its managers, clients or suppliers, or co workers if discipline is affected; intentional or grossly negligent damage; endangering safety; immoral acts or sexual harassment; revealing trade secrets; more than three unjustified absences in 30 days; disobedience related to the work; refusing safety measures; working drunk or under drugs without prescription; a final prison sentence that prevents working; lack of legally required documents attributable to the worker; and analogous serious causes.Ley Federal del Trabajo (LFT), DOF 1 April 1970 (Chamber of Deputies consolidated text, last reform DOF 14 May 2026), Arts. 46 and 47, sections I to XV, 2012-11-30 official text · verified 2026-10-26

2. Written notice. The employer must give the worker written notice stating clearly the conduct and the date or dates on which it occurred, delivered personally at the time of dismissal or communicated to the labor court within five business days, giving the worker's last known address. The limitation period does not start until the worker personally receives the notice, and failure to give it, personally or through the court, on its own creates a presumption that the dismissal was unjustified, unless the employer proves otherwise. In a dispute the employer bears the burden of proving the cause of rescission and that notice was given.Ley Federal del Trabajo (LFT), DOF 1 April 1970 (Chamber of Deputies consolidated text, last reform DOF 14 May 2026), Arts. 47, final paragraphs, and 784, sections IV and VI, 2019-05-01 official text · verified 2026-10-26

3. Unjustified dismissal. After mandatory conciliation the worker may ask for reinstatement or for compensation of three months of salary. If the employer does not prove the cause, the worker is also entitled, whatever the action chosen, to back wages from the dismissal for up to 12 months; if the case or compliance with the judgment is still pending after that, 2 percent monthly interest on 15 months of salary, capitalized at payment. Compensation is calculated on the integrated daily salary on the day the right arises (cash plus the proportional part of bonuses, premiums, commissions and benefits in kind), never below the minimum wage; monthly salaries are divided by 30.
Cost to do it: Three months of integrated salary plus back wages of up to 12 months if the case is lost, then interest.Ley Federal del Trabajo (LFT), DOF 1 April 1970 (Chamber of Deputies consolidated text, last reform DOF 14 May 2026), Arts. 48, 84, 89 and 485, 2019-05-01 official text · verified 2026-10-26

4. When the employer may refuse reinstatement. The employer may avoid reinstatement by paying the art. 50 compensation for workers with less than one year of service; workers in direct and permanent contact with the employer where the court finds the relationship cannot continue normally; confidence employees; domestic workers; temporary workers; and platform workers (except for violations of collective rights). The compensation is: for indefinite relationships, 20 days of salary per year of service; for fixed term relationships under one year, half of the time served, or over one year six months for the first year and 20 days for each following year; in all cases plus three months of salary and back wages and interest as applicable. The employer may deposit the compensation with the court through a paraprocedural filing.
Cost to do it: Three months plus 20 days per year of service (indefinite contracts), plus seniority premium.
Example: A confidence employee with 4 years of service and an integrated salary of MXN 800 a day: three months MXN 72,000.00, 20 days for each of 4 years MXN 64,000.00, seniority premium 12 days a year at the cap of MXN 630.08 a day MXN 30,243.84: MXN 166,243.84 before accrued benefits and back wages. / About USD 8,985 at 18.5026 (USD 3,891 plus USD 3,459 plus USD 1,635).Ley Federal del Trabajo (LFT), DOF 1 April 1970 (Chamber of Deputies consolidated text, last reform DOF 14 May 2026), Arts. 49 and 50, 2024-12-24 official text · verified 2026-10-26

5. Seniority premium. Permanent workers receive 12 days of salary per year of service when they are dismissed (with or without cause), when they leave for a justified cause, and when they resign voluntarily after at least 15 years of service; on death it is paid to beneficiaries. The salary used is capped at twice the minimum wage of the area where the work is performed (MXN 630.08 a day in 2026, MXN 881.74 in the Northern Border Free Zone) and cannot be below the minimum wage. If more than 10 percent of the workforce resigns voluntarily within a year, payment to the excess may be deferred to the following year.
Example: Ten years of service at or above the cap: 120 days x MXN 630.08 = MXN 75,609.60 (border zone MXN 105,808.80). / About USD 4,086 (border zone USD 5,719).Ley Federal del Trabajo (LFT), DOF 1 April 1970 (Chamber of Deputies consolidated text, last reform DOF 14 May 2026), Arts. 162, 485 and 486, 1988-01-21 official text · verified 2026-10-26

6. Resignation for the employer's fault. A worker may rescind without liability, and receive the art. 50 compensation, if the employer misled the worker about the job (within 30 days), commits dishonesty, violence, harassment or mistreatment against the worker or family, reduces the salary, fails to pay it on the agreed date or place, maliciously damages the worker's tools, exposes the worker to serious danger, demands acts against the worker's dignity, or for analogous causes. The worker must leave within 30 days of the cause.Ley Federal del Trabajo (LFT), DOF 1 April 1970 (Chamber of Deputies consolidated text, last reform DOF 14 May 2026), Arts. 51 and 52, 2012-11-30 official text · verified 2026-10-26

7. Collective terminations. Relationships also end by mutual consent, death, the end of the job or term, or incapacity of the worker. Closures due to force majeure, clear and manifest unprofitability, exhaustion of an extractive resource, or insolvency give workers three months of salary plus the seniority premium. Staff reductions caused by new machinery or work processes require agreement or court authorization and pay four months of salary plus 20 days per year of service (or more if the contract provides) plus the seniority premium.Ley Federal del Trabajo (LFT), DOF 1 April 1970 (Chamber of Deputies consolidated text, last reform DOF 14 May 2026), Arts. 53, 434, 436 and 439, 2019-05-01 official text · verified 2026-10-26

8. Time limits. The employer's right to dismiss or discipline a worker expires one month after it learns of the cause; a worker's right to leave for the employer's fault also expires in one month; a dismissed worker has two months from the day after dismissal to bring claims, suspended while the conciliation request is pending; most other labor claims expire in one year.Ley Federal del Trabajo (LFT), DOF 1 April 1970 (Chamber of Deputies consolidated text, last reform DOF 14 May 2026), Arts. 516, 517 and 518, 2019-05-01 official text · verified 2026-10-26

Exit	Three months	20 days per year	Seniority premium (12 days per year, capped)	Back wages
Voluntary resignation, under 15 years	No	No	No	No
Voluntary resignation, 15 years or more	No	No	Yes	No
Justified dismissal, proven	No	No	Yes	No
Unjustified dismissal, worker chooses compensation	Yes	Only where the employer may refuse reinstatement	Yes	Up to 12 months if litigated and lost
Resignation for employer's fault	Yes	Yes	Yes	If litigated and lost
Closure for unprofitability, force majeure or insolvency	Yes	No	Yes	No
Layoff from new machinery or processes	Four months	Yes	Yes	No

What a departing permanent worker receives, by type of exit (LFT arts. 48 to 52, 162, 436 and 439). Accrued salary, proportional aguinaldo, vacation and premium are due in every case.

Worked example

A plant manager (a confidence employee) with 4 years of service and an integrated salary of MXN 800 a day (MXN 24,000 a month, about USD 1,297) is let go without a provable cause.
At the Conciliation Center the company offers three months (MXN 72,000.00), 20 days per year (MXN 64,000.00) and the seniority premium at the capped MXN 630.08 a day (MXN 30,243.84), MXN 166,243.84 in total (about USD 8,985), plus the proportional aguinaldo, vacation and premium.
The settlement is put in writing, describes the rights covered and is ratified before the Conciliation Center, so it cannot later be challenged as a waiver (LFT art. 33).
If the company instead litigated and lost, it would also owe back wages of up to 12 months (up to MXN 288,000.00, about USD 15,565) and then 2 percent monthly interest on 15 months of salary.

Step by step

1. Document the cause with dates, witnesses and evidence, and act within one month of learning of it (LFT art. 517).
2. Deliver the written dismissal notice personally on the day, or file it with the labor court within five business days (LFT art. 47).
3. Compute the integrated daily salary (cash plus the proportional part of every benefit) and the seniority premium cap for the work location.
4. Offer a settlement at the Conciliation Center or sign one and ratify it there (LFT arts. 33 and 684-E).
5. File the IMSS exit notice within five business days and issue the final payroll invoice (CFDI).

Common traps

No written notice. A dismissal without the written notice is presumed unjustified (LFT art. 47).
Using base salary instead of integrated salary. Compensation is calculated on cash plus the proportional part of all benefits (LFT arts. 84 and 89).
Waiting too long to dismiss. The employer's right to dismiss for a given cause expires one month after it learns of it (LFT art. 517).
Unratified resignation letters. Agreements that waive rights are void as to the waiver unless approved by the Conciliation Center or the court (LFT art. 33).
Back wages accrue during litigation. A lost case adds up to 12 months of salary and then interest on 15 months (LFT art. 48).

Sources

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