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Real Estate in Mazatlan |
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By Carol Sinclair de Ibarra from Walfre
Real Estate
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Severance Pay For Employees
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| One of the most important details to know about Mexican labor law is that when you fire or layoff an employee, you are legally responsible to pay them a severance pay. This amounts to the equivalent of three months pay plus twelve days pay for each year they have worked, the proportional part of their Christmas bonus and holiday pay. If the employee quits, you are required to pay just the part corresponding to Christmas bonus and holiday pay. The main reason for this law is that in Mexico there is no unemployment insurance for the general work force. |
| Being involved in the sale of homes where the sellers are leaving Mazatlán, I have run into this issue time and time again. Commonly, the seller does not understand the responsibility toward the employee and therefore tries to pay little or nothing. Of course there is the “other side of the coin.” When Charles and Kay Till sold their golf course home last year they were very generous to a very efficient and faithful employee. They gave her six months salary, a wonderful letter of recommendation, tuition for a school to study English and enough furniture for two homes. They also told all their friends that Elena would be needing a job and to keep her in mind. She was more than happy to sign a reciept for the money and also a formal document stating that she had received a full severence pay. |
| Home buyers should also be aware that the sellers need to formally terminate employment even if the same person will continue to work with the new owners. This way the new owners will not inherit the seller´s liability. |
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| Every situation, however, is different depending on whether the employee is full or part-time, whether there is a formal or informal agreement, etc. Before terminating an employee, I suggest you consult a lawyer. |
