Annual leave in Mexico is governed by the Federal Labor Law (Ley Federal del Trabajo), specifically outlined in Article 76. This article provides an overview of the minimum leave entitlements, how leave accrues, and the employer’s responsibilities regarding annual leave.
Vacation Pay vs. Vacation Premium: what's the difference?
Vacation Pay is the employee's regular salary, paid as normal for each statutory vacation day taken. This is not an extra payment — it is simply the employee's regular pay continuing while they are on authorised leave.
Vacation Premium (Prima Vacacional) is a separate, additional mandatory benefit under Mexican labor law. It is equal to at least 25% of the employee's daily salary for each vacation day in their statutory entitlement, and is paid at the work anniversary — not when vacation days are taken. The Vacation Premium becomes applicable once an employee completes their first full year of continuous service. Employees who have not yet completed one full year do not accrue Vacation Premium during that period, except for any proportional amount that may be due upon termination.
Annual Leave Entitlement
Minimum Leave:
Employees in Mexico are entitled to a minimum of 12 days of paid annual leave after completing one year of service.Increasing Leave with Seniority:
The amount of annual leave increases with the employee's length of service:+2 days of leave for each additional year of service, up to a maximum of 20 days.
After reaching 20 days, leave increases by +2 days for every 5 years of service from the 6th year onward.
This structure ensures that employees who remain with the same employer for extended periods are rewarded with additional time off.
Accrual of Annual Leave
First-Year Accrual:
During the first year of employment, annual leave is pro-rated based on the length of service. Employees are entitled to a portion of the 12 days, depending on how long they have worked by the end of the year.Full Entitlement from Second Year:
Starting from the second year of employment, employees receive the full number of annual leave days based on their seniority.Carry-Over and Expiration:
Accrued leave that is not used can be carried over to the next year. However, there is a legal limit to this carry-over: any unused leave must be taken within 18 months after it was accrued, after which it expires.
Employer Responsibilities
Seniority Certificate:
Employers are required to provide employees with a seniority certificate once a year. This certificate should include:The employee’s length of service (seniority).
The total number of annual leave days the employee is entitled to.
The expiration date of any accrued leave.
This obligation is stipulated in Article 81 of the Federal Labor Law. The certificate helps employees keep track of their leave entitlements and ensures transparency in the management of leave.