Mexico Presses Employers on Labor Rights as Reforms Converge

The Mexican government urged employers to avoid unjustified layoffs at year-end and to protect workers’ social security and housing rights, as authorities intensify oversight amid a broader wave of labor reforms reshaping compliance, costs, and workforce management.

The call, issued jointly by the Ministry of Labor and Social Welfare (STPS), the Mexican Social Security Institute (IMSS), and the National Workers’ Housing Fund Institute (INFONAVIT), follows the identification — now for a sixth consecutive year — of companies that terminate workers in December only to rehire them in January. Authorities say the practice disrupts continuity of labor, social security, and housing benefits and constitutes an irregular use of permanent employment registrations.

“Unjustified terminations negatively affect the continuity of labor, social security, and housing rights,” say authorities, warning that noncompliance carries legal, administrative, and fiscal consequences that can affect company finances. In January 2025 alone, 142,398 workers were rehired by the same employer after being dismissed the prior month, according to official figures. Of the jobs lost between November and December 2024, 63% were registered as permanent positions, reinforcing the assessment that many year-end dismissals are not tied to legitimate temporary contracts.

To address the issue, the STPS, IMSS and INFONAVIT have sent notices to employers deemed at risk, urging them to review workforce practices against current regulations and to avoid actions that undermine worker protections or evade obligations. Labor authorities also expanded channels for guidance and complaints through IMSS, INFONAVIT, PROFEDET, and the Federal Labor Inspectorate, signaling closer scrutiny as inspections increase.

The enforcement push arrives as Mexico advances multiple labor initiatives that collectively raise compliance expectations for employers. In December, authorities entered the second and final enforcement phase of the Ley Silla, which requires companies to incorporate rest seating and break policies into internal workplace regulations. As of mid-December, inspectors may demand documentary proof that internal rules recognize the right to rest seating for workers who stand for extended periods, with fines assessed per affected employee for noncompliance.

Parallel to enforcement, lawmakers continue to debate structural changes to working time. President Claudia Sheinbaum earlier presented a proposal to implement a 40-hour workweek through a gradual transition beginning in 2027 and concluding in 2030, a reform projected to affect 13.4 million workers. The plan includes mandatory electronic time registration, a requirement that places operational pressure on employers to digitize attendance and scheduling systems. International experience cited by proponents shows stable or improved productivity following gradual reductions in working hours, particularly when supported by technology and sector-specific adjustments.

Legislative discussions also extend to statutory rest days. A proposal in the Chamber of Deputies seeks to expand mandatory paid holidays from nine to 15, adding dates tied to civic commemorations and creating additional long weekends. While the initiative remains under committee review, it reflects a sustained policy debate over rest periods in a country with long work hours relative to regional peers.

For businesses, the convergence of enforcement and reform has practical implications beyond legal compliance. Marisol Quezada, Country Manager, Hoop Carpool, links labor rules to productivity, retention, and operating costs. She explains how urban congestion, for example, continues to erode effective working time. Data from the TomTom Traffic Index show Mexico City commuters spending an average of 148 hours per year in traffic, a factor associated with lower job satisfaction and higher absenteeism and turnover. Employers in sectors requiring physical presence face additional pressure to manage schedules, mobility, and fatigue as regulatory standards evolve.

Corporate wellness strategies are also under reassessment. Fernanda Cater, Country Manager, Sesame HR, notes that programs focused narrowly on office-based perks can fall short if they do not account for commute times, scheduling rigidity, or the cumulative impact of long workdays. Flexible hours, hybrid models where feasible, and better alignment between wellness initiatives and operational realities are increasingly viewed as cost-effective measures as labor standards tighten.

Technology providers see the moment as an inflection point, such as Maya Dadoo, CEO and Co-Founder, Worky. HR and payroll platforms report rising demand driven by compliance complexity, particularly after the 2021 outsourcing reform shifted payroll responsibilities in-house and increased exposure to fines. Providers emphasize real-time attendance tracking, legally valid digital contracts, and integrated payroll systems to manage risks tied to overtime, rest breaks and social security contributions. As reforms advance, companies are reassessing whether it is more economical to hire additional staff than to rely on overtime under stricter limits.

The policy environment is further shaped by supply-chain considerations. In mid-December, the government negotiated a pause in road protests by farmer and freight groups, averting disruptions during the peak holiday season. The talks underscored the link between labor conditions, logistics reliability, and economic stability, as business groups warned that blockades can cost businesses billions of pesos in losses and exacerbate compliance and staffing challenges.

Taken together, the year-end warning on unjustified layoffs signals a broader message from authorities: labor rights enforcement is intensifying as Mexico updates its regulatory framework. For employers, the immediate task is to ensure continuity of worker benefits through December and January. The longer-term challenge lies in adapting systems, schedules, and workforce strategies to a labor market where compliance, transparency, and documentation are becoming central to operational resilience.