Protecting Jobs Means Protecting Employers Too

Creating a job should not make an employer the presumed villain in a dispute. Yet, I find that Mexico’s public debate too readily assigns blame before the facts are clear. The company becomes the aggressor, the employee the injured party. That assumption overlooks everyone else whose livelihood depends on the business remaining viable.

An entrepreneur who invests, meets their obligations, and creates lasting employment makes a substantial contribution to society. Paychecks support households, and supplier contracts sustain jobs well beyond the company’s own workforce. The profit a business earns helps finance its next investment and hire. It is unfair to expect businesses to fulfill that role while treating their defense of legitimate interests as somehow suspect.

The problem reaches well beyond small businesses. One dispute can threaten a small company’s cash flow. A large employer faces exposure across hundreds or thousands of employment relationships. An internal legal department improves its ability to respond, but it cannot eliminate legal fees, management distraction, or the operational consequences of a bad hire.

Mexico’s Federal Labor Law expressly protects employees. Article 18 favors the interpretation most beneficial to the worker when doubt arises, while Article 784 requires employers to prove disputed matters, such as grounds for dismissal, absences, and wage payments.⁠[1] Those protections have a legal rationale. My concern is what happens when the expense of defending a decision pressures a business to settle even when it believes it acted properly. A fair system must distinguish genuine vulnerability from bad faith.

The volume of disputes warrants attention. INEGI, Mexico’s national statistics agency, recorded 95,226 labor disputes under local jurisdiction in 2024, up 20.4% from 2023. Unjustified dismissal accounted for 57.9% of individual disputes. These figures describe claims, not findings of wrongdoing.⁠[2] They reinforce the need for institutions that can distinguish employer misconduct from a legitimate management decision.

An employee dismissed without just cause may seek reinstatement or compensation equivalent to three months’ salary. If the employer cannot establish the grounds for dismissal, back pay can accrue for up to 12 months. After that, if proceedings remain unresolved or the judgment has not been satisfied, monthly interest of 2% applies to an amount equal to 15 months’ salary.⁠[3] Legal expenses and replacement costs add to the bill. A manager may know what happened and still lack the records needed to establish it in court.

Supreme Court Weighs In

Mexico’s Supreme Court has recognized the wider consequences. In a 2016 ruling resolving conflicting judicial interpretations, its Second Chamber upheld the 12-month back-pay limit. Among the purposes it recognized were discouraging artificially prolonged litigation and preventing business failures that would harm other employees.⁠[4] Keeping an employer in business also serves the people who work there.

Meanwhile, payroll costs keep pressure on operating budgets. In 2026, Mexico’s general daily minimum wage rose 13%, from MX$278.80 (US$15) to MXN 315.04 (US$17); a separate rate applies in the northern border zone.⁠[5] For illustration, 100 positions paid at the general minimum require an additional MX$108,720 over a 30-day month, before employer contributions and benefits. This does not require identical percentage increases across all salaries. It does require careful budgeting. If revenue cannot absorb the increase, less money remains for investment and hiring.

Executives should address these risks before approving a vacancy. What must this person accomplish? How will success be measured, and what support will the employee receive? The budget should reflect the full cost of the role, including the time needed to become productive. Management should also decide whether the need calls for a permanent position, outside expertise, or a defined project.

Hiring then needs to test ability and judgment separately. A short, relevant work sample provides evidence of skill. Reference checks, conducted with the candidate’s permission, can help verify responsibilities and results. To assess reliability, ask for specific examples of missed commitments, mistakes, and responses to criticism. Follow up until the details are clear. Confidence in an interview is a poor substitute for evidence that someone can do the work.

The employment arrangement also needs careful attention. Mexico does not have a universal three-month probationary period. Article 39-A generally allows up to 30 days of probation for indefinite employment or relationships lasting more than 180 days. Up to 180 days may apply to qualifying managerial, leadership, or specialized technical or professional roles. Initial training is a separate arrangement, generally limited to three months, or six in the circumstances specified by law.⁠[6] The contract must reflect the actual role and purpose of the arrangement.

Both arrangements must be documented in writing and include pay, benefits, and social security coverage. They cannot be extended, combined, or repeatedly applied to the same employee within the company. Ending employment without dismissal indemnity requires establishing that the employee has not met the role’s requirements or competency standards and considering the joint productivity and training committee’s opinion as prescribed by law. Earned wages and accrued benefits remain payable. Continued employment after the period ends is treated as indefinite.⁠[6]⁠[1]

I recommend weekly reviews from the start, within the applicable evaluation period. Record expectations, the support provided, and actual results. A skills gap may call for training; concealing errors or repeatedly ignoring commitments calls for a different response. Managers must also examine whether their own instructions were clear. Allowing poor performance to persist pushes the burden onto dependable colleagues. They deserve a manager willing to address it.

Justified Dismissal

When dismissal becomes necessary, involve employment counsel before acting. A justified dismissal requires evidence of a statutory ground, such as more than three absences within 30 days without permission or justification, or an unjustified refusal to follow instructions concerning the employee’s agreed duties.⁠[7] Written notice must identify the conduct and dates and be delivered personally at dismissal or submitted to the appropriate labor court within five business days.⁠[1] Contracts, attendance records, and payment documentation should be maintained from the outset. Performance reviews provide further context.

If a claim arrives, respond promptly and preserve the evidence. Management, finance, and counsel should assess the merits, the cost of defending the case, and the terms on which settlement would make business sense. Set a negotiating range informed by those facts. Anger and fear are expensive substitutes for preparation. Budgeting for potential disputes also reduces the chance that a claim will disrupt operations.

Companies should give equal thought to which functions should remain in-house. Staff augmentation, structured as a specialized service through a provider with current REPSE registration, can be a useful way to support functions outside the core business. REPSE is Mexico’s registry of specialized service providers and contractors. To qualify, the service must fall outside both the client’s corporate purpose and its principal economic activity.⁠[8] A properly structured arrangement can bring in experienced specialists while freeing management to focus resources on the company’s main business.

Verify that the provider’s registration covers the service being purchased. Put scope, responsibilities, performance measures, and replacement arrangements in writing, and periodically review its labor, tax, and social security compliance. For a defined assignment, consider a consulting engagement with specific deliverables, acceptance milestones, and knowledge transfer. A technology implementation or process redesign may be better served by project expertise than by a permanent addition to the organization.

At Acute Talent, this informs our work in recruiting, staff augmentation, and specialized consulting. We help companies determine what talent they need and how to bring it into the business. Working through the business need with talent specialists and employment counsel before hiring gives management a stronger basis for its decisions.

Mexico needs employers willing to keep investing and hiring. That requires timely justice, accountability on both sides of the employment relationship, and recognition of what responsible businesses contribute. Employers deserve a fair hearing when they defend legitimate decisions. For leaders facing these pressures, the useful next conversation is about how their business hires, manages, and brings in expertise. Its continued health matters to every family relying on the next paycheck.