A proposal in Mexico’s Chamber of Deputies seeks to amend the Federal Labor Law (LFT) to enhance severance payments for workers when a job is terminated due to employer misconduct.
The project, driven by legislator Napoleón Gómez Urrutia from the Morena party, aims to ensure better income for employees who are let go and seek new job opportunities. This indemnity applies when a worker terminates the employment relationship due to employer-related causes.
Causes for Resignation with Severance Pay
- Misrepresentation by the Employer: When an employer deceives the employee, leading to resignation.
- Unfair Practices: Including salary reductions or acts of violence and threats against the worker.
- Safety Risks: If the employer puts the employee’s safety at risk.
The legislature proposes to increase the calculation base for severance pay from 20 to 90 days of salary, regardless of whether the contract is fixed-term or indefinite.
Severance Pay Calculations under the Proposal
- Employees with Indefinite Contracts: Eligible for 90 days’ salary per year of service if they terminate due to employer misconduct.
- Fixed-term Employees: Receiving half a month’s salary per month worked if less than a year, and six months’ salary for the first year plus 90 days for each subsequent year.
This initiative also covers situations where employees can’t return to their jobs following a labor dispute or when reinstating them would be impractical. The aim is to ensure workers receive a fair and dignified severance package.
Key Findings on Employee Resignation
According to Kelly’s “Tendencies in Mexico’s Labor Environment” report, major reasons for resignation include insufficient salary (52%), lack of growth opportunities (47%), and poor leadership (40%).
The proposal underscores the importance of workers having an estimated savings of three to six months’ salary for unexpected unemployment. However, it notes that current wages often fall short of recommended monthly savings.
