2025.09.15 – Employment Termination and Seniority Premium in Mexico: Case of Saúl and Employer

Key Findings

The case concerns a dispute between an employee, Saúl, and his employer regarding the calculation of severance pay. The disagreement arose because the payment offered did not include the statutory seniority premium. Mexican labor law establishes that workers are entitled to twelve days of wages per year of service as a seniority premium, capped at twice the minimum wage. This right applies even in cases of justified dismissal or death of the worker, while in cases of voluntary resignation it requires at least fifteen years of service. The discussion highlights both the legal justification for the dismissal due to repeated absences and the non-waivable right to the seniority premium regardless of fault.

Confirmed Facts

1. Saúl was informed by his employer that his severance payment was ready for collection, but he refused to accept it because the check did not include the seniority premium. The employer argued that the dismissal was fully justified due to eight absences within one month. Saúl accepted that more than three absences in a month constitute grounds for termination under Article 47, section X, of the Mexican Federal Labor Law.
2. Despite acknowledging the justified termination, Saúl insisted that he was still entitled to the seniority premium. This consists of twelve days of wages for each year worked, regardless of the cause of dismissal, with the salary base capped at twice the minimum wage. He cited that even if the dismissal is justified, the employer is legally obliged to pay this benefit.
3. The legal framework is found in Article 162 of the Federal Labor Law. It states that workers who resign voluntarily are entitled to the premium only if they have completed at least fifteen years of service. However, in cases of dismissal—whether justified or unjustified—or in the event of death, the premium must be paid without requiring a minimum length of service.
4. There is a common misconception that the twelve-day premium applies only after fifteen years of employment. This is true solely for voluntary resignation. In dismissals, the entitlement arises from the first year of service. The benefit is calculated proportionally if the worker did not complete full years of service.
5. An example illustrates the calculation: a worker with six years of service and a daily wage of 500 pesos would receive a seniority premium equivalent to seventy-two days of wages, totaling 36,000 pesos. If the daily wage exceeds twice the minimum wage, the calculation is capped at that maximum allowed level.