On December 27, 2022, the “DECREE amending articles 76 and 78 of the Federal Labor Law, regarding vacation periods” (hereinafter the “Reform”) was published in the Official Gazette, which came into force on January 1st, 2023.
In this regard, please be informed that the Reform amends the legal provisions regarding the calculation of vacation days in the Federal Labor Law (hereinafter “FLL”) in order to extend the minimum vacation period that employees may enjoy based on their seniority in the companies.
With the aforementioned increase, employees who have over one year of seniority shall enjoy at least 12 (twelve) days of paid vacations, which period shall be increased by 2 (two) days for each subsequent year, up to the sixth year worked; thereafter, the vacation period shall be increased by 2 (two) days for each five years of service.
Therefore, the minimum vacation period shall be calculated in accordance with the following chart:
Labor years | Vacation days |
|---|---|
1 | 12 |
2 | 14 |
3 | 16 |
4 | 18 |
5 | 20 |
6-10 | 22 |
11-15 | 24 |
16-20 | 26 |
21-25 | 28 |
26-30 | 30 |
31-35 | 32 |
36-40 | 34 |
It is important to mention that the vacation period corresponding to each employee may be distributed at the employee’s discretion in the manner and time required, and the employee is entitled to enjoy at least 12 (twelve) continuous days during the annual period.
Likewise, the increase in vacation periods will be applicable to the terms of the individual and collective labor agreements that were in force as of the effective date of the Reform, that is, January 1st, 2023. The foregoing, provided that the new calculation is more favorable for the employees.
On the other hand, it is necessary to consider that the modifications of the Reform have a direct impact on the vacation bonus that employers are obliged to pay pursuant to article 80 of the FLL, which shall correspond to at least 25% (twenty-five percent) of the salaries that correspond during the vacation period.
Consequently, the new vacation periods and vacation bonus shall be considered for the calculation of the contribution base salary for purposes of the payment of social security obligations and compensations for labor terminations.
In addition to the foregoing, it is important that the employer observes the following considerations:
Article 516 of the FLL sets forth the following:
“Article 516.- Work actions expire in one year, counted from the day following the date on which the obligation becomes due…”
From the foregoing, please be informed that all the labor benefits (including vacations and the payment of vacation bonus) expire in one year, therefore, after such period, the employee may not demand-request from the employer the unused vacations neither the payment of the vacation bonus.
Regarding the payment of vacation bonus:
The employer is obliged to pay to the employees the vacation bonus (equivalent to 25% of the daily salary) that may correspond to them in accordance with the number of vacation days that each of them are entitled to and calculated over the vacation days that the employee effectively enjoyed.
If the employee does not enjoy the total number of his/her vacation days, the vacation bonus must be paid only considering the enjoyed vacation days of the corresponding period.
New hires are not automatically entitled to a vacation period and vacation bonus; such labor benefits are mandatory to be paid once the employees have completed the first year of his/her employment.
