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Understanding Holiday Pay and Aguinaldo Obligations in Mexico

Expanding your workforce to Mexico means more than just understanding payroll taxes and employment contracts—it also means navigating local compensation practices like holiday pay and the legally mandated Aguinaldo. These are not optional perks but statutory obligations under Mexican labor law. Non-compliance can result in fines, audits, and even employee lawsuits.

In this article, we’ll break down what global employers need to know about holiday entitlements and Aguinaldo requirements in Mexico, and how Employer of Record (EOR) services can help ensure full compliance.

What Is Holiday Pay in Mexico?

Under Mexican Federal Labor Law, every employee is entitled to a minimum of six vacation days after their first year of service. This number increases by two days per year of employment until it caps at 12 days, and then increases by two days every five years.

In addition to vacation time, employees are entitled to:

  • A 25% vacation premium on top of their regular salary during vacation days.
  • Official public holidays, which in Mexico typically include:
    • January 1st (New Year’s Day)
    • February 5th (Constitution Day)
    • March 21st (Benito Juárez’s Birthday)
    • May 1st (Labor Day)
    • September 16th (Independence Day)
    • November 20th (Revolution Day)
    • December 25th (Christmas)

For an updated list of official holidays and compliance calendars, you can consult Mexico’s Official Government Website (gob.mx).

What Is the Aguinaldo?

The Aguinaldo is a mandatory year-end bonus that must be paid by December 20th of each year. According to Article 87 of the Federal Labor Law, all employees are entitled to receive at least 15 days’ worth of salary as Aguinaldo.

Key Details:

  • Applies to all employees, including part-time and temporary workers.
  • If an employee has not worked a full year, they are entitled to a prorated amount.
  • It must be paid in cash or through a legal payroll system.

Failure to pay the Aguinaldo on time can lead to:

  • Fines
  • Labor disputes
  • Damaged employer reputation

Read more on Mexico’s labor legislation here (STPS)

How Do EORs Ensure Compliance with Holiday and Bonus Pay?

Working with an Employer of Record in Mexico like Global Touch ensures all legal obligations—including holiday pay, vacation premiums, and Aguinaldo—are managed accurately and on time.

Benefits of using an EOR include:

  • Automated proration of Aguinaldo for short-term contracts.
  • Timely reminders for year-end compliance obligations.
  • Proper classification of contractors vs. employees.
  • Management of public holidays, local calendars, and tax implications.

For a complete overview of what an EOR does, check out our blog post:
What is an Employer of Record (EOR) and How Can It Help Your Company?

Penalties for Non-Compliance

  • Failing to comply with holiday and Aguinaldo requirements may lead to:
    • Audits from the Mexican Labor Department
    • Employee lawsuits under Ley Federal del Trabajo
    • Financial penalties ranging from 50 to 5000 times the UMA (Unidad de Medida y Actualización)

Best Practices for International Employers

  • Keep detailed employment records.
  • Use certified payroll systems that comply with SAT and CFDI.
  • Partner with local labor law experts or EOR providers.
  • Budget ahead for Aguinaldo and holiday premiums.
  • Communicate benefits clearly to your employees.

Final Thoughts

Expanding your team to Mexico can unlock access to skilled talent and competitive labor costs, but it also comes with distinct legal obligations. Holiday pay and the Aguinaldo are two crucial aspects of employee compensation that can’t be overlooked.

Whether you’re scaling operations, hiring remote workers, or managing a hybrid team, ensuring full compliance in Mexico should be a strategic priority. Partnering with a trusted EOR like Global Touch can take that burden off your shoulders—so you can focus on growing your business.