Mexico proposes deadline for severance payments

A legislative proposal has been introduced in Mexico's Chamber of Deputies to establish a strict deadline for companies to pay workers their severance, known as 'finiquito'. The initiative, promoted by Deputy Abigail Arredondo Ramos of the Institutional Revolutionary Party (PRI), seeks to amend the Federal Labor Law (LFT) to address the current lack of a precise timeframe for these final payments.

The proposal suggests that workers should receive their severance within a maximum of three calendar days following the termination of the employment relationship. Additionally, the reform requires employers to provide a detailed receipt breaking down all components of the payment, including unpaid days worked, proportional Christmas bonuses (aguinaldo), vacations, vacation premiums, and seniority premiums where applicable.

To ensure compliance, the initiative includes a penalty mechanism: if an employer fails to meet the three-day deadline, they would be required to pay a monthly interest rate of 2% on the outstanding amount.