A common concern among employers in Mexico revolves around the validity of termination agreements in the employment relationship, a topic that has been the subject of continuous debate among legal professionals. The central question is whether private termination agreements are fully valid between the parties or if their validity requires formalization before the Labor Conciliation Center or, alternatively, before the Labor Courts.
Agreements are expressions of the will of the parties, and in the labor context, they are commonly used to terminate an employment relationship and settle amounts owed to the worker, as established in Article 53, Fraction I, of the Federal Labor Law (hereinafter referred to as “LFT”).
To formalize the agreement, it is essential that it be in writing and includes a detailed breakdown of the amounts corresponding to each concept, such as vacation pay, vacation premium, year-end bonus, compensation, and any pending benefits, as well as the withholding of Income Tax (ISR) if applicable. This breakdown is crucial to demonstrate that the worker is receiving the correct payment, as a lack of precision could lead to the challenge of the agreement, alleging lower receipts, deception in the signature, or coercion in accepting the agreement.
If an agreement sets a future date for payment, a conventional penalty, at least equivalent to one day’s salary, must be included, starting to accumulate from the breach. Since the LFT does not specify a limit, it is recommended to make the payment on the agreed date to avoid increases in the debt (Article 684, Fraction XIV, LFT).
In the case of ratification of the agreement before the labor authority, it is responsible for verifying the accuracy of the amount paid, granting validity and security to the parties. However, ratification is not mandatory and can take place at the company’s premises.
If the agreement shows defects in consent, such as error, fraud, bad faith, or violence, the worker can challenge its nullity. If proven, the employer could be ordered to pay differences or even reinstatement if it is demonstrated that the worker did not intend to terminate the employment relationship and was forced to sign.
When these agreements are privately executed without the intervention of the authority, they may be susceptible to claims, especially if they involve waivers of rights by the worker. However, when an agreement is executed before a Labor Court, its validity is absolute and binding between the parties.
In summary, both privately executed agreements and those ratified before labor courts have full validity from the constitutional framework to the regulations of the Federal Labor Law. The difference lies in that private agreements may be subject to nullity claims as they are not subject to the activity calendars of labor authorities and avoid transfers and loss of time in carrying out the ratification. It is the responsibility of the company and its legal team to ensure that the agreements comply with all legal requirements, without containing undue waivers of rights, and are executed properly. For this purpose, the team at Vega, Guerrero & Asociados is available to provide support in the labor termination processes.
