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Labor Reform

After a long and tortuous legislative process in Congress, the decree that reforms articles 76 and 78 in the Labor Code was published in the Federal Official Gazette on December 27th, 2022 and will go into effect on January 1st, 2023.


As per the reform to article 76, the minimum paid vacation days employees are entitled to on their first year goes from six to twelve; these will still be increased by two days per year for the first five years and then it will be increased by two days every five years. This chart compares the current minimum number of vacation days per year and the reformed ones:


Current years of employment

Current vacation days

Years of employment as per reform

Vacation days as per reform

1

6

1

12

2

8

2

14

3

10

3

16

4

12

4

18

5-9

14

5

20

10-14

16

6-10

22

15-19

18

11-15

24

20-24

20

16-20

26

25-29

22

21-25

28

30-34

24

26-30

30

31-35

32

On the other hand, article 78 was reformed to state that employees will be entitled to at least twelve consecutive paid vacation days and that if the employee so decides, their vacation days can be distributed according to their wishes and needs.


No changes were made to article 80 in the labor code which states employees are entitled to a 25% vacation bonus on top of their paid vacation time or to article 81 that states that employees must take their vacation days within six months of their anniversary.


These changes are applicable to all currently existing contracts and not just to new hires, which will evidently have a considerable impact on employers' finances. It is also important to note that these are the minimum legal days of paid vacation time, so all employers are free to give their staff more paid time off according to their own policies.


If you want more information on the matter, feel free to contact us here


Paula Blanco, CPA

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