When navigating the complexities of a new legal system it is vital to maintain focus on certain principles as to avoid law suits and more importantly, to avoid wasting time, resources and energy in unproductive hiring strategies.

When understanding employment regulations in Mexico it is important to take into account that Mexican Federal Labor Law provides many statutes that are not available under U.S, European or British Law. Provisions such like: inability to terminate without just cause (no employment at will), severance pay, vacation premiums, profit sharing and collective (union) securities may be construed as restrictive and costly for foreigners looking in. Nonetheless, it is ironic to find out that despite heavy employee legal protection, the economic burden of employees and legal exposure can be considered low in Mexico when compared to international standards due to penalties, costs, insurance, compensation packages and economical wage levels in other nations. Thereafter, it is essential to understand and manage this trade-off with effective HR management policies that must always begin with the correct strategy upon hiring employees.

In the U.S for example, as in Mexico there is a distinction between employment contracts and other contracts for service. Nonetheless, Unlike in the U.S (Fair standards labor act) Mexico does not admit the distinction between exempt and non-exempt employees due to the fact that ALL employees are guaranteed at least all of the statutory benefits in accordance with the principle of workplace stability.

In regards with types of contracts, per law in Mexico there are only 3 types of employees (that match the available types of contracts):

a) Employees hired for an indefinite amount of time.

a.1) subject to a probationary period

a.2) subject to an initial training period

b) Employees hired for a construction period.

c) Employees hired for a previously determined amount of time.

The norm or the general rule of thumb is that all labor relations and contracts are for an undetermined/indefinite period of time (no indication of when and why it could end).

When dealing with these open-ended labor contracts, since 2012 congress gave employers the alternative to hire employees using 2 NEW different varieties of said contract. The new law clearly states that when an employee enters into an agreement which is open ended (as is the rule of law) contracts may be subject either to a) a probationary period or else, b) an initial...