Mexico is entering a significant period of labour reform as the country moves towards a gradual reduction in the standard working week from 48 hours to 40 hours.
The reform introduces new employer obligations, enhanced working time monitoring requirements and a phased reduction in weekly working hours through to 2030. As businesses prepare for the changes ahead, now is the time to assess how workforce planning, payroll processes and compliance frameworks may be affected.
A New Era for Working Hours in Mexico
The reform establishes a phased reduction in the maximum standard working week over a five-year period.
The planned transition includes:
Importantly, the reform specifies that employees' salaries and employment benefits cannot be reduced because of the shorter working week. Employers will therefore need to consider how productivity, staffing levels and operating models can be adapted while maintaining compliance.
Why Employers Should Be Planning Now
Although the first reduction in working hours does not take effect until 2027, organisations should not underestimate the scale of preparation required.
For many employers, the changes may require a review of:
Businesses operating in manufacturing, retail, hospitality, logistics and other labour-intensive sectors may face challenges as they adapt to reduced working hours without reducing employee pay.
New Time Recording Requirements
Alongside the reduction in working hours, the reform introduces mandatory electronic working time records from 1 January 2027.
Employers will be required to maintain electronic records showing employees' start and finish times, with information available to labour authorities upon request. The Ministry of Labour and Social Welfare (STPS) is expected to publish further guidance regarding the operation and administration of these systems.
Questions employers should be considering include:
For organisations still relying on manual processes, the transition may require significant investment in workforce management systems.
Looking Beyond Working Hours
One of the biggest risks for employers is focusing solely on reduced working hours while overlooking the wider compliance implications.
Areas that may require review include:
The reform also updates overtime provisions, with strict limits on the number of additional hours employees can work and enhanced scrutiny of excessive overtime practices. Employers that rely heavily on overtime may need to reconsider workforce structures as the transition progresses.
Compliance Risks and Financial Implications
The introduction of mandatory electronic records will bring additional compliance obligations for employers.
Under the reform, organisations that fail to maintain appropriate records may face financial penalties, while excessive reliance on overtime could increase the likelihood of labour authority reviews and inspections.
Employers should also be aware of potential tax and social security implications associated with overtime arrangements. Changes to overtime usage may affect payroll costs, tax deductibility and social security contribution calculations, making it important to assess workforce strategies holistically rather than viewing the reform as an isolated employment law change.
Preparing for the Transition
With the phased implementation extending through to 2030, employers have an opportunity to take a measured approach to compliance and workforce planning.
Practical steps may include:
Early preparation can help organisations manage compliance requirements while minimising disruption to operations and employee experience.
Mexico – Global Insights
For further guidance on Mexican payroll compliance, employment legislation, workforce management and global mobility, visit the Mexico Global Insights section on the activpayroll website.
Navigating Change with Confidence
activpayroll supports organisations operating in Mexico and across Latin America with payroll, compliance and workforce management solutions designed to help businesses navigate legislative change with confidence.
As Mexico progresses towards a 40-hour working week, organisations that begin planning now will be best placed to manage compliance obligations and minimise operational disruption. If your organisation would like support assessing the impact of these reforms, speak to our experts today.