Vacation Days in Mexico: 2026 Employer Compliance Guide

Vacation in Mexico is not a discretionary benefit. It is a statutory right governed by the Federal Labor Law.

The rules around entitlement, timing, payment, and documentation are more specific than most foreign employers expect.

Getting vacation wrong creates direct liability: unpaid premiums, invalid CFDI records, termination disputes, and audit exposure.

Vacation Entitlement in Mexico: The 2023 Reform Table

The Vacaciones Dignas reform (Articles 76 and 78 LFT, effective January 1, 2023) doubled the minimum vacation entitlement from the pre-2023 baseline.

Every employee hired on or after January 1, 2023 uses the new table from day one. Employees hired before 2023 also use the new table from their 2023 anniversary date onward.

These are legal minimums. Collective bargaining agreements or company policy may offer more, but no employer may offer fewer.

Key rules:

• Entitlement is based on the anniversary date, not the calendar year

• Applies equally to part-time and full-time employees

• Cannot be reduced by internal policy or employee agreement

• Entitlement is earned annually on the anniversary date, not accrued daily

• At least 12 consecutive days must be granted as a continuous rest period (unless the employee requests to split them)

Vacation Premium (Prima Vacacional) in Mexico

On top of regular vacation pay, employers must pay a vacation premium of at least 25% of the daily salary for each vacation day taken (LFT Article 80).

Formula: Vacation premium = daily salary × vacation days × 25%

Example: An employee earning MXN 400/day takes 12 vacation days.

• Vacation pay: MXN 400 × 12 = MXN 4,800

• Vacation premium: MXN 4,800 × 25% = MXN 1,200

• Total due: MXN 6,000

The premium is a distinct payment, not included in the base daily wage. Both must appear as separate line items in the CFDI payroll receipt.

ISR exemption on vacation premium (2026): The first 15 UMA daily values of vacation premium are exempt from income tax. At MXN 117.31/UMA in 2026, that is MXN 1,697.10 exempt per vacation period. Any premium above this threshold is subject to ISR withholding.

Vacation and the Integrated Daily Salary (SBC)

Vacation days and the vacation premium integrate into the SBC (Salario Base de Cotización) used for IMSS contributions.

As seniority increases and vacation entitlement grows, the integration factor rises and the SBC must be recalculated.

Failing to update the SBC after each anniversary date understates IMSS contributions and creates retroactive assessment exposure.

When and How Vacation Must Be Granted in Mexico

Knowing the entitlement amount is only the first step. The LFT also governs timing and administration.

6-month scheduling window. Once the anniversary date passes, the employer has a maximum of 6 months to schedule and grant those days. Vacation that sits unscheduled beyond this window creates legal exposure.

No cash in lieu of vacation. An employer cannot offer money instead of time off. Vacation days cannot be bought out except at termination as part of the finiquito.

Annual entitlement certificate required. Employers must provide each employee with a written document confirming their vacation entitlement, available days, and the coverage period annually. This is a legal requirement and is the primary document in any audit or dispute.

Scheduling coordination. The employer manages operational scheduling but cannot indefinitely defer vacation past the 6-month window. Both parties must cooperate to agree on dates.

Vacation's Impact on Payroll and CFDI in Mexico

• Vacation pay must use the employee's ordinary daily wage, not averaged or reduced

• The 25% premium must appear as a separate line item in the CFDI payroll receipt

• Both items must be reported to SAT accurately; combining them or omitting the premium creates a CFDI compliance error

• Vacation days must be recorded consistently in the payroll system to match CFDI filings and IMSS records

Unused Vacation and Carry-Forward in Mexico

There is no calendar-year reset. Mexican law does not allow employers to cancel or expire unused vacation at December 31. Unused days carry forward until taken or paid out at termination. Resetting balances on January 1 creates retroactive liability for every affected employee.

Preventing vacation creates liability. If the employer repeatedly defers scheduling and the 6-month window passes, the employee's right to those days does not expire. The liability accumulates.

Statute of limitations. Employees have up to 1 year from when vacation was due to file a claim for ungranted or unpaid vacation. Former employees retain this right after leaving.

Vacation at Termination in Mexico

Vacation at termination is one of the most frequently miscalculated components of the exit process.

• Pro-rata vacation must always be paid. If an employee leaves before their next anniversary date, they receive vacation pay for the fraction of the year worked. 8 months into year 3 = 8/12 of the year-3 entitlement.

• The 25% premium applies to all termination vacation pay, whether the employee is resigning, being terminated, or leaving for any reason.

• Vacation is a required finiquito component. A finiquito that omits proportional vacation or the premium is legally insufficient.

• Waivers are void. An employee cannot legally waive unpaid vacation in a resignation letter or finiquito receipt.

Common termination vacation errors:

Special Cases in Mexico

Maternity leave. Days on maternity leave count toward seniority and vacation accrual. The anniversary date and entitlement continue as normal throughout protected leave.

Sick leave during scheduled vacation. If an employee becomes ill during a scheduled vacation period and obtains an IMSS disability certificate, the vacation is suspended for the certified period. Those days are rescheduled after recovery.

Public holidays falling within vacation. A mandatory public holiday that falls during a vacation period does not count as a vacation day. The employee receives that day in addition to their vacation entitlement.

Salary increase before vacation is taken. If a salary increase occurs after the anniversary date but before vacation is taken, vacation pay and the premium must use the new, higher salary.

Collective bargaining agreements. When a CBA provides more vacation days than the statutory minimum, the higher entitlement applies. Employers covered by a CBA must administer vacation per the contract terms, not just the LFT floor.

Common Vacation Compliance Errors in Mexico

• Resetting vacation by calendar year: the most widespread vacation compliance error; vacation resets on the anniversary date, not January 1

• Not tracking anniversary dates: managing vacation without individual hire-date records makes correct entitlement calculation impossible

• Calculating the premium on monthly salary instead of the daily rate, or applying below 25%

• No written vacation records: informal approvals via text or verbal agreement create disputes about days taken

• Treating vacation as a general PTO pool: vacation is a specific statutory entitlement, tracked separately from sick days and personal time

• Not issuing the annual entitlement certificate: required by law and the primary document in any labor inspection

How Human Resources Mexico (HRM) Manages Vacation

Human Resources Mexico (HRM) is the leading Employer of Record in Mexico and the only locally based EOR built exclusively for companies in the US, Canada, China, and other countries hiring in Mexico.

HRM tracks each employee's anniversary date, applies the correct entitlement tier, issues the annual written certificate, and calculates vacation pay and the 25% premium accurately.

HRM reports both as separate CFDI line items, updates the SBC at each anniversary, and includes the full pro-rata vacation component in every termination finiquito.

Get a custom proposal for your Mexico team. Questions about vacation entitlement or any benefits compliance area? Ask our Mexico EOR Specialist AI Chatbot for immediate answers.

Vacation Days Mexico FAQ

How many vacation days are employees entitled to in Mexico?

12 days after year 1, rising by 2 days per year through year 4 (18 days), then 20 days for years 5–9, continuing to 32 days at 31+ years.

These are the legal minimums under the 2023 LFT reform.

What is the vacation premium in Mexico?

A mandatory payment of at least 25% of the daily salary for each vacation day taken (LFT Article 80).

It is paid in addition to regular vacation pay and must appear as a separate line item in the CFDI payroll receipt.

Does vacation in Mexico reset on January 1?

No. Vacation entitlement resets on each employee's individual anniversary date (hire date), not on January 1. Resetting balances at year end without legal basis creates retroactive liability for every affected employee.

Can vacation days be replaced with cash in Mexico?

No. Employers cannot pay employees to skip their vacation.

The only time vacation is converted to cash is at termination, when unused proportional vacation days must be included in the finiquito along with the 25% premium.

What happens to unused vacation at termination in Mexico?

Pro-rata vacation for the current partial year of service must be calculated and paid, plus the 25% premium on all vacation days being paid out.

This is a required finiquito component. The employee cannot waive it.

How long does the employer have to schedule vacation in Mexico?

A maximum of 6 months from the employee's anniversary date.

If vacation goes unscheduled beyond this window, the employer is in violation of the LFT and the employee's right to those days continues to accumulate.

Does the vacation premium have an ISR exemption?

Yes. In 2026, the first MXN 1,697.10 of vacation premium (15 UMA daily values at MXN 117.31/UMA) is exempt from income tax.

Any premium above this threshold is subject to ISR withholding.