Severance Pay in Mexico: Finiquito vs Liquidación Explained
Quitting, being let go and being fired without cause lead to different payments under the Federal Labor Law. How the finiquito and the liquidación are calculated and where to claim.
In Mexico, every worker who leaves a job is owed a finiquito: unpaid wages, the proportional Christmas bonus, unused vacation with its premium and, in some cases, a seniority premium. A worker dismissed without justified cause is also owed a liquidación under the Federal Labor Law, starting with three months’ salary, and has two months to claim it.
What is the difference between finiquito and liquidación?
The finiquito settles what you already earned and applies to every exit, including a resignation. The liquidación is the compensation (indemnización) owed on top when the employer ends the job without a legal cause, or when you leave because of the employer’s fault.
| How the job ends | Finiquito | Liquidación (compensation) |
|---|---|---|
| You resign | Yes | No; seniority premium only after 15 years of service |
| Dismissed for a justified cause listed in Article 47 | Yes | No, but the seniority premium is still owed |
| Dismissed without justified cause | Yes | Yes: 3 months’ salary or reinstatement, plus back pay if a court rules for you |
| You leave because of the employer’s fault (Article 51) | Yes | Yes, under Article 50 |
The rules below come from the Federal Labor Law (Ley Federal del Trabajo, LFT). They apply to foreign residents with a Mexican employer in the same way as to Mexicans.
What goes into the finiquito?
- Unpaid salary for days worked up to the last day.
- Proportional Christmas bonus (aguinaldo). Article 87 sets at least 15 days of salary a year, and workers who leave before December are owed the share for the time they worked. Our page on the aguinaldo shows the calculation.
- Vacation. Vacation days cannot be swapped for money while you work, but Article 79 gives a proportional payment for the current year when the job ends. Article 76 sets at least 12 working days after the first year, rising by two days a year up to 20.
- Vacation premium (prima vacacional) of at least 25% of the salary for those vacation days (Article 80).
- Seniority premium (prima de antigüedad) of 12 days of salary per year of service (Article 162). It is paid on any dismissal, justified or not, and on a resignation only after at least 15 years. For this premium the salary is capped at double the minimum wage, which is MXN 630.08 a day in Mexico City as of November 2026.
How much is the liquidación for unjustified dismissal?
Article 48 lets a dismissed worker choose between getting the job back (reinstatement) and compensation of three months’ salary. If the employer cannot prove a legal cause, the worker is also owed back wages (salarios vencidos) from the dismissal date for up to 12 months, and after that interest of 2% a month on 15 months of salary if the case is still open.
The often-quoted “20 days per year” comes from Article 50. It applies when the employer is allowed to refuse reinstatement (Article 49: workers with under a year of service, trusted positions or trabajadores de confianza, domestic workers, temporary workers and a few others) and when a worker quits because of the employer’s fault. For an open-ended contract, Article 50 sets 20 days of salary per year of service plus three months’ salary and any back pay. Settlements often use this formula, but the law ties it to those cases.
| Item | Amount under the LFT |
|---|---|
| Constitutional compensation | 3 months of salary |
| Compensation per year (Article 50 cases) | 20 days of salary per year of service |
| Seniority premium | 12 days per year, salary capped at 2x minimum wage |
| Back pay if the employer loses in court | Up to 12 months, then 2% monthly interest on 15 months |
| Finiquito items | Unpaid salary, proportional aguinaldo, vacation and premium |
Under Article 47, the employer must give written notice stating the cause and date of a dismissal. Without that notice, the dismissal is presumed unjustified unless the employer proves otherwise.
What is the deadline to claim?
A dismissed worker has two months from the day after the dismissal to act (Article 518). Filing a conciliation request pauses that clock. Other claims, such as an unpaid aguinaldo, generally expire after one year (Article 516). A worker who wants to leave because of the employer’s fault must do so within 30 days of the cause (Article 52).
How does the Centro de Conciliación process work?
Before going to a labor court, workers and employers must try conciliation at a conciliation center (Article 684-B). Federal industries go to the Federal Center for Conciliation and Labor Registration (CFCRL); most other jobs in Mexico City go to the city’s local conciliation center.
- File a conciliation request (solicitud de conciliación) in person, in writing or online, with official ID. The center must give free legal advice on your rights and deadlines.
- The center sets a hearing, normally within 15 days, and summons the employer, who faces a fine of 50 to 100 UMA for not showing up.
- At the hearing, the conciliator proposes a settlement. If both sides agree, the signed agreement is binding and enforceable.
- If there is no deal, you receive a certificate that conciliation failed and can file a lawsuit. The whole conciliation stage should not exceed 45 calendar days.
The Federal Labor Defense Office (Profedet) gives free advice and representation to workers in federal matters. Article 33 says any settlement must be in writing, list the rights it covers and be ratified before a conciliation center or court; a clause in which you give up earned rights is void.
Is severance pay taxed?
Partly. Article 93 of the Income Tax Law exempts seniority premiums, compensation and similar separation payments up to 90 times the minimum-wage reference per year of service, and the excess is taxed. The employer withholds the tax and should show it on the payroll receipt (recibo de nómina), which is a CFDI you can download.
Bottom line
Ask for the dismissal reason in writing and do not sign a resignation letter you did not write. Check the finiquito line by line against the items above, and if the numbers look short, file at the conciliation center within two months. This is general information, not legal advice; Profedet, a conciliation center or a labor lawyer can assess your case.
FAQ
Do I get severance if I resign?
You get the finiquito: pending salary, proportional aguinaldo and vacation pay with premium. The seniority premium is added only after 15 or more years of service, and there is no liquidación.
Can my employer pay less if I sign a settlement?
A settlement is valid only if it is in writing and ratified before a conciliation center or court. Any part that waives wages or benefits you already earned is void under Article 33.
Does a foreign worker need a valid work permit to claim?
Labor rights come from the work relationship under the Federal Labor Law, and Article 33 voids any waiver of earned wages. Ask Profedet or a labor lawyer how your case is handled. Immigration status is a separate matter with INM; see our page on the work permit for temporary residents.
