Fixed-Term Employment Contract Mexico (Contrato por Tiempo Determinado)

A Fixed-Term Employment Contract Mexico (Contrato de Trabajo por Tiempo Determinado) is a formal written labour agreement between a patrón (employer) and a trabajador (worker) in Mexico establishing an employment relationship that expires on a specific calendar date, governed by Article 37 of the Ley Federal del Trabajo (LFT) published in the Diario Oficial de la Federación on 1 April 1970. Unlike the indefinite contract under Article 35 LFT — which is the presumed default form of employment — the Contrato por Tiempo Determinado is only legally valid when the nature of the work or the replacement of a temporarily absent worker justifies a defined duration, making this a contract of exception rather than the norm in Mexican labour law.

Article 37 of the Ley Federal del Trabajo specifies the three circumstances where a fixed-term contract is permissible: (i) when the nature of the work requires it — such as a construction project with a defined completion milestone, a trade fair, or a product launch campaign; (ii) when a permanently employed worker is temporarily absent and must be replaced — for example during maternity leave (licencia de maternidad under Article 170 LFT), extended illness (incapacidad temporal), or sabbatical leave; and (iii) when required by an extraordinary increase in production volume that does not correspond to the company's regular permanent activity — for instance, a manufacturing plant that temporarily doubles output for a seasonal product cycle.

The constitutional foundation for all employment in Mexico rests in Article 123 of the Constitución Política de los Estados Unidos Mexicanos of 5 February 1917. Article 123, Apartado A governs private-sector employment and establishes that the Ley Federal del Trabajo shall determine the minimum conditions of employment — none of which may be waived or reduced by contract. A Fixed-Term Employment Contract in Mexico must provide all the same minimum benefits as an indefinite contract: aguinaldo of at least 15 days' salary under Article 87 LFT, annual vacation of at least 12 working days under Article 76 LFT (reformed by the Decreto published in the DOF on 27 December 2022), a 25% prima vacacional under Article 80 LFT, and Participación de los Trabajadores en las Utilidades (PTU) at 10% of annual taxable profits under Articles 117 through 131 LFT.

The Ley Federal del Trabajo applies a strong presumption against fixed-term employment. Article 35 LFT establishes that where the duration of the employment relationship is not specified and the nature of the work does not require a temporary arrangement, the employment is deemed indefinite by operation of law. Article 39 LFT adds a critical rule: if the fixed term expires and the worker continues providing services without objection from the employer, the contract extends — first to the completion of the task or until the returning worker resumes their post, and thereafter converts into an indefinite employment relationship. Employers who use successive fixed-term contracts to staff inherently permanent positions face reclassification by the Tribunales Laborales (labour courts established under the 2019 reforma laboral) and retroactive recognition of all accumulated seniority, aguinaldo, vacation, and PTU rights.

All employers in Mexico must register fixed-term workers with the Instituto Mexicano del Seguro Social (IMSS) before the commencement of work under Article 15 of the Ley del Seguro Social (LSS) published in the DOF on 21 December 1995. IMSS coverage for fixed-term workers includes all five branches: enfermedad y maternidad, riesgos de trabajo, invalidez y vida, retiro cesantía en edad avanzada y vejez (RCV), and guarderías y prestaciones sociales. Employer and worker IMSS contributions are calculated on the Salario Diario Integrado (SDI) under Article 84 LFT — which includes base daily wage plus the proportional daily value of all recurring benefits — and remitted bimonthly through the Sistema Único de Autodeterminación (SUA).

For payroll and tax purposes, the patrón must withhold Impuesto sobre la Renta (ISR) from the worker's wages under Article 94 of the Ley del Impuesto sobre la Renta (LISR) published in the DOF on 11 December 2013, and remit withholdings monthly to the Servicio de Administración Tributaria (SAT). The worker's Registro Federal de Contribuyentes (RFC) and CURP (Clave Única de Registro de Población) are required for IMSS, INFONAVIT, and SAT compliance. The employer must also contribute 5% of the SDI to the worker's INFONAVIT housing fund under Article 29 of the Ley del INFONAVIT.

The 2019 reforma laboral (Decreto published in the DOF on 1 May 2019) replaced the Juntas de Conciliación y Arbitraje with Tribunales Laborales under the Poder Judicial de la Federación and created the Centro Federal de Conciliación y Registro Laboral (CFCRL) to administer mandatory pre-litigation conciliation under Articles 684-A through 684-E LFT. All labour disputes arising from fixed-term contracts — including claims of unjustified early termination or improper reclassification — must pass through this conciliation process before proceeding to litigation. The Secretaría del Trabajo y Previsión Social (STPS) inspects employer records and may demand production of written contracts at any time under Article 804 LFT.

A Fixed-Term Employment Contract Mexico under Article 37 of the Ley Federal del Trabajo is required whenever a Mexican employer engages a worker for a genuinely temporary purpose that falls within one of the three legally recognized categories. Misusing the fixed-term format for inherently permanent positions is the most common and costly employer error in Mexican labour law — the Tribunales Laborales regularly reclassify such arrangements as indefinite, triggering full liquidación liability.

The contract is needed when a company requires temporary worker substitution — for example, when a permanent employee takes maternity leave (licencia de maternidad, 84 days under Article 170 LFT), paternity leave (licencia de paternidad, 5 days under Article 132 Fraction XXVII-Bis LFT), extended medical incapacity (incapacidad temporal IMSS), or any other justified leave of absence. In these cases, the fixed-term contract explicitly names the absent worker being substituted and terminates automatically when that worker returns, with no severance obligation for the substituted worker's return.

The document is required when a company must cover an extraordinary increase in production or service demand that is not part of its regular permanent activity under Article 37 LFT. A food manufacturer that doubles production for holiday season, an accounting firm that hires extra staff for the annual SAT tax declaration filing season (April–May for corporations), or a retail chain that staffs additional cashiers for the Christmas–Día de Reyes season — each of these scenarios may justify a fixed-term contract if the volume increase is genuinely extraordinary and temporary.

A Contrato por Tiempo Determinado is also required when hiring workers for a specific project with a defined end date — for example, installing a new ERP system, running a trade fair booth at a specific Feria Internacional, or staffing a construction project until completion of a specific building phase. The employer must be able to demonstrate that the task has an objectively defined conclusion date. Where the completion date is indefinite, Article 36 LFT (specific-work contract) or Article 35 LFT (indefinite contract) is the appropriate instrument.

The contract must be in writing under Article 24 LFT. Workers who cannot be shown a written employment contract are presumed, under Article 784 LFT, to have the terms and conditions they claim — meaning the employer bears the full burden of proof. The Inspección del Trabajo of the STPS regularly audits employer records and penalizes companies that cannot produce written employment contracts for all workers.

When a fixed-term contract reaches its agreed end date and the employer wishes to part ways with the worker, no severance (indemnización por despido) is owed under Article 53 Fraction III LFT — the expiration of the agreed term is itself a cause of termination without employer liability. However, if the employer terminates the contract before the agreed end date without justified cause (Article 47 LFT), the worker is entitled to the wages corresponding to the remaining period of the contract plus all accrued benefits. Any dispute must be submitted to mandatory conciliation at the CFCRL before proceeding to the Tribunales Laborales under the 2019 reforma.

Under Article 39 LFT, if the worker continues working after the fixed term expires without the employer formally ending the relationship, the contract automatically extends. After the task is completed or the substituted worker returns, any continuation of services creates an indefinite employment relationship — the employer loses the benefit of the fixed-term arrangement and acquires the full seniority and termination liability of an indefinite contract.

A valid Fixed-Term Employment Contract Mexico under the Ley Federal del Trabajo must contain the specific elements required by Articles 24 and 25 LFT plus the fixed-term justification required by Article 37 LFT. Missing any of these elements creates presumptions against the employer in labour disputes.

Identification of Parties: Full legal name, RFC (Registro Federal de Contribuyentes), CURP (Clave Única de Registro de Población), NSS (Número de Seguridad Social assigned by IMSS), official identity document number, and domicile of both the patrón and the trabajador. Where the employer is a persona moral (Sociedad Anónima de Capital Variable — SA de CV, or Sociedad de Responsabilidad Limitada — S de RL), the company's RFC and Registro Público de Comercio inscription number and the identity and powers of the legal representative (poder notarial granted before a Notario Público under the Código Civil Federal) must be stated.

Fixed-Term Justification (Causa Específica): This is the element that distinguishes this contract from the indefinite form and is absolutely critical. The contract must state with precision the legal basis under Article 37 LFT and the specific factual reason — for example: "El presente contrato se celebra por tiempo determinado en términos del Artículo 37, fracción I de la Ley Federal del Trabajo, para sustituir temporalmente a la C. [worker name], quien se encuentra en licencia de maternidad conforme al Artículo 170 LFT, y terminará automáticamente a la fecha en que dicha trabajadora se reincorpore a sus labores." Without a specific and legally recognized justification, the Tribunales Laborales will reclassify the contract as indefinite.

Duration and Termination Date: The specific start date and end date (or the condition that triggers termination — such as the return of a named absent worker or the completion of a named project) stated with precision. A contract that states a vague condition such as "when business conditions normalize" will not satisfy the Article 37 LFT requirement.

Job Position and Functions: The specific job title (puesto) and a precise description of duties under Article 25 Section IV LFT. Where the worker is substituting a named employee, the position title must match the position occupied by the absent worker to demonstrate legitimate substitution.

Work Location: The address(es) where services will be provided under Article 25 Section V LFT. Remote or telework arrangements require a complementary agreement under Articles 330-A through 330-K LFT.

Salary and Integrated Daily Wage: The base daily salary (salario diario base) and the Salario Diario Integrado (SDI) calculated under Article 84 LFT. The SDI includes base wage plus proportional daily values of aguinaldo (minimum 15 days under Article 87 LFT) and prima vacacional (25% under Article 80 LFT). The salary must meet or exceed the Salario Mínimo General set annually by CONASAMI — $278.80 MXN per day for the general zone and $419.88 MXN per day for the Zona Libre de la Frontera Norte (ZLFN) in 2025.

Mandatory Benefits: All benefits under Article 123 of the Constitución Política — aguinaldo (Article 87 LFT), vacaciones and prima vacacional (Articles 76–80 LFT), PTU (Articles 117–131 LFT), IMSS coverage (Ley del Seguro Social), and INFONAVIT contributions (Ley del INFONAVIT Article 29). Proportional aguinaldo must be paid at the end of the fixed term if the contract does not span a full calendar year under Article 87 LFT.

No-Automatic-Renewal Clause: The contract should explicitly state that it does not renew automatically at the end of the fixed term and that the parties must execute a new agreement if the employment relationship is to continue, to prevent the Article 39 LFT automatic conversion to indefinite employment.

Data Protection Notice: An aviso de privacidad under Article 15 of the Ley Federal de Protección de Datos Personales en Posesión de los Particulares (LFPDPPP, published in the DOF on 5 July 2010), informing the worker of the processing of personal data for HR, payroll, IMSS, INFONAVIT, and SAT compliance purposes, and the employee's ARCO rights (access, rectification, cancellation, objection) exercisable through the Instituto Nacional de Transparencia, Acceso a la Información y Protección de Datos Personales (INAI).

Workday Type and Schedule: The type of workday (diurna, nocturna, or mixta) under Article 60 LFT, with maximum hours (8, 7, or 7.5 respectively), the agreed daily schedule, and the designated weekly rest day under Article 69 LFT.

Governing Law and Dispute Resolution: Statement that the contract is governed by the Ley Federal del Trabajo and that all disputes not resolved through mandatory conciliation at the Centro Federal de Conciliación y Registro Laboral (CFCRL) or the corresponding state conciliation centre will be submitted to the competent Tribunal Laboral under the 2019 reforma laboral.

Forms-legal.com provides this Fixed-Term Employment Contract Mexico template as a practical starting point. Every fixed-term contract should be reviewed by a licensed Licenciado en Derecho or abogado laboralista before execution, particularly to confirm that the specific factual justification meets the Article 37 LFT standard and that the contract will survive reclassification scrutiny by the Tribunales Laborales or the STPS Inspección del Trabajo.