How are overtime paid and calculated in Mexico?: What the Federal Labor Law says

Overtime is an important issue for workers and employers in Mexico. It is normal that often. Questions arise about how overtime is paid, how much it should be paid, and when it should be paid. Furthermore, it must be taken into account some variables such as the type of work day, the value of the surcharge and how it is carried out. 

Perhaps you may be overwhelmed by the large amount of information related to it. In the following Ninja Excel article, we will tell you how these questions are addressed and will explain how to calculate overtime in Mexico in accordance with the Federal Labor Law.

Types of Working Hours in Mexico

Before fully understanding what is considered an overtime hour, we must understand the types of workdays in Mexico. The Federal Labor Law establishes three types of working hours in the country. According to article 60 these are:

• daytime which is that between 6 in the morning and 8 at night.

• Night shift which runs between 8 at night and 6 in the morning.

• Meanwhile, the Mixed Day It includes the time periods of daytime and nighttime shifts. The day will be mixed as long as the night period is less than 3 and a half hours. According to the Federal Labor Law, if it includes 3 and a half hours or more, it will be considered a night shift.

Overtime: what does it mean? 

Overtime are all hours that exceed the agreed working day. It is considered overtime when the limit of 8 hours of the daytime shift, 7 hours of the night shift and 7 and a half hours of the mixed shift is exceeded.

In what cases are overtime used?

In accordance with the Federal Labor Law in its article 66, indicates that the work day can be extended due to extraordinary circumstances. However, this same article does not indicate what type of “circumstances” may be extraordinary. Even so, it must be mutually agreed between worker and employer. 

Of course, the article 65 indicates that in cases of “accident or imminent risk in which the life of the worker, his colleagues or the employer, or the existence itself, is in danger.” Overtime can be used, as long as it does not exceed 3 hours a day or is used 3 times in a week.

How should overtime be calculated in Mexico?

To calculate overtime, the value of each hour of work must be taken into account.. For example, the 2023 minimum wage is 207 pesos per day. In addition, it must be considered that there is a 100% surcharge regarding the hourly salary value. If a person works 2 overtime hours of the 9 allowed under the legislation, this would be the result:

Weight value per hour worked: 207 (daily salary) / 8 (hours of daytime work) = 25.87 pesos per hour.

Double overtime calculation: 25.87*2 = 51.75 (overtime value)

Overtime payable = 51.75 * 2 (the working hours after the regular working day)

Result = 103.5 MXN

Result of the total daily salary for that day (including overtime) = 310.5 MXN

Types of Overtime in Mexico

There are differences between types of overtime that can be calculated under LFT legislation. We can divide overtime according to the limit of hours they use.

• Double Overtime: Overtime must be paid double when the agreed working day is exceeded. 

For example, if the worker charges 30 pesos per hour, the cost for each extra hour worked will be 60 pesos. 

• Triple overtime: This overtime will be paid triple when the limit of 3 overtime hours per workday is exceeded and this resource is used more than 3 times per week. 

For example, if the worker performs four hours of overtime work, that fourth hour must be paid with a 200% surcharge. That is, the cost per extra hour in our previous case is 90 pesos per hour. 

Calculate Overtime with Excel

Excel is your best ally if you need to calculate overtime. To calculate overtime with Excel, you can use the formula “=EXTRAS_HOURS (salary, hours, percentage)”. 

With this formula, the total gross salary, the overtime hours worked and the surcharge percentage are considered. As we said before, a recharge of 100% in double overtime and 200% in triple overtime should be considered. 

Frequent questions

 How is overtime pay calculated in Mexico?

It is calculated considering the type of working day (daytime, nighttime or mixed), the daily salary and the value of work per hour. In addition, the surcharge of 100% must be added if it is a double overtime hour or 200% if it is a triple overtime hour.

How is double and triple overtime paid?

It is included in the payroll calculation and in the gross salary. 

What does the Federal Labor Law say about overtime in Mexico?

Article 66 authorizes extending the working day for extraordinary reasons contemplated by legislation. You can review the Federal Labor Law in detail here. 

What happens if I work more than 3 hours overtime?

It must be paid triple, that is, multiply by three the hourly value of daily work. 

Conclusions

In summary, Overtime is an important part of the workday and payroll in Mexico. Therefore, it is necessary for both workers and employers to be aware of the corresponding laws and regulations. Calculating overtime correctly is crucial to avoid conflicts with the Conciliation and Arbitration Board. Therefore, every company must ensure that the salaries corresponding to its workers are fully compensated.