Employment Liability Insurance Is a Right in Mexico

Social Security in Mexico is a fundamental right. It ensures access to health care, medical assistance, protection of livelihoods and necessary social services for individual well-being.

Social Security consists of two regimes: mandatory and voluntary. The mandatory regime is compulsory and applies to those in formal employment—as well as various public sectors—and their families. This regime, outlined in the Social Security Law, encompasses five types of insurance, namely:

• Labor risks.
• Illness and maternity.
• Disability and life.
• Retirement, old-age severance and elderly benefits.
• Nurseries and other social benefits.

Labor risk insurance is fully covered by employers. It provides financial and in-kind benefits for incapacity or death of a worker due to labor risks, which are divided into two categories:

• Work accidents include any bodily injury or functional impairment—whether immediate or subsequent—or death occurring suddenly during or because of work. This applies regardless of the location or time of the accident, including during travel between home and the workplace.
• Professional or occupational diseases encompass any pathological condition resulting from continued exposure to a cause originating or motivated by work, or the environment in which the worker is obliged to provide services, as well as work-related diseases outlined in the Federal Labor Law.

When employers first obtain their Employer Registration with the Mexican Social Security Institute, they must determine the premium that they will pay for labor risk insurance. To do so, they must identify their principal business activity in the catalog provided by the Social Security regulations and determine the applicable class of premium to be paid for their insurance contributions.

As a general rule, once the premium for a full calendar year has been quoted, employers must annually submit their accident rate statement no later than the last day of February of the following year to determine the premium for their insurance contributions for the next year.

Takeaway for Employers

Labor risk insurance is a vital component of Mexico’s Social Security system and a crucial safeguard for workers and their families. By providing comprehensive coverage for work-related accidents and occupational diseases, this insurance ensures financial and in-kind benefits in times of need and promotes a culture of safety and well-being in the workplace.

Daniela Hidalgo Martínez and Santiago Villanueva Durán are attorneys with Basham, an Ius Laboris member firm, in Mexico City. © 2024 Basham. All rights reserved. Reposted with permission of Lexology.