Mexico Final Settlement: Rules Explained

A finiquito in Mexico is the final settlement of everything the worker has already earned when employment ends, whatever the reason for the ending. It is always owed: on resignation, on justified dismissal, on unjustified dismissal, and on the end of a fixed-term contract. It is not a bonus and not a favour. It is the closing of the account between employer and worker.

To check your own settlement, use the Mexico finiquito tool, which keeps the finiquito lines and the dismissal compensation lines apart.

Finiquito is not liquidación

Many English guides use "finiquito" for the whole termination payment, including dismissal compensation. Mexican law keeps the two apart. The finiquito pays what you earned: unpaid salary, prorated aguinaldo, proportional vacation, prima vacacional, and pending prior-years vacation. The liquidación pays compensation for an unlawful ending: the 90-day indemnity, the 20-days payment where it applies, and prima de antigüedad.

If you resign, your employer owes you the finiquito only. If you are dismissed without a justified, properly notified cause, you are owed the finiquito plus the liquidación. Any guide that promises the 90-day indemnity to a worker who resigns is wrong. The finiquito is calculated on base daily salary, which is monthly salary divided by 30. The 90-day and 20-day indemnities use the Salario Diario Integrado, or SDI, while prima de antigüedad uses base daily salary capped at twice the minimum wage.

How the finiquito is calculated

Unpaid salary equals unpaid days times daily salary. Aguinaldo, the Christmas bonus, equals aguinaldo days times days worked in the calendar year divided by 365 times daily salary. The legal minimum is 15 days of salary per year, paid in cash by 20 December. A worker who leaves mid-year receives the proportional part for the days worked in that calendar year.

Proportional vacation equals the vacation entitlement of the current cycle times days since the last period end divided by 365 times daily salary, minus vacation days already taken in the current cycle. Pending vacation from prior years is paid in full, not prorated. Prima vacacional, the vacation premium, equals 25% of the vacation pay, proportional plus pending. This is a legal minimum under Article 80. Contracts may grant more. Vacation entitlement rose under the "vacaciones dignas" reform in force since 1 January 2023, under Article 76: one year, 12 days; two years, 14 days; three years, 16 days; four years, 18 days; five years, 20 days; six to ten years, 22 days; 11 to 15 years, 24 days; 16 to 20 years, 26 days; 21 to 25 years, 28 days; 26 to 30 years, 30 days; and 31 to 35 years, 32 days. At least 12 days must be taken consecutively, under Article 78. While employment lasts, vacation is taken, not cashed out. It is only paid in the finiquito if it is pending.

The SDI and the liquidación

On unjustified dismissal or employer-attributable termination, under Article 51, three further amounts are added. The 90-day indemnity, under Article 48, is 90 days of SDI. The 20 days per year payment is 20 days of SDI per year. Strictly, this applies in employer-attributable termination and refusal to reinstate, under Articles 50-II and 52. In negotiation practice it is used as a reference for settlement. That is why it is shown as a toggle, default off: turning it on for every unjustified dismissal would overstate the strict legal minimum. Prima de antigüedad, under Article 162, is 12 days per year, but the daily rate is capped at twice the applicable minimum wage. The cap applies only to the prima, never to the 90-day or 20-day indemnities, which use uncapped SDI. Eligibility covers dismissal with or without just cause at any tenure, employer-attributable termination, voluntary separation after 15 or more years, and death, disability or retirement cases. The "15 years only" condition applies to plain voluntary resignation only. In 2026, the minimum wage is 315.04 pesos per day in the General zone, with a prima cap of 630.08 pesos, and 440.87 pesos in the Northern Border Free Zone, with a prima cap of 881.74 pesos. Mexico has no statutory notice period: severance replaces notice. A justified dismissal still requires prompt written notice stating the Article 47 cause. Failure to notify presumes the dismissal was unjustified.

A worked example and tax

Example one is resignation, mid-year, finiquito only. Monthly salary is 15,000 pesos, so daily salary is 500 pesos. The worker was hired 1 January 2024 and resigns 30 June 2026, after 2.5 years, in the third cycle, with an entitlement of 16 days. Days worked in 2026 total 181. Resignation under 15 years means no prima de antigüedad, no 90 days and no 20 days. Proportional vacation is 3,967.12 pesos. Prima vacacional is 991.78 pesos. Prorated aguinaldo is 3,719.18 pesos. The finiquito total is 8,678.08 pesos.

The total is gross. ISR withholding is estimated separately by the employer under LISR Article 96, which works on cumulative income, so a guide cannot compute net pay honestly. What can be shown exactly is the exempt and taxable split. In 2026, aguinaldo is exempt up to 30 UMA, which is 3,519.30 pesos, prima vacacional up to 15 UMA, which is 1,759.65 pesos, and indemnity plus prima de antigüedad up to 90 UMA per year of service, which is 10,557.90 pesos per year. Only the excess is taxable. The 2026 UMA is 117.31 pesos per day from 1 February 2026, from INEGI. In January 2026 the 2025 UMA of 113.14 pesos still applied. In example one, aguinaldo against the 30-UMA exemption leaves only 199.88 pesos taxable, and prima vacacional is fully within the 15-UMA exemption.

Check your own settlement with the Mexico finiquito tool. See all guides for the country on the Mexico page, and browse more guides on the Calcotia blog.