What are the different mode of compensation?

What are the different mode of compensation?

Types of civil indemnity

One of the most frequent doubts in the labor world, both for bosses and workers. It is to determine what is workers’ compensation? This is a compensation received by the employee, but in which cases does it apply? What types are there? How should this be managed by HR?

The first thing to say is that not all severance pay is related to a dismissal. It is usual to think that this term refers to the unjustified termination of an employment contract. However, we will see that this is not always the case.

On the other hand, it is essential to understand that this is one of the key steps in Human Resources. Taking into account that, many times, compensating an employee is due to a lack of planning, carelessness or simply ignorance. We will also address this point in depth.

Undoubtedly, determining what is compensation is the first step to avoid mistakes that can cost your company dearly. For this reason, below we will explain everything you need to know about workers’ compensation in Mexico.

Constitutional indemnity

The temporary employment contract shall be formalized in writing; it may be verbal when in the situation of temporary employment due to circumstances of production, the duration of the contract is less than four weeks and full time.

There are also situations of temporary employment in the case of convicted workers in penitentiary institutions and in the case of minors and young people in centers for minors subject to internment measures.

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Temporary or fixed-term contracts may in some cases be beneficiaries of hiring incentives, when the requirements of the applicable regulations are met in each case, depending on the characteristics of the temporary situation, the company, the worker, the working day or the duration.

The workers who in a period of thirty months have been contracted for a period of more than twenty-four months, with or without solution of continuity, for the same or different job with the same company or group of companies, by means of two or more temporary contracts, either directly or through their provision by temporary employment companies, with the same or different contractual modalities of determined duration, will acquire the condition of permanent workers, except for the labor relations of interim and relief.

Types of severance pay

Dismissal is a very unpleasant situation, both for the dismissed employee and for the human resources manager who communicates the dismissal decision. The human resources manager must know how to manage these feelings correctly at the moment of communicating the dismissal to the employee. In addition, he/she must be perfectly aware of the whole dismissal process, because if it is not carried out correctly, it can pose a risk for the company.

This dismissal is regulated in Articles 52 and 53 of the Workers’ Statute. The causes of the objective dismissal can be divided into two groups: Causes attributable to the company, are those that refer to the company’s situation as a result of the dismissal:

Disciplinary dismissal is regulated in Article 54 of the Workers’ Statute, although it is necessary to take into account the collective bargaining agreement that regulates each sector, because the employee’s behaviors that are considered very serious misconduct and that can give rise to a sanction and disciplinary dismissal are usually defined. The causes that lead to this dismissal are:

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Workmen’s Compensation Example

However, the new formula for calculating severance pay means that only workers with an indefinite-term contract who, as of February 12, 2012 (entry into force of the labor reform) had accumulated severance pay that exceeds the equivalent of 24 monthly payments, retain an exclusive compensation of 45 days.

Once this double calculation has been made, the resulting severance payments are added together. But there is an exception: workers who have obtained in the first tranche an amount of compensation equivalent to more than 24 monthly payments. In this case, they would only receive the amount generated in the first tranche.