Employer of Record in Mexico

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Mexico

Mexico is a country of rich history and vibrant traditions, blending indigenous and Spanish influences. It is home to ancient civilizations like the Maya and Aztecs, with iconic ruins such as Chichen Itza and Teotihuacan. Mexican cuisine, including tacos, guacamole, and mole, is beloved worldwide. Festivals like Día de los Muertos (Day of the Dead) reflect its unique cultural heritage. Mexico’s natural beauty ranges from the beaches of Cancun to the Copper Canyon and the cenotes of the Yucatán Peninsula.

Languages

Spanish

Population

127.5 Million

Capital City

Mexico City

Currency

Mexican Peso (MXN)

Cost of living ranking

60th

VAT (Value Added Tax)

16%

Hiring in

Mexico

Types of Employment Contracts

Employment relationships in Mexico are primarily governed by the Federal Labor Law (FLL). Key points include:
Indefinite-Term Contracts: Standard contracts without a predetermined end date.
Fixed-Term Contracts: Limited to specific durations and permissible only under certain conditions. Such contracts must be in writing and cannot exceed a total of five years.
Seasonal Contracts: Applicable for work tied to specific seasons or periods.

Probationary Period

A standard probationary period is up to 30 days for most positions, extendable to 180 days for managerial roles. During this period, either party can terminate the contract without cause, provided a 15-day notice is given.

Payroll Management in

Mexico

Payroll Frequency

Employees are typically paid on a bi-monthly basis, with payments made on the 15th and the last day of each month.

Minimum Wage

As of 2023, the general minimum wage is set at MXN 207.44 per day, with higher rates applicable in the Free Zone of the Northern Border.

Overtime

The standard workweek is 48 hours. Overtime is compensated at:

200% of the regular rate for the first nine hours.
300% for work done after nine hours or on public holidays.

Mandatory Bonuses

Aguinaldo (Christmas Bonus): Employees are entitled to at least 15 days' salary, payable by December 20 each year.
Vacation Premium: An additional 25% of the salary corresponding to vacation days.

Taxation in

Mexico

Employee Contributions

Social Security (IMSS): Covers healthcare, disability, and retirement benefits.
Retirement Savings (SAR): Mandatory contributions to individual retirement accounts.
Income Tax (ISR): Progressive rates ranging from 1.92% to 35%, depending on income levels.

Employer Contributions

Social Security (IMSS): Approximately 20% to 28% of the employee's salary.
Housing Fund (INFONAVIT): Approximately 5% of the employee's salary.
Payroll Tax (Impuesto Sobre Nómina - ISN): A state tax ranging between 1% and 3% of total compensation.

Leave in

Mexico

Types of Leave in Mexico

Annual Leave

Employees are entitled to a minimum of:
12 days of paid vacation after one year of service.
Increases by two days each subsequent year until reaching 20 days, with further increases every five years.

Sick Leave

Employees are entitled to sick leave for up to 52 weeks, paid at 60% of their regular wage from the fourth day of illness, provided by IMSS.

Maternity Leave

Female employees are entitled to six weeks before and six weeks after childbirth, paid at 100% of their regular wage by IMSS.

Paternity Leave

Male employees are entitled to five working days of paid leave following the birth of a child.

Public Holidays

Mexico observes seven mandatory paid public holidays, with an additional day every six years for the presidential inauguration.

Benefits in

Mexico

Mandatory Benefits

Profit Sharing (PTU): Employers must distribute 10% of their annual pre-tax profits among employees.
Social Security Benefits: Includes healthcare, maternity, disability, life insurance, and retirement pensions.
Housing Fund (INFONAVIT): Provides employees with access to housing loans and related benefits.

Optional Benefits

Employers may offer additional benefits such as meal vouchers, transportation allowances, and supplementary health coverage to attract and retain talent.

Termination in

Mexico

Notice Period

Not required for terminations with just cause. For unjustified dismissals, severance payments apply instead.

Just Cause Termination

Permitted for reasons specified in the FLL, such as misconduct or breach of trust. Employers must provide immediate written notice detailing the cause.

Unjustified Dismissal

If termination lacks just cause, employees are entitled to:

Three months' salary.
Twenty days' salary for each year of service.
A seniority premium of twelve days' salary per year of service, capped at twice the minimum wage.
Accrued benefits including proportional vacation pay, vacation premium, and Aguinaldo.

ON THIS PAGE

Overview

Hiring

Payroll

Taxes

Leave

Benefits

Termination

Types of Employment Contracts

Probationary Period

Payroll Frequency

Minimum Wage

Overtime

Mandatory Bonuses

Employee Contributions

Employer Contributions

Types of Leave in Mexico

Mandatory Benefits

Optional Benefits

Notice Period

Just Cause Termination

Unjustified Dismissal

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