Employee Benefits in Mexico

Bonuses and additional payments

In Mexico, the Federal Labor Law mandates an annual Christmas bonus, known as “Aguinaldo,” equivalent to at least 15 days of an employee’s base salary. This bonus must be paid by December 20 each year, and failure to comply can result in significant fines. The Aguinaldo is a legal obligation for all employers, and the calculation method must be applied uniformly to all eligible employees.

Annual leave

Employees in Mexico are entitled to paid vacation leave after completing one year of service. The statutory entitlement is 12 days per year for first-year employees, increasing by two days each subsequent year until reaching 20 days, with further increments every five years. This leave is fully paid and must be provided within six months after the completion of a full year of service.

Additional leave may be offered as part of an employment contract, though it is not required by law. Many employers offer enhanced leave policies to stay competitive and improve retention.

Employees are also entitled to a vacation premium of at least 25% of their regular salary during the vacation period. Unused statutory leave must be taken within the stipulated period; otherwise, it may be forfeited, depending on company policy.

Sick leave

Personal and sick leave are governed by the Federal Labor Law. Employees are entitled to up to 52 weeks of paid sick leave, with compensation provided by the Mexican Social Security Institute (IMSS) at 60% of the employee's salary, starting from the fourth day of illness. A medical certificate from an IMSS-accredited doctor is required.

Additional benefits

In addition to the above, employers are legally required to provide the following benefits under Mexican labor law:

• Instituto Mexicano del Seguro Social (IMSS): Covers healthcare, maternity, work-related accidents, disabilities, and retirement pensions. Employer contributions range from approximately 15–25% of the employee’s wage, depending on salary level and risk class.
• INFONAVIT: A housing fund that supports employee mortgage loans. Employers contribute 5% of the employee’s salary to the fund.
• Retirement Savings (SAR): Employers contribute 2% of an employee’s salary to the retirement savings system managed through AFORE accounts.
• Profit Sharing (PTU): All employers must distribute 10% of annual taxable income to employees.

Public healthcare through IMSS is available to all insured employees and their dependents, but many companies also offer private insurance or supplemental health plans. As your Employer of Record in Mexico, we can guide you through selecting competitive and compliant benefit packages for your workforce.