Mexico Employer of Record

Mexico Employer of Record
If a lack of speed or local expertise are among your top concerns when expanding to or employing workers in Mexico, an employer of record may be the best option for achieving your global growth objectives. An employer of record, sometimes known as an international PEO, enables you to quickly hire and onboard workers in Mexico―often in as little as two weeks―without having to take on the cost and risk of establishing a local entity. Learn about the hiring, employment, payroll and benefits requirements for workers in Mexico and how our employer of record service, Global Employment Outsourcing (GEO), and local HR experts can help you manage your international employment needs.

Hiring in Mexico

Employment relations are regulated by the Mexican Constitution of 1917 and the Federal Labor Law, which address work hours, minimum wage, discrimination, workplace health and safety, and unions.

Although the Labor Law is the legal standard for employer activity in Mexico, the country continues to adjust its labor laws to be more accommodating to all businesses. One major addition to the country’s labor statutes is a 2017 initiative from the Mexico Labor Department that created a new digital-based system that enables companies to self-report regulatory activities to create a more transparent compliance environment.

Related to transparency in employment is the requirement that all employees receive a written contract with clear stipulations of all labor terms and conditions.  

As your employer of record and PEO in Mexico, we can ensure that every contract, for every worker, meets all requirements. We can also provide you with guidance about cultural norms and hiring best practices and keep you up-to-date with employment regulations as they change.

Employment contracts in Mexico

As you look to hire employees in Mexico, here are some common regulations you’ll need to know to create a compliant contract, as well as how an employer of record and PEO can provide support for your unique HR needs. Working hours Although Mexican employment contracts spell out employees’ specific working hours, a workweek may not exceed 48 hours. Employees must receive one fully paid day off for each six days of work. Mexican labor law establishes the following maximum weekly work shifts:
  • Day shifts: Eight hours between 6 a.m. and 8 p.m., equivalent to 48 hours per week
  • Night shifts: Seven hours between 8 p.m. and 6 a.m., equivalent to 42 hours per week
  • Mixed shifts: Seven and a half hours divided between the day and night, equivalent to 42 hours per week
Compensation As you consider the appropriate salary to offer new employees, keep in mind:
  • Mexico’s standard minimum wage is 141.70 pesos per day
  • Along the Northern Border Free Zone, or Zona Libre de la Frontera Norte, which includes the state of Baja California, as well as the northern parts of Chihuahua, Coahuila, Nuevo Leon, Sonora and Tamaulipas, minimum wage is 185.56 pesos per day
  • Manual laborers must be paid at least weekly, and other workers must be paid at least every two weeks
  • Employees are entitled to triple their wages for the day if they are required to work on their rest day, and employees who work on Sunday must receive an additional 25% of their wages
  • Overtime cannot exceed three hours a day or three times a week, and requires double pay for the first nine hours a week and triple for all hours after that
As your employer of record in Mexico, we can provide you with resources and insights about employee compensation, so you are better equipped to make a competitive employment offer. Bonuses Employers in Mexico are required to pay a Christmas bonus, known locally as el aguinaldo, by December 20 of each year. This mandatory bonus for employees who have worked for a company for at least a year is equivalent to 15 days of regular wages. Employees who have worked less than a year receive a prorated bonus. Additionally, under the Federal Labor Law, workers in Mexico—excluding executive officers and general managers—are entitled to a share of their employer’s profits. Probationary period If a Mexican employment contract is for an indefinite term or for a defined term over 180 days, an employer may include a 30-day trial period for new employees. The employee must agree to the trial period, however, and it must be included in the written employment contract. The trial period may be extended to 180 days for management positions. The law also permits an initial training period of up to three months, or up to six months for directors, managers and employees performing technical and professional activities. After the trial period or initial training period (which may not be combined), the employer may terminate an employee without severance if it determines the individual does not have the skills needed for the job. Termination and severance Under the Federal Labor Law, employers in Mexico may terminate employees for just cause, including:
  • Misrepresentation of job qualifications, dishonesty or insubordination
  • Threats, acts of violence or sexual harassment
  • Intentional damage to an employer’s property or serious damage to an employer’s property through negligence
  • Absence from work more than three times in 30 days without permission or cause
  • Compromising the safety of the workplace
  • Revealing trade secrets or other confidential information
  • Failure to follow safety procedures
  • Coming to work drunk or under the influence of nonprescription drugs
  • Being sentenced to prison
Workers must be notified in writing of the cause for dismissal for it to be considered justified, and if an employer fails to dismiss an employee within one month of the event that precipitated just cause, the dismissal is not valid. Employees in Mexico who are dismissed for cause are entitled to all wages earned and benefits accrued. Employees dismissed without cause are entitled to severance pay equal to three months of regular pay, plus 20 days of daily pay per year of service, plus a seniority premium equal to 12 days of pay per year of service, plus all benefits due. As your employer of record in Mexico, we can work with you to quickly handle the unforeseen event of an employee termination, providing legal guidance and a personalized process that ensures you stay out of labor court.

Employee benefits and paid leave in Mexico

When negotiating terms of an employment contract with a candidate in Mexico, here are some of the statutory benefits and paid leave requirements to keep in mind, as well as how an employer of record can support your company’s benefits strategy.

Maternity leave
Pregnant employees in Mexico are entitled to paid maternity leave for 42 days before giving birth and 42 days after birth. If the baby has a disability or requires hospitalization, the postpartum leave can be extended by two weeks. Additionally, the employee may transfer up to four weeks of the pre-birth leave to postpartum leave.

Employees in Mexico are entitled to twelve paid vacation days after a year with a company. Paid vacation increases by two days each subsequent year of service. After five years, when vacation reaches 14 days, employees are entitled to two additional days for every five years of employment.

Vacation pay is equal to 125% of regular salary.

Employees in Mexico may not receive compensation in lieu of vacation leave.

Eight holidays are observed nationwide:

  • New Year’s Day
  • Constitution Day
  • Benito Juarez Day
  • International Labor Day
  • Independence Day
  • Revolution Day
  • Presidential Inauguration Day (every six years)
  • Christmas Day

Although many businesses and labor contracts observe additional days for religious and national celebrations, employees are not entitled to these days off with pay.

If employees are required to work on a national holiday, they are paid triple their daily wages.

Sick leave
Employees in Mexico who are unable to work because of an injury or illness not related to work are eligible for paid sick leave, providing they have paid into the social security system for four weeks before the condition developed. Sick leave is paid at 60% of an employee’s regular wage from the fourth day of the illness, up to 52 weeks (and may be extended for another 52 weeks).

Health coverage
Healthcare coverage for employees in Mexico is managed by the Instituto Mexicano del Seguro Social (IMSS), or the Mexican Social Security Institute. Employees and employers share the health care contributions to the IMSS.

As your employer of record in Mexico, we may be able to provide optional supplementary medical insurance coverage for professionals and their dependents at a more cost-effective rate.

Additional benefits
In addition to medical care, the Mexican social security system funds numerous benefits, such as workers’ compensation, retirement pensions, disability payments and unemployment compensation.

Employees and employers are both required to contribute.

Employer social costs will cover a large portion of employee benefits in Mexico, but we can consult with you about supplemental coverage options, such as additional pension contributions or life insurance, if needed.

Employee onboarding with an employer of record in Mexico

We write and validate all local employment contracts, streamlining the onboarding process for you and your Mexican employees—all you have to do is provide relevant information and review and approve the employment agreement. As your employer of record in Mexico, we will:
  • Schedule a welcome call to discuss HR and employment information for Mexico, as well as answer any questions
  • Prepare a customized employment contract in English and in Spanish (or other local language)
  • Share the employment contract and benefits information with the new employee for signature and review
  • Gather tax and banking information from the employee to set up payroll
  • Provide a local point of contact to the employee to answer any questions regarding their employment, local HR or payroll
The entire onboarding process for the employee is often completed in as little as two weeks.

Partner with Safeguard Global as your employer of record and PEO in Mexico

With over a decade of service, we are the longest-serving employer of record and PEO provider in the international market. Organizations around the world rely on Global Employment Outsourcing (GEO) to expand and hire in over 179 countries around the world, quickly and compliantly. We’ve seen just about every global employment circumstance imaginable—and with our extensive knowledge of local law and culture, we know what it takes to get employment right in Mexico. We provide written contracts in the local language, salaries in the local currency and HR support in your employees’ time zone. Additionally, as a global payroll provider we support payroll administration—including payments, filings and other calculations—in more than 150 countries and can accommodate the payroll outsourcing needs of any size organization. Whether you’re looking to hire as part of a strategic expansion or to meet specific talent needs, our global solutions advisors can walk you through your international hiring options so you can make the right choice for your organization. Contact us today.

The information provided on or through this website is for informational purposes only and does not constitute legal advice. Safeguard Global expressly disclaims any liability with respect to warranty or representation concerning the information contained herein, including the lost essence, interpretation, accuracy and/or completeness of the information in transit and language translation.

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