Guide to employment, payroll and benefits in

Mexico

Rivermate offers complete payroll, benefits and compliance services for

Mexico

01. Overview

Last updated: 

August 19, 2021

Currency
Mexican Peso
Capital
Mexico City
Ease of doing business
72.4
Language
Spanish
Population
128932753
GDP growth
2.04%

02. Grow your team in

Mexico

with Rivermate

Payroll, benefits, taxes, and compliance can be difficult to manage in

Mexico

, particularly if you don't have established local relationships. You can hire employees in

Mexico

effectively, conveniently, and in full compliance with all relevant labor laws using Rivermate's global employment solution. We handle the responsibilities and legal risks associated with foreign employment so you can concentrate on growing your company.

03. Summary

Mexico is a nation in southern North America that is officially known as the United Mexican States. The United States borders it on the north; the Pacific Ocean on the south and west; Guatemala, Belize, and the Caribbean Sea on the southeast; and the Gulf of Mexico on the east. Mexico is the world's 13th-largest country by area, with approximately 126,014,024 inhabitants and the most Spanish-speakers. It occupies 1,972,550 square kilometers, making it the world's 13th-largest country by area. Mexico is a federation made up of 31 states and Mexico City, the country's capital and largest city. Guadalajara, Monterrey, Puebla, Toluca, Tijuana, Ciudad Juárez, and León are among the other major cities. Pre-Columbian Mexico dates back to 8,000 BC and is considered one of the six cradles of civilization. It was home to many advanced Mesoamerican cultures, most notably the Maya and Aztecs. From its base in Mexico City, the Spanish Empire invaded and colonized the area in 1521, founding the colony of New Spain. The Catholic Church was instrumental in the propagation of Christianity and the Spanish language, as well as the preservation of indigenous cultures. Spanish native peoples were extensively exploited in order to mine rich reserves of precious metals, which helped to cement Spain's position as a major world power for the next three centuries. Mexico's early history as a nation state was marked by political and social upheaval, as a result of a convergence of indigenous and European customs. This led to the successful Mexican War of Independence against Spain in 1821. In the mid-nineteenth century, the Texas Revolution and the Mexican–American War resulted in massive territorial defeats for the United States. The Constitution of 1857 enshrined newly implemented reforms that provided rights to indigenous peoples and limited the influence of the military and the church. This sparked the Reformation War and French invasion, which saw Maximilian Habsburg crowned Emperor against republican forces led by Benito Juárez. Instability and the dictatorship of Porfirio Daz, who tried to modernize Mexico and restore order, marked the following decades. The decade-long Mexican Revolution in 1910 ended the Porfiriato era, and the triumphant Constitutionalist party drafted a new 1917 Constitution, which is still in force today. The revolutionary generals governed as a succession of presidents until Alvaro Obregón's assassination in 1928, which prompted the establishment of the Institutional Revolutionary Party the following year, making Mexico a de facto one-party state until 2000.Mexico is a developing country, ranking 74th on the Human Development Index, but it has the world's 15th-largest economy by nominal GDP and the world's 15th-largest economy by nominal GDP.

04. Public holidays

05. Types of leave

Paid time off

Mandatory Vacations:1 year seniority - 6 days2 years seniority - 8 days3 years seniority - 10 days4 years seniority - 12 days5 to 9 years seniority - 14 days10 years or above – additional 2 days per 5 years.A no carryover policy is imposed in Mexico.

Public holidays

Mexico recognizes eight public holidays.

Sick days

No minimum required by law.

Maternity leave

Mothers are entitled to up to three months of leave fully paid by social security.

Paternity leave

Fathers are entitled to one week of leave fully paid by the employer.

Parental leave

Parental leave in Mexico is not mandatory. However, private companies can choose to impose this.

Other leave

06. Employment termination

Termination process

Although no formal process is required, it is encouraged that the termination be formalized before the conciliation and arbitration court.

Notice period

No notice period for termination is required.

Severance pay

If the resignation is voluntary, the employer is required to pay the employee all accrued benefits. If an employee has at least 15 years of service, he or she is entitled to 12 days' pay for each year worked. Employers must pay all benefits due to employees who are terminated for cause. The employer will also entitle 12 days of pay for each year worked by the employee. Severance pay will equal three months' salary, 20 days for each year of service, and a seniority bonus of 12 days per year of service for terminations without cause. Additionally, the employee will be compensated for lost wages from the date of termination to the date on which the employer complies with the Labor Board's decision.

Probation period

Probationary periods are optional in Mexico, but the common practice is 3 months.

07. Working hours

General

In general, office jobs operate from 8:00 a.m. to 6:00 p.m., although working hours have increased in recent years and frequently extend until 7:00 p.m. or later. It's worth noting that in Mexico, lunch breaks range from one hour for regular workers to three hours for executives. With the advent of the modern working era, the cultural tradition of a "Siesta" became extinct.

Overtime

Employees earning minimum wage may work up to 9 hours per week without being paid. The next nine hours will be compensated at a rate of 200 percent of salary, with any additional hours compensated at a rate of 300 percent.

Employees earning more than the minimum wage are exempt from overtime pay for 50% of the hours worked per week, up to a maximum of five minimum wage hours per week. The first nine hours will be compensated at a rate of 200 percent, and subsequent hours at a rate of 300 percent.

08. Minimum wage

General

The minimum wage is 141.70 MXN per day. However, the minimum wage in the Free Economic Zone of the Northern Border is different and is set at 213.39 MXM per day.

09. Employee benefits

General

The Mexican Social Security Institute (Instituto Mexicano del Seguro Social, IMSS), a federal agency in Mexico, requires all workers to have access to public health care. However, given some of the drawbacks of the public health care system, such as long wait periods to visit a doctor or specialist, a scarcity of physicians, a lack of flexibility, and so on, many companies provide their workers supplementary private medical insurance.

As part of their employment compensation, several businesses provide their workers with a private insurance plan. Despite the fact that fewer than 3% of Mexicans have private medical insurance, private medical services account for 52% of overall medical expenditures in the nation. Private insurance is often chosen since it covers more costly procedures.

Because the statutory benefits in Mexico are very generous, companies seldom provide many extra perks. Flexible work hours are a typical perk, and job sharing and telecommuting opportunities are often provided. Employers may provide extra advantages such as supplementary contributions to retirement savings, reallocation allowances for foreigners, and Life Insurance on occasion.

10. Why Rivermate as your Employer of Record / PEO?

Establishing an entity in

Mexico

to hire a team takes time, money, and effort. The labor law in

Mexico

has strong worker employment protection, requiring great attention to details and a thorough awareness of local best practices. Rivermate makes expanding into

Mexico

simple and effortless. We can assist you with hiring your preferred talent, managing HR and payroll, and ensuring compliance with local legislation without the hassle of establishing a foreign branch office or subsidiary. Our PEO and Global Employer of Record solutions in

Mexico

give you peace of mind so you can focus on running your business.

Please contact us if you'd like to learn more about how Rivermate can help you hire employees in

Mexico

via our Employer of Record / PEO solution.

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