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Mexico Peso is the official currency of Mexico. Its currency symbol is $, MXN.
Mexico City the city’s capital and a state in itself. Densely populated, it is known for its Templo Mayor.
Spanish is the official language of Mexico, which is spoken by 90% of the people.
The population of Mexico is 130.3 million (based on World Bank numbers as of 2021).
Salaries in Mexico are generally paid on a bi-weekly basis around the 15th and last working day of the month.
To start growing your team in Mexico, you must establish a local entity- including an account with a local bank, a local office and an address registered as a subsidiary. This
allows you to manage payroll, tax, benefits and compliance for your employees, but can take several months.
Emerald can hire and payroll your workers, quickly and compliantly with their ready to go entity. Make growing your team simple with Emerald as a global partner.
Emerald can hire and payroll your workers, quickly and compliantly with their ready to go entity. Make growing your team simple with Emerald as a global partner.
When considering international expansion, Mexico offers many benefits for businesses. The country has a reputation of being a popular destination for expats and
international investors but has become even more attractive to businesses in more recent years. Mexico has benefitted from recent economic growth due to its trade
openness and connections to the US. Its geographical location allows US organisations to gain significant cost savings and shipping time reduction.
Mexico is well known for its low labour costs, making the county extremely competitive by offering a high wage gap for its workers. The Mexican workforce is highly skilled
across the engineering industry. The country produces over 130,000 graduates for the IT Industry and Software Development sector from its 120 universities.
Mexico has also done more to protect companies that choose to invest and start up in the country by signing the USMCA trade agreement.
Mexico has strict contractor regulations to prevent companies from avoiding new tax legislations. For example, in Mexico, a company is required to share 10% of its profits
with its employees. It was previously common for organisations to hire contractors to perform core activities, essentially acting as employees without receiving employee
contributions or benefits like profit sharing. Contractors can now only be used for specialised services like outsourcing HR, data processing, etc.
Labour laws are strict and it is a legal requirement that all employees are provided with health insurance subsidised by the government, as well as housing credits.
Setting up an entity in Mexico is extremely time consuming and requires expert knowledge to ensure compliance with the country‘s tax laws.
Mexico is highly popular for remote workers due to its low cost of living when compared to other countries. It is ranked 8th in the top 50 digital nations list and benefits from
great wifi connectivity and popular time zone preference.
With remote working and hybrid models still increasing, companies are looking for the best places to hire remote talent to save money. For a lot of US and Canadian
organisations, this leads them to Latin America. Being a remote worker in Mexico is extremely rewarding in the benefits received, health insurance and housing credits.
English proficiency is also highly sought after and is rewarded financially.
Start growing your remote workforce now
| Maximum Standard Working Hours | 48 hours per week / 8 hours per day. |
| National Minimum Wage | 172.87 Mexican Peso (MXP) per day. |
| Overtime pay rate | 100% of normal salary. |
| Rest days | Every 6 working days. |
| Break entitlement | 30 minutes per day. |
| Over 48hours Sunday pay rate | 200%. |
| Employer Tax Contributions | 36.1% - 44.73% on top of the employee salary. |
| Social Security Contributions | 24.95% - 33.58% |
| National Housing Fund | 5.00% |
Annual leave: a minimum of 6 days annual leave each year, increasing by two days a year for each year of service.
Disability and life insurance
Sickness and maternity insurance
Work injuries cover
Retirement, Unemployment in Advanced Age and Old Age cover (CEAV)
Health Insurance
A mandatory 13th-month salary payment, known as Aguinaldo, paid by 20th December calculated by 15 days of salary with an additional allowance.
Contracts in Mexico must include:
A contract of employment (Contrato de Trabajo) can be agreed either in written or verbal form. However, it is always best practice for these to be provided in writing.
The contract should include employee personal details, employer details, probation period, contract length (if applicable), salary, workplace location, job title, start date,
standard working hours, holiday entitlement, terms of notice and any other collective agreements (contrato colectivo).
These are two main types of contracts in Mexico. The first is a permanent contract for an undetermined time, where employment exceeds 180 days and a probation period
may be included (Por tiempo indeterminado). The second is a fixed term/temporary contract for a specific work or time (Por tiempo determinado).
There are also seasonal contracts where an employee may not be required all week, month or year, and trial period contracts of 30-180 days, which either party may
terminate at the end of the period with no obligation. Workers can also be recruited for initial training contracts, under which there will be a period for initial training where
an employee will provide services under the direction of the employer, whilst the employee gains the skills or knowledge required. When the training or trial period finishes,
the employment continues for an undetermined period.
Probation periods in Mexico are valid for up to 30 days. This can be extended to up to 180 days for employees in managerial, technical, or professional positions.
Emerald Technology can onboard employees in Mexico within 48 hours.
Restrictive covenants are generally not provided for in Mexican law, although they are not expressly prohibited during an employment relationship. Restrictive covenants have become more common in Mexico as a means to protect the employer’s confidential information and trade secrets, as well as ensuring the companies’ right to loyal competition.
Non-compete clauses and clauses relating to non-solicitation of employees and customers are all recognised and can be enforceable. Restrictive covenants are generally only enforceable during an employment relationship. Post-employment covenants are considered null and void under legislation.
Everyone who works in Mexico is enrolled in the public healthcare sector by their employer, whether they are a citizen or foreign worker. There are two main types of public
health insurance in Mexico: the instituto de Salud para el Bienestar (INSABI) and the Instituto Mexicano del Seguro Social (IMSS).
The INSABI scheme is a health insurance program for the unemployed or those that cannot afford to enrol voluntarily. It offers health services and treatment free of charge.
The IMSS scheme is health insurance for employees working for private companies, applicable for both Mexican citizens and foreign employees. There is also the option
for private healthcare, which many wealthy Mexicans and foreign employees choose. This gives access to private clinics and hospitals with better infrastructure, care
options, and shorter waiting times. English is also more widely spoken in private clinics and hospitals.
Expectant mothers are entitled to 12 weeks’ maternity leave, to be taken six weeks before the expected due date and six weeks after the birth. There is also the option to
request to transfer an extra four weeks of maternity leave to after the birth, so only two weeks are taken before the due date. This would need to be agreed by the
employer in advance. The employer pays 60% of the employee’s salary during their maternity leave and the Mexican Social Security institute covers the remaining 40%.
Fathers are entitled to five days’ paid paternity leave.
An employee is entitled to up to 52 weeks’ sick leave, for which a leave certificate must be submitted by either the IMSS or private doctor. An employee is entitled to 60%
of their regular salary, increasing to 100% if the absence is due to a work-related illness or injury. The employer has the option to pay the difference of 40% so the
employee receives their full salary. The employee will start receiving 60% of their salary after their fourth day of illness. Employees will need to have made at least four
weeks of social security payments before the illness to be eligible for paid sick leave.
As the legal employer, Emerald Technology requires the following employee documents to ensure complete compliance:
Most foreign nationals will need a visa to work in Mexico.
When an employer dismisses an employee it must be with just cause and they must give them notice. The notice period starts from the day after the employer notifies the employee of the termination. Notice must be given in accordance with the following schedule at a minimum:
| Termination: | For an employer to dismiss an employee, a just cause is required in line with Mexican Labour Law, such as intoxication at work, threats or acts of violence, intentional damage to work property, harassment (including sexual harassment) against co-workers, revealing confidential information or secrets from the employer, more than three absences within 30 days without permission or just cause, or refusal to comply with health and safety procedure. |
| Employee notice periods: | The employee may unilaterally terminate the employment contract by providing notice in writing. There is no minimum notice period an employee must provide under law. However, it is common practice that a notice period will be included in the contract of employment. |
| Employer notice periods: | The employer must give written notice stating the conduct or behaviour as reason for dismissal, along with the date(s) this took place. Failure by the employer to provide notice will give the employee grounds to claim for dismissal that was not justified. The employee can then request reinstatement or compensation. |
If an employee is made redundant, they are entitled to a payment based on years of continuous service.
| Under 15 years service | three months’ salary, payment of owed hours worked, 20 days’ salary for each year of service, and any vacation and Christmas bonus accrued at the time of dismissal |
| Over 15 years service | In addition to the above, if an employee has worked for a company for over 15 years, they are entitled to a seniority premium. This is usually equal to 12 days’ salary for each year worked. |
Full-time employees who have been employed for one year are entitled to 6 days annual leave. For each year of service this increases by an additional 2 days. It is common practice that many companies offer their employees more than the legal minimum annual leave. There are 8 public holidays.
January 1st: New Year’s Day
February 7th: Constitution Day
March 14th: Benito Juarez Day
May 1st: Labor Day
September 16th: Independence Day
November 20th: Revolution Day
December 25: Christmas Day
The national minimum wage in Mexico (Salario Minimo) from January 2022 is 172.87 Mexican Peso (MXP) per day. The rate along the free zone of the north border (Zona
Libre de la Frontera Norte or ZLFN) is 260.34 MXP per day.
Standard working hours in Mexico should not exceed 48 hours per week, or 8 hours per day. Overtime hours should not exceed 3 hours per day and three times in a week,
meaning no more than 9 hours overtime each week. Overtime hours are paid at 100% of the normal salary. On Sundays if an employee is working within their 48 hours per
week, they will need to be paid a bonus 25% of their normal salary. If hours exceed the weekly 48 per week for work on a Sunday, then the employee will be paid a 200%
bonus on their Sunday salary.
An employee is entitled to a 30-minute break during a continuous workday. For every 6 days worked an employee is entitled to at least one rest day.
Salaries in Mexico are generally paid on a bi-weekly basis around the 15th and last working day of the month. Employees are also entitled to a vacation bonus which is equivalent to no less than 25% of their regular salary. Additionally, a Christmas bonus of at least 15 days’ salary is to be paid before 20th December.
Bonus:
A mandatory 13th-month salary payment, known as Aguinaldo, paid by 20th December calculated by 15 days of salary with an additional allowance.
Income Tax
The Mexican tax year runs from January to December. It is the employer’s responsibility to ensure taxes are paid from salaries before payments are made to the
employees. The general personal income tax rates are listed below as guidance. Most Mexican states levy a low tax on salaries and other income earned by employees.
This is payable by the employer, for example, Mexico City imposes a 3% payroll tax.
0-7,735: 1.92%
7,735 – 65,651: 6.40%
65,651.07 – 115,375: 10.88%
115,375.90 – 134,119.41: 16%
134,199.41 – 160,577.65: 21.35%
323,862 – 510,451.00: 23.52%
510,451.00 – 974,535.03: 30%
974,535.03 – 1,299,380.04: 32%
1,299,380.04 – 3,898,140.12: 34%
3,898,140.12+: 35%
Similar to other countries, Mexico has strict rules on classifying individual contractors and full-time employees differently. Misclassifying your workers can put your business at risk of fines.
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