Employer Record in Mexico

Basic information

Capital: Ciudad de México

Time zone: GMT+1

Languages:Spanish

Currency code: MXN

Human Resources at a Glance 

Contract Terms

Contracts must be in Spanish and can be bilingual. They must be in writing and signed by both parties.
A contract must include:
– Name
– Start date
– Length of the employment
– Job description
– Termination conditions
– Christmas Bonus
– Beneficiaries, according to article 25 of the Federal Labor Law.

Guidelines Regarding Probation Period/Trial Period

Probation periods help an employer and the employee ensure they’re a hiring match, allowing a company to quickly decide if it’s a fit or the employee to see if the job aligns with their career goals.

Regulations and Rules Regarding Working Hours

Standard working hours are eight hours per day and a maximum of 48 hours per week. The standard workweek is from Monday to Friday if the working week is 40 hours. The extended workweek is 48 hours from Monday to Saturday.

Overtime is paid according to the following rates

Overtime payment is mandatory. Hours outside of the maximum working hours are considered overtime, and there is no maximum of overtime hours per week. For additional hours, employees are paid:

• 200% of the hourly rate, the first eight hours of overtime during a week
• 300% of the hourly rate, overtime hours above the first eight hours

Minimum Wage Requirements

The minimum wage in Mexico depends on the location of the employee:

• – Free Zone of the Northern Frontier (NBFZ) is MXN 312.42/day or 114,029.65/year
• – The rest of the country is MXN 207.44/day or 75,715.65/year
  Please note: Both working and resting days in the year are accounted for in the calculation of minimum wage.

Payroll Cost for Employers

The employer cost is generally estimated at 20.3% of the employee salary.
Monthly Costs

• Social Security IMSS – MXN 643.71
• Local Tax – 3.00%
• Surplus Fee (extra social security cost for special salaries) – 1.10%*
• Occupational risk – 0.50%*
• Retirement and old age – 4.241%*
• Retirement – 2.0%*
• Benefit for disabilities – 0.70%*
• Disablement and Life Insurance – 1.75%*
• Nursery and Social Benefits – 1.0%*
• Medical Expenses – 1.05%*
• Infonavit (mortgage fund) – 5.0%*
  Annual Costs
• Vacation Bonus – 25% of the value obtained by multiplying the employee’s daily salary by their number of vacation days.
• Year End bonus/Christmas Bonus – 15 working days of wages for employees with one year of service, pro-rated for employees with less than 1 year of service
• Profit Sharing – 10% of the company’s profit in the fiscal year distributed among eligible employees
  *These costs are calculated on the employee’s contribution base salary (SBC). The contribution base salary is indicated during the registration of the employee in the Mexican Social Security Institute (IMSS). The contribution base salary is made up of the payments made for the daily quota, bonuses, perceptions, food, housing, bonuses, commissions, benefits in kind, and any other amount granted to the employee for their services.To determine the social security contributions for both the employer and the employee, the days worked or not worked by the employee and the base contribution salary in each period (fortnightly, monthly, or bimonthly) are considered.

Termination

Grounds

Terminations must respect complex rules and the rules of an employee’s employment country. The off-boarding is always handled by the Employer with the primary stakeholders. It may include ad-hoc fees as well as required or recommended steps on specific termination cases.
Terminations in Mexico can be complex. There is no at-will termination for employers, and if the termination is without cause, a mutual agreement must be agreed upon. Compliant terminations include:

• Voluntarily by the employee
• By mutual agreement: end of year bonus, holidays, and severance must be paid
• By the expiration of the contract
• Unilaterally by the employer based on:
  • probation period
  • disciplinary dismissal according to the Labor Code (Article 47 LFT)
    The employee should not be notified when termination is by mutual agreement until the employer has set up the termination process (calculated severance payment, written the termination letter, and informed HR). A termination must be done within 24 hours, including paying the employee.
    The employer will have to notify the employee and request a wet ink signature of the resignation letter provided by the employee the same day. The employer will have 24 hours to pay the employee severance and benefits accrued.

Notice Period

  In Mexico, there is no notice period for terminations, as enforced by law.

Severance compensation

Employees terminated without cause can claim the following severance payments:

• 90 days of salary compensation, including payment of employment benefits
• 20 days of salary for each year of services rendered
• A seniority premium, equal to 12 days salary per year worked, including paid vacation, Christmas bonus, and additional accrued benefits
  An employee dismissed without just cause has the option to be reinstated to his former job instead of receiving the severance payment.

Payment & leave Compensation & Holidays

SalaryPayment

Bimonthly

Payslip Payroll

Including wage calculation, social insurance, tax management, labor contract management, legal compliance and other contents.

Annual Leave

Full-time employees who work for five days per week are entitled to a minimum of 12 days of paid time off (PTO). This entitlement increases annually at a rate of 2 days per year for the first five years up to 20 days; and then 2 days every five years thereafter up to a maximum of 32 days.

Sick Leave

Employees are entitled to paid sick leave for up to 52 weeks, and the Mexican Social Security Institution may grant additional weeks according to the type of illness. This leave is paid at different rates and by different payers depending upon length.

Maternity & Parental Leave

Pregnant employees are entitled to 84 days of paid leave. Leave must start 40 days before the child’s birth and continue without breaks. The employee will receive 100% of their average salary during this period, and Mexican Social Security Institute (IMSS) will be responsible for this pay.

Employees can additionally request rest breaks within the six months after the birth, known as the nursing period. The employee can extend leave and will be unpaid.

In Mexico, no law covers parental leave. However, employees may be entitled to maternity leave and paternity leave.

Tax and Social Security Information

Personal Income Tax

  The individual income tax ranges from 1% to 35%. Income tax is calculated according to progressive rates.

Gross Annual Income	Tax Rate (%)
Up to MXN 7,735.00	1.92%
Up to MXN 65,651.07	6.40%
Up to MXN 115,375.90	10.88%
Up to MXN 134,119.41	16%
Up to MXN 160,577.65	17.92%
Up to MXN 323,862.00	21.36%
Up to MXN 510,451.00	23.52%
Up to MXN 974,535.03	30%
Up to MXN 1,299,380	32%
Up to MXN 3,898,140.12	34%
Over MXN 3,898,140.13	35%

Mexico has a new special regime that if the employee meets the criteria, could lower the income tax called “Regimen Simplificado de Confianza”. However, even though the employee is entitled to this lower tax benefit, they can choose to apply it or continue with the average income tax.

Social security

• National Housing Fund (Infonavit)
• Pension Fund
• Public Health Insurance
• Social Security
• Worker Compensation Accident Insurance
• Private Healthcare – Unisure (optional)
• Private Healthcare – MetLife (optional)
• Private Healthcare – Allianz (optional)

Public Holidays 2024

Holidays	Date
New Year’s Day	1.1
Constitution Day	2.5
Benito Juarez’s Birthday Memorial	3.18
Labour Day	5.1
General Election Day	6.2
Independence Day	9.16
Inauguration Day	10.1
Revolution Day Memorial	11.18
Christmas Day	12.25