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Capital City
Mexico City
Currency
Mexican Pesos
(
$
)
Timezone
GMT -5/6/7/8
Payroll Frequency
Bi-monthly
Tax Year
1 January- 31 December
Employer Tax
36.1% – 44.73%
Languages
Spanish
Capital City
Mexico City
Currency
Mexican Pesos
(
$
)
Timezone
GMT -5/6/7/8
Payroll Frequency
Bi-monthly
Tax Year
1 January- 31 December
Employer Tax
36.1% – 44.73%
Languages
Spanish
Mexico boasts a technically skilled labor force, making it an attractive destination for businesses seeking talent with diverse educational backgrounds and expertise. Mexico also exhibits high talent retention rates, leading to the formation of workable teams with long tenures, providing stability and continuity to businesses.
Hiring employees in Mexico can result in significant cost savings, with potential savings of more than 60% on hiring costs for skills of the same quality.
Despite potential language differences, Mexico offers cultural and language compatibility advantages. Learning Spanish and hiring Spanish-speaking employees can foster smoother communication and easier collaboration.
Understanding and respecting Mexican culture is crucial for successful hiring and fostering positive work relationships. The friendly and personal work culture may differ from practices in other countries.
Businesses can only operate smoothly in Mexico if they comply with local labor laws including drafting compliant employment contract agreements and meeting taxation and payroll obligations. Learn more about the employment laws and regulations in Mexico below, to avoid any compliance issues.
Mexico requires employment contracts, and at-will employment is not permitted. Employers should draft detailed contracts, considering factors such as:
We can help you get a new employee started in Mexico quickly, with a minimum onboarding time of just 1-2 working days. The timeline starts once the employee submits all required information onto the Playroll platform and completes any necessary local authority registrations.
For non-nationals, the Right to Work assessment (if applicable) may add up to three extra days. Additional time may be needed for follow-ups on this assessment. Please note, payroll cut-off dates can impact the actual start date. Playroll's payroll cut-off date is the 10th of each month unless otherwise specified.
In Mexico, there is a minimum probation period of 30 days. This may be extended for management positions and specialised roles.
In Mexico, employers must adhere to strict labor laws regulating working hours and overtime to ensure compliance and protect employee rights. Standard working hours vary based on shift type: day shifts allow up to 48 hours per week, night shifts up to 42 hours, and mixed shifts up to 45 hours. Employees are entitled to rest breaks, including a minimum 30-minute meal break for shifts exceeding six hours. Overtime is permitted but limited to a maximum of 9 hours per week, with strict penalties for violations, including fines and legal consequences.
Overtime compensation in Mexico follows a structured system to discourage excessive work hours. Employees working up to 9 hours of overtime per week receive double their regular hourly wage, while any hours beyond this threshold are paid at triple the regular rate. Employers who fail to comply with these regulations may face severe penalties, including imprisonment in cases of excessive labor exploitation.
The minimum wage for employees in Mexico is typically 62.98 pesos per hour, amounting to 12,596 pesos per month for a typical 40 hour work week.
In 2025, Mexico's minimum wage saw a 12% increase, raising the general minimum wage to 278.80 pesos per day, while the Northern Border Free Zone rate increased to 419.88 pesos per day. This adjustment aims to improve workers' purchasing power and address inflation. Employers must comply with these updated wage rates, ensuring fair compensation for all employees, including full-time, part-time, interns, and expatriates. Certain professions have professional minimum wages that exceed the general rate, particularly in specialized industries.
The National Minimum Wage Commission (CONASAMI) conducts annual reviews to assess economic conditions and adjust wages accordingly. Employers should also be aware of industry-specific variations, government regulations, and the impact of inflation on wage policies. While the minimum wage establishes a legal baseline, discussions continue regarding whether it adequately meets living wage standards. Ensuring compliance with these regulations is essential for businesses operating in Mexico to avoid legal risks and maintain fair labor practices.
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1 January- 31 December is the 12-month accounting period that businesses in Mexico use for financial and tax reporting purposes.
The payroll cycle in Mexico is usually bi-monthly, with employees being paid on the 15th and the last day of each month.
The minimum wage for employees in Mexico is typically 62.98 pesos per hour, amounting to 12,596 pesos per month for a typical 40 hour work week.
In Mexico, a mandatory 13th-month salary payment, known as Aguinaldo, is a standard practice. This bonus payment is required to be disbursed by December 20th. The calculation of Aguinaldo involves 15 working days of salary, along with an additional allowance, taking into account a 365-day year.
Employer payroll contributions are generally estimated at an additional 36.1%- 44.73% on top of the employee salary in Mexico.
In Mexico , the typical estimation for employee payroll contributions cost is around 2.78%.
In Mexico, the individual income tax rates follow a progressive structure, with rates ranging up to 35%.
In Mexico's retirement system, there's a pension for those 65 and older, a mandatory savings plan, and other private options. If someone retires at 65 after contributing for about 24 years but doesn't have enough savings for the minimum pension, they receive the minimum pension for support.
Employers in Mexico must manage critical payroll obligations, including income tax withholding, social security contributions, and state payroll taxes. Income tax is based on progressive rates ranging from 1.92% to 35%, while social security contributions involve employer and employee payments to fund benefits such as healthcare and pensions. Additionally, state-level payroll taxes, typically ranging from 1% to 3%, add another layer of complexity.
Accurate calculations, timely submissions, and adherence to state-specific regulations are essential to avoid penalties and maintain positive employee relations. Leveraging payroll management software can streamline these processes, ensuring compliance and reducing administrative burdens in Mexico.
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In Mexico, work permits and visas are essential for employers hiring foreign workers. The process involves submitting applications, paying fees, and meeting specific eligibility criteria. The key visa types include the Temporary Resident Visa with Work Permission, Permanent Resident Visa, Intra-Company Transfer Visa, and Business Visitor Visa. Employers must ensure compliance with local labor regulations when sponsoring foreign employees.
The annual leave entitlement in Mexico is 12 days for a full time worker. These can include public holidays on top of that or within those days, which would otherwise be unpaid.
Mexico has at least seven national holidays each year, and in election years, there are eight. There are also significant observances, which are bank holidays
The allocation of annual leave is determined by the duration of employment. The minimum leave days vary depending on the length of an employee's service, as outlined below:
Maternity leave lasts for 12 weeks, including six weeks before childbirth and six weeks after. During pregnancy and after childbirth, individuals receive a cash subsidy equal to 100% of their last daily salary contribution for 42 days before delivery and 42 days after.
Employees in Mexico get five days of paid paternity leave, receiving their full average salary, covered by the employer.
While on sick leave in Mexico, employees do not receive payment from their employer. Instead, they are compensated by Social Security, receiving 60% of their regular salary from the fourth day of sickness-related absence from work. If the employee experiences a work-related sickness or injury, the compensation is 100%. Sick leave is limited to a duration of 52 weeks.
Mexico does not have a separate shared parental leave policy.
In Mexico, leave policies are regulated by the Federal Labor Law, ensuring employees have access to various types of leave, including annual leave, sick leave, maternity and paternity leave, and adoption leave. Full-time employees are entitled to a minimum of 12 days of paid annual leave after completing one year of service, with this entitlement increasing over time. Additionally, employees receive a vacation premium of at least 25% of their regular salary during their vacation period. Sick leave is covered by the Mexican Social Security Institute (IMSS), providing 60% of the employee’s salary from the fourth day of illness for up to 52 weeks, with a possible extension of another 52 weeks.
Maternity leave grants female employees 12 weeks of paid leave, while fathers receive five days of paid paternity leave. Mexico also observes seven national public holidays annually. Employers must comply with these regulations to avoid legal issues and foster a supportive work environment. While some types of leave, such as bereavement leave or sabbaticals, are not legally mandated, many companies choose to offer them as part of their internal policies. Keeping up with legal requirements and ensuring clear communication of leave policies are key best practices for employers in Mexico.
In Mexico, mandatory employee benefits include social security contributions, Christmas bonuses, paid vacations, profit-sharing, retirement savings, maternity and paternity leave, and severance pay. These benefits ensure worker protection and financial stability.
Many companies offer supplemental benefits such as private health insurance, life insurance, meal vouchers, stock options, gym memberships, flexible work arrangements, and tuition reimbursement to attract and retain top talent. Employers must comply with labor laws while strategically leveraging additional perks to enhance employee satisfaction and company reputation.
Mexico's labor laws provide strong protections for employees, ensuring that terminations follow strict legal procedures. Employers can only dismiss employees for just cause, such as dishonesty, workplace misconduct, or repeated absences, and must provide written notice outlining the specific reasons. If an employer terminates an employee without just cause, they are required to pay severance, which typically includes three months' salary, 20 days' salary per year worked, and other accrued benefits. Employees who believe they were unfairly dismissed can file a complaint with the Conciliation and Arbitration Board and may be entitled to reinstatement or additional compensation.
The termination process in Mexico requires proper documentation, including a termination letter, final payslip, and tax documents. Employers must also ensure that final payments, including wages, vacation pay, and severance (if applicable), are settled promptly. Collective redundancies require authorization from the Labor Board and must comply with severance regulations. By following these legal obligations, employers can avoid disputes and remain compliant with Mexico’s labor laws.
Employers can't end employment without a valid reason. Unlike in some places, there is no "at-will" employment. The Mexican Federal Labor Law lists specific reasons and procedures for terminating an employee without facing legal consequences. These reasons are outlined below:
In Mexico, there are no mandated minimum notice periods, but according to federal labor law, if a situation warrants, the employer must write a notice to the employee within 30 days of becoming aware of any misconduct.
If an employee is let go without a good reason, they are entitled to severance pay. This pay includes three times their usual monthly salary and an extra 20 days' pay for each year they've worked beyond 15 years.
For voluntary resignations or firings with a valid reason, employees with 15 or more years of service get a bonus called a seniority premium. This bonus equals 12 days' pay for each year they've worked.
Disclaimer
THIS CONTENT IS FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSTITUTE LEGAL OR TAX ADVICE. You should always consult with and rely on your own legal and/or tax advisor(s). Playroll does not provide legal or tax advice. The information is general and not tailored to a specific company or workforce and does not reflect Playroll’s product delivery in any given jurisdiction. Playroll makes no representations or warranties concerning the accuracy, completeness, or timeliness of this information and shall have no liability arising out of or in connection with it, including any loss caused by use of, or reliance on, the information.
ABOUT THE AUTHOR
Jesse Weisz
Jesse is an experienced R&D Analyst at Playroll, a leading Employer of Record (EOR) provider. With a strong background in data analysis and market research, Jesse specializes in identifying emerging trends and driving innovation in global HR solutions. She is an all-rounder, critical thinker and success-seeker (often inextricably linked to being a late-night tea drinker).
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As of January 1, 2025, Mexico's minimum wage rates are:
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