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Mexico

Introduction
 

General overview & country facts, as well as labour regulations.
Employer Contributions
 

These are additional costs incurred by employers over and above the employee’s monthly gross salary and/or bonus.
Employee Contributions
 

These are costs incurred by employees that reduce their monthly gross salary and/or bonus to determine their net “take home” pay.
Employment Terms
 

All you need to know about salary & bonuses, working hours & overtime, probation period, notice period & severance pay, as well as all leave types.

COUNTRY PLAYBOOK

Mexico
Everything you need to know about payroll, benefits & hiring top talent in Mexico

Currency

Mexican Peso (MXN)

Salary payment frequency

Bi-weekly or Monthly

Capital

Mexico City

Time Zone

GMT -6:00

Official Languages

Spanish

Is English spoken?

Yes
Mexico | Global Employment

Quick Links

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Introduction

General Overview & Economic Facts
  • Mexico, or México, is officially known as the United Mexican States, or Estados Unidos Mexicanos
  • It is in the southern part of North America and has a population of 129 million people. Mexico covers 1,972,550 square kilometers (761,610 sq mi), making it the world’s 13th-largest country by area
  • Mexico is a developing country, ranking 74th on the Human Development Index, but has the world’s 15th-largest economy by nominal GDP and the 11th-largest by PPP, with the United States being its largest economic partner

  • Its large economy and population, global cultural influence, and steady democratization make Mexico a regional and middle power with it often being identified as an emerging power, however, it is considered a newly industrialized state
Why Employ In Mexico?
  • The main exports from Mexico are corn (maize), oil, fruits and vegetables, silver, coffee, cotton
  • Population demographic- 18.20% of the population is between the ages of 15 and 24 years, with 40.50% of the population being between the ages of 25 and 54. Mexico has a fairly youthful population, making it a favourable country to employ young, energetic employees
Overview of the Labour Law
  • Mexican employment law and employment rights are contained under the Constitution of the United Mexican States (Constitución Política de los Estados Unidos Mexicanos) as well as Federal Labour Law
  • Employment rights in Mexico apply to everyone deemed to carry out subordinated work in Mexico, regardless of the jurisdiction chosen in employment agreements
  • Federal Labour Law and Mexican labour courts favour employees. Mexican employment law provides strong labour conditions and protections for employees
    Fun Country Facts
    • Colour television was invented by a Mexican 
    • Mexican cuisine has officially become part of World Cultural Heritage 
    • Mexico City was built on a lake and it sinks about 12cm annually
    Why Use Playroll Services For Mexico?
    • Employing in Mexico requires companies to have their own legal entity in the country as well as managing payroll, employee benefits, taxes and legal compliance. This can get quite complicated, especially with the complexity of employment laws in Mexico.
    • With Playroll’s Employer of Record services, your team will be employed by our established legal entities in each country.
    • We will take care of payroll, employee benefits, taxes, legal compliance and provide ongoing employee support, so that you can focus on growing a thriving team/growing your business/growing your team
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      Employer Contributions

      These are additional costs incurred by employers over and above the employee’s monthly gross salary and/or bonus.

      Social Security

      Called Instituto Mexicano Del Seguro Social (IMSS) In Mexico
      Calculated on a maximum salary of MXN 2,240.50 per month.

      Sickness and Maternity Insurance

      Cash benefits
      1.75%
      Calculated on monthly earning

      Medical benefits
      20.40%
      Fixed fee. Calculated on monthly earnings

      Medical benefits- surplus fee
      1.10%
      Calculated on monthly earnings in excess of MXN 268.86

      Disability And Survivors/Life Insurance

      Disability And Survivors/Life Insurance
      1.75%
      Calculated on monthly earnings

      Work Risk Insurance

      Low-Risk Job
      0.54%
      Premium and rate dependent on factors such as nature of industry. Calculated on monthly earnings

      High-Risk Job
      7.59%
      Premium and rate dependent on factors such as nature of industry. Calculated on monthly earnings

      Weighted Average Rate
      1.987%
      Premium and rate dependent on factors such as nature of industry. Calculated on monthly earnings

      Nursery and Social Benefit

      Family Allowance

      1.75%

      Pension Fund

      Called State Pension Fund In Mexico
      Calculated on a maximum salary of MXN 2,240.50 per month.

      Retirement
      2.00%

      Unemployment and Old-Age Insurance
      3.15%

      Payroll Tax

      Called State Payroll Tax In Mexico
      Levied at the state level and withheld by the employer

      Mexico City
      3.00%

      Other States
      1.00-3.00%

      Housing Fund

      Called National Workers Housing Fund Institute (Infonavit) In Mexico

      5.00%
      Calculated on a maximum salary of MXN 2,240.50 per month

      Labour Standards

      Called Profit Sharing In Mexico

      10.00%
      The profit sharing is 10.00% of the company’s gross, pre-tax income. There are certain categories of employers that are exempt from profit sharing

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      Employee Contributions

      These are costs incurred by employees that reduce their monthly gross salary and/or bonus to determine their net “take home” pay.

      Social Security

      Called Instituto Mexicano Del Seguro Social (IMSS) In Mexico
      Calculated on a maximum salary of MXN 2,240.50 per month.

      Sickness and Maternity Insurance

      Cash benefits
      0.25%
      Calculated on monthly earnings

      Medical Benefits – Fixed Fee
      0.38%
      Calculated on monthly earnings

      Medical benefits- surplus fee
      0.40%
      Calculated on monthly earnings in excess of MXN 268.86

      Pension Fund

      Called State Pension Fund In Mexico
      Calculated on a maximum salary of MXN 2,240.50 per month.

      Unemployment and Old-Age Insurance
      1.125%

      Housing Fund

      Called National Workers Housing Fund Institute (Infonavit) In Mexico

      Employees do not contribute to this unless they have a mortgage through the fund. Calculated on a maximum salary of MXN 2,240.50 per month

      Income Tax

      Income Tax is ‘Pay As You Earn’
      Federal tax of 30% is applied on vacation premium exemptions, grocery coupons, and Christmas bonuses

      Income bracket per annum

      0.01 – 7,735.00
      1.92%

      7,735.01 – 65,651.07
      6.40%

      65,651.08 – 115,375.90
      10.88%

      115,375.91 – 134,119.41
      16.00%

      134,119.42 – 160,577.65
      17.92%

      160,577.66 – 323,862.00
      21.36%

      323,862.01 – 510,451.00
      23.52%

      510,451.01 – 974,535.03
      30.00%

      974,535.04 – 1,299,380.04
      32.00%

      1,299,380.05 – 3,898,140.12
      34.00%

      3,898,140.13 or more
      35.00%

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      Employment Terms

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      General

      Minimum Wage
      • Northern border zone- MXN 213.90 per day

      • Rest of Mexico- MXN 141.70 per day
      Working Hours
      • Maximum of 48 hours per week (if working 8 hours a day, 6 days a week)
      • Minimum 30-minute meal interval
      • Typical working hours are 08h00 to 18h00 Monday to Friday
      Overtime
      • Maximum of 3 hours per day and 9 hours per week

      • All employees who work overtime are entitled to overtime pay regardless of their position, salary level or any other factor
      Notice Period
      • There is no obligation under the law for either employers or employees to notify the other party in advance of a dismissal or resignation
      Severance Pay

      Called Termination Without Cause in Mexico

      • Permanent employees who are dismissed without just cause are entitled to claim reinstatement or the payment of mandatory severance up to a total payment of +/- 4 months’ salary.

      • Where an employee is dismissed for just cause, they will only be entitled to the payment of accrued salary and benefits 

      Probation Period
      • 30 or 180 days
      • A probation period of up to 180 days can be agreed for:

      Employees in managerial/direction position.

      – Employees who perform administrative/general activities 

      – Employees who perform specialised technical or professional activities.

      Bonus

      Called an Annual Christmas Bonus (Anguinaldo) in Mexico

      • The amount of the payment is based on an employee’s base salary
      • The bonus must be paid by 20 December of each year
      • The bonus is equivalent to at least 15 days of salary
      Public Holidays

      Public holidays 2022

      • January 1st – New Year
      • February 5th – Constitution Day
      • March 21st – Benito Juarez Day/President’s Day
      • May 1st – Labor Day
      • September 16th – Independence Day
      • November 20th – Revolution Day

      • December 25th – Christmas Day
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      Leave

      Paid Leave / Vacation Days
      • 6 days per year- after 1 year of employment

      • 8 days per year – after 2 years of employment

      • 10 days per year – after 3 years of employment

      • 12 days per year – after 4 years of employment

      • 14 days per year – after 5 years of employment

      • 16 days per year – after 10 years of employment
      Sick Leave
      • Paid leave
      • Paid by Social Security
      • 52 weeks per year
      Maternity Leave
      • Paid leave
      • Paid by Social Security 
      • 12 weeks per year
      Paternity Leave
      • Paid leave
      • Paid by employer
      • 5 days per year
      Family Care Leave

      Called Care Leave for Parents with a Child with Cancer in Mexico

      • Paid leave
      • Paid by Social Security 
      • 28-364 days per year
      Adoption Leave
      • Paid leave
      • Paid by Social Security 
      • 6 weeks per adoption (of a minor child)
      Long Term and Injury Leave

      Called Disability Leave in Mexico

      • Paid leave
      • Paid by Social Security
      • 52 weeks per year (for temporary disability)
      Start hiring in Mexico today!