Mexico offers strategic market access to North America and a large, skilled talent pool with significant cost advantages.
The country requires strict compliance with federal labor law (Ley Federal del Trabajo — LFT), employer social security contributions through IMSS (Instituto Mexicano del Seguro Social) at rates of 24–38% depending on salary and risk classification, INFONAVIT housing fund contributions (5% of integrated salary), state payroll taxes (1–3%), ISR income tax withholding, and statutory benefits including aguinaldo (minimum 15-day Christmas bonus), PTU (10% profit sharing), and comprehensive maternity and paternity leave.
Currency: Mexican Peso (MXN)
Language: Spanish (primary); English in multinational firms
Regulatory Authority: Ministry of Labor and Social Welfare (STPS), SAT (Tax Authority), IMSS
Federal minimum wage (varies by region): approx. MXN 248–312 daily (2024).
A written employment contract is required; it may be indefinite, fixed-term, or seasonal.
Up to 180 days standard (typically 90 days); extendable for managerial roles.
24-38% employer burden (IMSS 15-24% + INFONAVIT 5% + state tax 1-3%)
At least 12 days of earned vacation (increasing with seniority) plus sick and casual leave.
48 hours/week standard (8 hours/day); can be 6 days/week
IMSS (healthcare, retirement, disability), INFONAVIT 5%, SAR 2%, state payroll tax
Progressive withholding (1.92-35%) for employees; employer remits monthly
200% for first 9 hours/week; 300% for hours exceeding 9/week
Mexico requires written employment contracts in Spanish specifying the job role, salary structure (salario integrado), working hours, benefits, confidentiality/IP clauses, non-compete terms where enforceable, termination rules, and dispute resolution procedures under the Federal Labor Law (LFT). Probation periods are allowed (typically up to 90 days, extendable to 180 days for managerial roles) and must be documented. Workers must be classified as either employees (indefinite or fixed-term) or independent contractors, with strict misclassification enforcement by IMSS and SAT. Where unions or collective bargaining agreements apply, wage floors and mandatory benefits must be respected. EORs must issue compliant contracts, register employees with IMSS and SAT, and ensure compliance with working-time rules and labor standards.
Payroll requires employer contributions to IMSS (≈15–24%), INFONAVIT (5%), SAR (2%), and state payroll taxes (1–3%), while ISR withholding is remitted monthly at progressive rates (1.92–35%) with CFDI electronic payroll receipts. Mandatory benefits include vacation (starting at 12 days), a 25% vacation premium, paid maternity and paternity leave, public holidays, and annual statutory payments such as aguinaldo (minimum 15 days’ salary) and profit sharing (PTU at 10%). Termination without cause requires statutory severance, including back pay, a seniority premium (12 days/year, capped), and constitutional indemnity (approximately three months’ salary). Under Mexico’s 2021 outsourcing reform, EORs must be registered in REPSE if providing specialized labour, and may not supply personnel for a client’s core business functions. Compliance also includes maintaining proper onboarding documents, termination filings, CFDI payroll, immigration processes for foreign workers, and periodic reporting to IMSS, SAT, INFONAVIT, and labour authorities.
