Hire in Mexico

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Last updated at June 16, 2022
beautiful scenery in the country of mexico

Currency

Mexican Peso (MXN)

Capital

Mexico City

Time Zone

GMT-6

Key Country Facts

Introduction

Mexico, officially known as United Mexican States (Estados Unidos Mexicanos) or Mexican Republic (República Mexicana), is located in North America. It is a federal republic composed of 32 states with a population of approximately 126 million. It has the world’s 12th largest nominal GDP (IMF 2021), and the 2nd largest economy in Latin America (World Bank 2021).

Area

Mexico shares land borders with the United States to the north and with Guatemala and Belize to the south. It is bounded to the west by the Pacific Ocean and to the east by the Gulf of Mexico and the Caribbean Sea. With a land mass of 1.97m square kilometers it is the world’s 13th largest country by area.

Climate

Mexico experiences a wide array of climatic conditions. Much of the country lies to the south of the Tropic of Cancer with year-round high temperatures. To the north temperatures are typically cooler in winter months. Many larger cities are at a relatively high altitude which lends to a more temperate climate.

Culture

Mexican culture predominantly reflects a mixture of indigenous and Spanish cultures and indeed there is a great unifying pride in the indigenous heritage.

Religion

According to a 2020 census just under 80% of Mexicans identify as Roman Catholic. A further 12% belong to other Christian denominations whilst around 5% declare no religious affinity.

Official Language

Although not officially recognized in law Spanish is the national language of Mexico, which means it is the worlds most populous Spanish speaking country. Over 50 indigenous languages are spoken by over 100,000 people. English is widely taught as a second language, but few show a high level of proficiency.

Mexico HR at a Glance

 

 

 

EMPLOYMENT LAW
Employment relationships in Mexico are governed primarily by the Mexican Constitution of 1917, in which the guidelines for employment are established. Article 123 of the Federal Constitution, entitled “Labour and Social Welfare”, expressly recognizes and protects the basic inalienable rights of employees. Within this scope the Federal Labour Law (FLL), and its subsequent amendments, was enacted to regulate all aspects of employer-employee relations. Labour relations are highly regulated in Mexico and employees generally have far greater rights than their American neighbors.

 

EMPLOYMENT CONTRACT
It is mandatory in Mexico to provide a written employment agreement. Every employee must enter into an individual employment agreement with the employer and set out the terms and conditions of the employment. Importantly, it should be noted employees cannot waive their right to receive mandatory benefits or rights.

Article 25 of the FLL provides the statutory content required for every employment contract, as follows:

  • name, nationality, age, gender, marital status, personal identity number, taxpayer registration number, and addresses of both the employee and the employer;
  • whether the employment relationship is seasonal, or for a specific task, for a fixed term, for initial training or for an indefinite term, and whether the contract is subject to a trial period;
  • the service or services to be provided, which shall be stated in as detailed a manner as possible;
  • the place or places where the work shall be rendered;
  • the duration of the work shift;
  • the form and amount of the salary;
  • the day and place of salary payment;
  • indication that the employee will be trained or instructed in terms of the plans and programs established by the company, pursuant to provisions of the FLL;
  • any other term and work condition, such as days of rest, holiday and any additional agreement reached between employee and employer.

Fixed Term Contract

Contracts for a fixed term or for a specific task may be entered into when the needs of the employer require such an engagement. To enter into such an agreement validly, the employer must justify the reason for hiring an employee for a fixed term or for a certain undertaking, and hence the contract will terminate automatically at the end of its term (fixed-term employment) or at the completion of the undertaking (employment for a specific task). If the activities under which the employee was originally hired continue after the end of the contract, the employment relationship will be automatically extended and accordingly deemed to be for an indefinite term.

Probation Period/Trial Period

Employees hired pursuant to an indefinite employment agreement or a fixed-term agreement of at least 180 days can be hired subject to a probationary period of up to 30 days, extendable by up to 180 days if the employee is hired as an executive, manager or director or fills an administrative position.

Working Hours

The Federal Labour Law (FLL) states that for every six days worked, employees shall be entitled to one day of rest. It also recognizes three types of work shifts, as follows:

  • eight hours a day for daytime work (48 hours a week);
  • seven hours for night-time work (42 hours a week); and
  • seven-and-a-half hours for a mixed work shift (45 hours a week).

The principle of a 48-hour workweek, is officially the law of the land. However, in many employment relationships throughout much of the private sector, a 40-hour workweek has been established.

The FLL also provides that employees are entitled to at least 30 minutes of rest or to have a meal during their shift, and this time shall be considered as part of their working day.

Overtime

An employee must not be required to work more than 3 hours more than the number of hours in the statutory workday during a given shift, or more than 9 hours in each week. An employee working overtime on a given day is entitled to double compensation for each hour of overtime. In the event the employee works more than 9 hours overtime in each week, the employee is entitled to triple compensation for each hour of overtime.

Although, as a matter of law, all employees are entitled to overtime pay, it has become common practice for employees holding managerial positions not to claim any overtime pay, because it is implied that their salary already includes and covers the extra time they need to work in view of their role. Nevertheless, this should not be assumed to mean they are not entitled to overtime pay, because it is possible under the FLL to claim overtime pay.

Health and Safety in the Workplace

Under the provisions of the FLL, employers have the obligation to establish work environments in accordance with the principles of worker safety and health.

All employers are obliged to prevent work-related stress by constantly evaluating the organizational environment and applying any necessary control measures.

Bonus

Employees have the right to a Christmas bonus (Aguinaldo) of at least fifteen days of their daily base salary, which must be paid by no later than 20 December of each year.

Termination

Grounds

An employer may terminate an employment relationship without incurring any liability only under one of the justified causes established by law, as follows:

  • use of false documentation to gain employment;
  • dishonest or violent behavior against the employer or the employer’s family;
  • dishonest or violent behavior against co-workers that disrupts work discipline;
  • acts of harassment or sexual harassment directed toward any person in the workplace;
  • sabotage of the workplace;
  • negligence;
  • carelessness that threatens the safety of the workplace and of other workers;
  • immoral acts in the workplace;
  • disclosure of trade secrets;
  • more than three unexcused absences in a 30-day period;
  • insubordination;
  • failure to adopt preventive measures or to follow procedures to avoid accidents or illnesses;
  • reporting to work under the influence of alcohol or narcotic drugs;
  • incarceration.

Strictly, the employer cannot otherwise terminate the employment without cause. However, under Mexican labour law, “integrity at work” is mandatory behavior for the employee. An employee is deemed to act with integrity when the work is carried out with intense effort, care, and attention, in the agreed-upon time, place, and manner. “Lack of integrity” is a generic cause for dismissal.

In practice, however, exposure under an unlawful termination lawsuit is mostly limited to the statutory termination payments, so most terminations can be implemented either through employee resignations or through a mutual termination (with severance).

Restricted or prohibited terminations

If the employment relationship is at that time suspended (e.g., an employee on maternity leave).

Notice Period

Under Mexican legislation there is no minimum notice period to terminate an employment relationship. That is, when the employer dismisses the employee the employment termination will be effective immediately. However, the employer must notify the employee in writing of the cause or causes for the dismissal. When an employer terminates an employee under the justified causes established in article 47 of the FLL, the employer must notify the employee within 30 days of the cause or causes of the termination.

Garden leave is not a common practice in Mexico, since the employer can terminate the employment relationship immediately.

Redundancy/Severance Pay

The severance payment is calculated depending upon the cause of termination:

Voluntary resignation: The employer must pay all benefits due, including sales incentives, on a prorated basis up to the termination date. If the employee has at least fifteen years of seniority, he is also entitled to a seniority premium of twelve days’ salary for each year of service, capped at twice the minimum daily salary in force.

Termination with cause: The employer must pay all benefits due, including commissions, on a prorated basis until the date of termination, and the seniority premium of twelve days of salary for each year of service (but with a cap of twice the minimum daily salary per the terms above).

Termination without cause: Employees who are terminated without cause are entitled to the following lump sum severance: (1) three months of the employee’s daily aggregate salary, plus; (2) twenty days of the employee’s daily aggregate salary for each year of service; (3) a seniority premium of twelve days’ salary for each year of service (but with a cap of twice the minimum daily salary as outlined above; and (4) any benefits due.

Post Termination Restraints/Restrictive Covenants

The Mexican Constitution includes the general principle of “freedom of work”, whereby an individual cannot be prevented from working or performing a lawful activity, unless there is a judgment stating otherwise issued by a competent court. Based on this, the general accepted interpretation is that post termination non-compete obligations and in general restrictive covenants are not enforceable in Mexico. This interpretation would not vary, even if the obligation is limited to a certain period, territory, product or to identified competitors.

Post-termination non-compete, customer non-solicit and employee non-solicit clauses are therefore not enforceable. However, such provisions are often included in employment agreements because they can have a deterrent effect and even create a sense of moral obligation on the part of an employee.

Trade Unions/Collective Agreements

Trade unions are prevalent in certain sectors, such as the sugar, railway, automotive, and mining industries, as well as the public sector (especially education and energy). A union may be formed by at least 20 employees in a certain workplace; however, employees that are affiliated to an existing union may request, through that union, to sign a collective bargaining agreement with their employer. There are no works councils or other employee representatives.

Tax and Social Security

Personal Income Tax

Individual residents in Mexico are subject income tax on their worldwide income, regardless of their nationality. Non-residents, including Mexican citizens who can prove residence for tax purposes in a foreign country, are taxed only on their Mexican sourced income.

Income BrandIncome Band From (MXN) Income Band Up to (MXN) Basic Tax on Column 1 (MXN) Basic Tax on Excess (%)
0.01 7,735.00 0 1.92
7,735.01 65,651.07 148.51 6.40
65,651.08 115,375.90 3,855.14 10.88
115,375.91 134,119.41 9,265.20 16.00
134,119.42 160,577.65 12,264.16 17.92
160,577.66 323,862.00 17,005.47 21.36
323,862.01 510,451.00 51,883.01 23.52
510,451.01 974,535.03 95,768.74 30.00
974,535.04 1,299,380.04 234,993.95 32.00
1,299,380.05 3,898,140.12 338,944.34 34.00
3,898,140.13 and above 1,222,522.76 35.00

Social Security

Employee contributions to the Mexican Social Security Institute are withheld at source. The employer also makes contributions. Both contributions are calculated at varying rates and subject to various caps.

Employer Contributions – up to 22.75%

Employee Contributions – up to 10.15%

*The above rates serve as a broad guideline. Actual rates charged will differ.

Employees

Salary Payment

An employer must make all salary and statutory payments from an in-country bank account.

Payslip

The process of issuing payslips to employees is fully electronic. All payroll must go through a process before it can be issued to the employee. Indeed, the electronic payslips must initially be submitted, validated and e-signed by the Mexican Tax Authority.

The payslip must contain personal and job information of the employee, the bank account number, tax Id (RFC), citizen Id (CURP), social security number, position, cost centre, etc. Also, it must include each wage type paid including in the payment, perception, taxes withhold, other deductions and net to be paid. The amount must also match the amount sent from the employer’s account to the employee’s bank account.

Annual Leave

Annual Leave

All employees must enjoy vacations period which cannot be inferior to 6 days per year for the first year and will increase by 2 working days for each following year until it reaches 12 vacation days. Thereafter, the vacation period increases by 2 days for every 5 years of service.

Years of Employment Vacation Days
1 6
2 8
3 10
4 12
5-9 14
10-14 16
15-19 18
20-24 20

… and so on, increasing 2 days every 5 years.

In addition to this, employees in many states are entitled to a minimum of 25 per cent of the salary earned during their holidays as a vacation bonus.

Sick Leave

An employee is entitled to sick leave depending on the type of illness and degree of disability. In case of illness or injury, an employee must obtain a doctor’s certificate. The Mexican Social Security Institute (IMSS), not the employer, pays the employee’s income during the leave.

There is no mandatory unpaid medical leave of absence in Mexico. If the employee needs an unpaid medical leave of absence due to a condition not recognized by the IMSS, then the employer has the discretion to grant the leave.

The economic benefits paid by the IMSS due to illness are based on 60% of the employee’s registered salary, and they are paid as of the fourth day of absence and up to 52 weeks.

Compassionate & Bereavement Leave

There is no statutory regulation governing leave in the event of a bereavement, although such policy may be included in the individual contract.

Compassionate & Bereavement Leave

Two consecutive days paid leave for death of a spouse, ascendant, descendant, sibling or person who, declared in his or her labour booklet, lives under his or her economic dependence.

Maternity & Parental Leave

Maternity Leave

Women have the right to 6 weeks of paid leave prior to the birth of a child and 6 weeks following the birth of a child. Women can allocate up to 4 of the 6 weeks of the pre-birth leave to the post-birth leave period. The salary during this period is paid by the IMSS.

During the nursing period of 6 months, the new mother is entitled to two additional thirty-minute rest periods per day.

Paternity Leave

A male employee is given 5 business days of paid paternity leave when his spouse gives birth, or he adopts a child.

Adoption Leave

The FLL provides that women are entitled to a paid maternity leave of absence of 6 weeks after they receive the adopted child. Fathers are entitled to a paid paternity leave of absence of 5 days following the adoption of a child.

Public Holidays

There are 9 mandated national public holidays per year. These include December 1st every six years, on the day of the national presidential inauguration and the election day scheduled by federal and local electoral laws.

Employees who are required to work on a mandatory holiday are entitled to double pay.

Benefits to the Employee in Mexico

Statutory Benefits

The Mexican Social Security Institute (IMSS) is responsible for administering social security programs which are governed by the Social Security Law (LSS) of 1997.

The social security system is financed from contributions by workers, employers, and the government. The contributions are based on salary levels. The system protects workers in the following matters:

  • Occupational accidents and illnesses
  • Old age
  • Retirement and survivor pensions
  • Disability
  • Medical benefits
  • Maternity
  • Childcare
  • Social services

Profit Sharing: employees are entitled to share in the employer’s profits, currently fixed at 10% of the company’s gross, pre-tax income, that should be pay between the months of May and June.

Other Benefits

All employees get public health care coverage through the Mexican Social Security Institute. However, many employers offer their workers supplementary health insurance options. Other common optional benefits include:

  • Car allowance
  • House allowance
  • Grocery tickets
  • Gas coupons

Visas and Foreign Workers

General Information

The Migration Law establishes the following types of immigration status for foreign nationals in Mexico:

  • Visitors;
  • Temporary residence;
  • Temporary residence with work permission; and
  • Permanent residence.

Visitors – Visitor visas are subdivided into a) tourists and other non-business-related visitors; and b) businesspersons. The maximum length of stay for foreign nationals arriving in Mexico under this type of status is 180 continuous days and employment in Mexico is not allowed. The status of visitor tourist describes itself. The status of visitor businessperson allows foreign nationals to engage in business-related activities; however, they may not be paid, either in cash or in kind for these activities.

Temporary Residence – Granted to those foreign nationals who have a family connection (either Mexican or foreigner) or otherwise in Mexico. They may not pursue employment, they may however apply for work permission, and the length of their stay is linked to the person to whom they are connected in Mexico, and which is not exceeding four years.

Temporary residence with work permission – Granted to foreign workers whose work visa is sponsored by a Mexican company. The maximum length of a temporary residence card is four years. The Mexican company must commence the process and request the work permission on behalf of the employee before their entrance to Mexico. Once the maximum four-year period has elapsed, the foreign national may seek permanent-resident status.

Permanent residence – Permanent residency is granted to those foreign nationals who meet the following requirements:

  • they have been married to a Mexican national for more than two years (and the marital bond persists);
  • they have Mexican children; or
  • their temporary residency has reached the four-year period.

Process

Generally, the employer must first issue a job offer; then the employer must submit an application for work permit. The approval process typically takes 30-60 days. Once approved the employee should submit their document to their local Mexican consulate and attend an appointment there for eventual complete approval of the visa.

Only once this process is complete may the employee travel to Mexico for the purpose of employment. Upon arrival, and within 30 days, the employee must register with the National Institute of Immigration (INM).

After arriving in Mexico, the employee will need to apply for both a Social Security Number (Clave Única de Registro de Población – CURP) from the local government office and a tax number (Registro Federal de Contribuyentes – RFC) which is issued by the Mexican Tax Administration Service (Servicio de Administración Tributaria).

Public Holidays in 2022

S.No Occasion Date
1 New Year’s Day January 1st
2 Constitution Day February 7th
3 Benito Juarez Day March 21st
4 Labour Day May 1st
5 Independence Day September 16th
6 Revolution Day November 21st
7 Christmas Day December 25th

Several other days are widely recognized and celebrated but are not officially mandated public holidays. Additionally, certain election days and the presidential inauguration day (every 6 years) are considered public holidays.