How to Legally Hire Employees in Mexico
Mexico is known for its ingenuity, creativity, and nobility. It also has the second-largest economy in Latin America. A lucrative market such as Mexico is nothing without its productive workforce.
NNRoad offers employment solutions in Mexico allowing you to hire employees in Mexico even if you do not have an entity there. Our services streamline the hiring process and allow entry into the country.
Keep reading to learn how to legally hire employees in Mexico.
1. PEO Services in Mexico
A PEO is a Professional Employer Organization. A PEO helps mitigate legal risk, complies with local labor laws, and allows cost-effective HR administration.
PEO services give foreign business owners the opportunity to hire employees in Mexico by bridging the cultural gap between you and your employee working under your authority.
It is a budget-friendly way to test and enter the market and you can decide later on whether you want to start a business in Mexico.
2. Hiring Employees in Mexico
a. Mexico Labor Laws
Mexico’s labor laws favor its employees and unions. When hiring employees in Mexico, you are legally required to provide labor contracts that layout terms of the employee’s compensation, benefits, and termination requirements in the local language.
b. Contract Types
Offer letters and labor contracts are required by law to include salary information and additional compensation in Mexican pesos. Mexico does not have “at-will” employment, instead, they have four types of employment contracts:
- Work/Definite Time Period (Temporary/Seasonal)
- Indefinite Time Period (Permanent)
- Trial Period
NNRoad and our in-country partners are experts regarding Mexico’s local labor laws. We handle the legalities related to hiring employees in Mexico so that you can focus on your core business.
c. Compensation and Benefits
Minimum wages vary by location and industry. Effective January 1st, 2020, minimum wage workers in Mexico will now take home 123.22 pesos per day.
Mexican employees are entitled to:
- An eight-hour workday, six workdays a week. Working on Saturdays is common
- Nine paid legal holidays
- Minimum six-day paid vacation period after first at 25% of wages
- Severance pay in case of dismissal based on time worked for dismissals without cause
- Three months of salary
- 20 days of salary for each year worked
- Retained benefits
- 12 days salary for seniority
- Salary from date of dismissal to date of payment
- Social security contributions based on the type of work involved and benefits conferred
- End of year bonus is equal to at least 15 days wages and required prior to the 20th of December of each year
- Six weeks of maternity leave
- Overtime pay double-pay or more
- Retirement fund contribution of 2% of wages with a maximum of 25 times the minimum wage in the Federal District
To learn more about compensation and benefits in Mexico, check out our blog What To Know Before Hiring Your First Employee in Mexico and see how Mexican employees are covered.
NNRoad’s employment solutions help businesses make their way into Mexico’s market.
NNRoad also offers entity formation services, payroll and benefits administration, and tax and accounting services in Mexico.