What to Know Before Hiring Your First Employee in Mexico
Mexico is a diverse country that is characterized by its ingenuity, creativity, and nobility. Business culture in Mexico is very unique by how work relationships are built on trust and personal networks over experience or capabilities.
Through HR outsourcing you can hire employees in Mexico, meaning your employees will have the local knowledge and know-how to help your business succeed.
NNRoad has trusted experts who fully understand Mexico’s labor laws and can help your company hire Mexican employees in compliance with the law so you can focus on your global expansion strategy.
Keep reading to learn what you should know before hiring your first employee in Mexico.
Mexico’s Labor Laws
Mexico has strict labor regulations that favor employees, benefits, and labor unions.
Mexico legally requires employment contracts in the local language that lays out the terms of the employee’s compensation, benefits, and termination requirements. The offer letter and employment contract should always include salary and additional compensation in Mexican pesos.
Mexico has four types of labor contracts:
- Contract by Work or by Determined Time Period
- Mexican Labor Contracts for Indeterminate Amounts of Time
- Contract for a Trial Period
- Training Contracts
In Mexico, a typical workweek is six days, eight-hour shifts, with Saturday workdays being common practice. All employees are entitled to one day off per week for every six days worked.
There are generally three kinds of workdays by law:
|Workday||Hours||Schedule Range||Break Time|
|Day Shift||8||6:00am-8:00pm||30 mins|
|Night Shift||7||8:00pm-6:00am||30 mins|
|Mixed Shift||7.5||Mixed Nightwork <= 3.5 hrs||30 mins|
Compensation and Benefits
Minimum wages vary by region and profession in some circumstances.
Effective January 1st, 2020, minimum wage workers in Mexico will now take home 123.22 pesos (around $6.50 USD) per day. Social security contributions vary based on the type of work involved and benefits conferred.
In Mexico, all employees who paid on salary must be enrolled in the Mexican Social Security Institute. Employees are entitled to:
- Medical attention at hospitals, pharmacies, and rehab centers
- Savings for retirement
- Daycare for children up to 4 years old
- Social benefits such as recreation or resorts
- Pension in case of disability or death
- Marriage and funeral expense support
Social Security is mandatory for employers. Social security provides savings of 2% of the employee’s base salary, which is granted to Retirement Fund Administrators (AFORE) of the employee’s preference so that by the age of 60 years or more may be given to the worker in the way he chooses.
Additional Employee Policies
Employees have the right to enjoy paid vacation days from the first year of seniority in the company including compensation of not less than 25% of the salary paid during their vacation period.
The people of Mexico celebrate eight national holidays:
- New Year’s Day
- Constitution Day
- Benito Juarez’s birthday
- Labor Day/May Day
- Independence Day
- Revolution Day
- Election Day (every 6 six years for the election of the President)
- Christmas Day
Employees who work on mandatory holidays are entitled to three times their normal rate of pay and an agreement with the employer as to the number of hours that they will work.
There are several situations in which an employee can leave the company, among the most common are resignation and termination.
For resignation, the law doesn’t provide a period of prior notice, the most common practice is that the employee delivers his pending issues outstanding in the following two weeks. For termination, the law does not include a period of prior notice, so the employer can terminate the employee and leave on the same day.
Hiring your first employee in Mexico through employee leasing is within your grasp with NNRoad’s support. Understanding the employment laws of Mexico is an important step in a company’s global expansion strategy and we can guide you through this.
NNRoad offers global employment service, payroll service, and benefits administration to make your company’s entry into Mexico’s market successful.
If you are interested in learning more about Mexico, check out our Three Facts You Didn’t Know About Mexico blog post.