Mexico Employment Law & Compliance Guide for Employers
Key employment laws in Mexico: what employers need to know
Employment in Mexico is governed by Article 123 of the Constitution and the Ley Federal del Trabajo (LFT) [Federal Labour Law], with social security under the Ley del Seguro Social (IMSS). Two rules surprise many foreign employers: dismissal without a legal cause costs at least three months’ salary plus seniority premium, and companies must share 10% of taxable profit with staff (PTU). A reform in force since 1 May 2026 also cuts the maximum workweek from 48 to 40 hours by 2030. This page summarises the core employer rules with official sources.
Mexico employment rules at a glance
| Topic | What the rule is | Official source |
|---|---|---|
| Minimum wage | From 1 January 2026: MXN 315.04 per day general (up 13%) and MXN 440.87 per day in the Northern Border Free Zone (up 5%). Higher professional minimum wages apply to some trades. Minimum-wage earnings are exempt from income tax. | Diario Oficial de la Federación, 9 Dec 2025 – CONASAMI resolution on 2026 minimum wages |
| Standard working hours | Maximum 48 hours a week in 2026 (8-hour day shift, 7-hour night shift, 7.5-hour mixed), with one paid rest day a week. A reform in force since 1 May 2026 cuts the limit by 2 hours a year to 40 hours in 2030, without pay cuts. | Chamber of Deputies – LFT reform decree, DOF 1 May 2026 |
| Overtime pay | In 2026 the first 9 overtime hours a week are paid at double rate and further hours at triple. The 2026 reform raises the double-rate limit to 12 hours by 2030, caps work at 12 hours a day and requires electronic time records from 2027. | Chamber of Deputies – LFT reform decree, DOF 1 May 2026 |
| Paid annual leave | 12 working days after the first year, rising by 2 days a year to 20 days in year 5, then by 2 days every 5 years. A prima vacacional [vacation premium] of at least 25% of vacation pay is mandatory. | Ley Federal del Trabajo, Arts. 76–80 |
| Public holidays | 7 paid holidays a year: 1 January, first Monday of February, third Monday of March, 1 May, 16 September, third Monday of November and 25 December, plus election days and 1 October every six years. Holiday work earns double pay on top of normal pay. | Ley Federal del Trabajo, Arts. 74–75 |
| Sick leave | No employer-paid sick leave is required. IMSS pays a sickness subsidy of 60% of the registered salary from the fourth day of certified incapacity, for up to 52 weeks. Work-related incapacity is paid at 100% from the first day. | Ley del Seguro Social, Arts. 58 and 96–98 |
| Maternity and parental leave | 12 weeks of maternity leave at full pay (normally 6 weeks before and 6 after birth), paid by IMSS if contribution requirements are met. Fathers get 5 working days of paid paternity leave from the employer. Nursing breaks apply for 6 months. | Ley Federal del Trabajo, Arts. 132 and 170 |
| Probation period | Allowed in indefinite contracts and fixed-term contracts over 180 days: up to 30 days, or up to 180 days for managerial, technical or professional roles. It must be in writing and cannot be extended or repeated. | Ley Federal del Trabajo, Arts. 39-A to 39-F |
| Notice period | No statutory notice period. To dismiss for cause, the employer must give a written notice stating the cause and date, delivered to the employee or through the Labour Court within 5 business days. Without it, the dismissal is presumed unjustified. | Ley Federal del Trabajo, Art. 47 |
| Severance pay | Unjustified dismissal: 3 months' integrated salary, plus 20 days' salary per year of service where reinstatement is refused, a seniority premium of 12 days per year (salary capped at twice the minimum wage), accrued benefits and possible back pay of up to 12 months. | Ley Federal del Trabajo, Arts. 48–50 and 162 |
| Employer social contributions | IMSS insurance, retirement savings (2%), INFONAVIT housing (5%) and an old-age rate rising yearly to 2030 cost roughly 20–30% of salary, capped at 25 UMA (about MXN 89,180 a month). State payroll tax adds about 2–4%. | PwC Worldwide Tax Summaries – Mexico, other taxes (professional source) |
| Employee social contributions | IMSS employee share of about 2.4–2.8% of registered salary, withheld by the employer and capped at 25 UMA (maximum about MXN 29,103 a year in 2026). For minimum-wage workers, the employer pays the employee's share. | PwC Worldwide Tax Summaries – Mexico, individual other taxes (professional source) |
| Income tax on salaries | Employers withhold ISR [income tax] monthly using a progressive table from 1.92% to 35%, issue a digital payroll receipt (CFDI de nómina) for each payment and usually run the annual reconciliation. An employment subsidy reduces tax for low earners. | Ley del Impuesto sobre la Renta, Arts. 94–99 |
| Mandatory bonuses and 13th-month pay | Aguinaldo [year-end bonus] of at least 15 days' salary by 20 December; PTU [profit sharing] of 10% of taxable profit, paid by end of May (capped per employee at 3 months' salary or the 3-year average); 25% vacation premium. | Ley Federal del Trabajo, Arts. 80, 87 and 117–131 |
| Work permits for foreign nationals | Foreign nationals need a residence status with permission to work from the National Migration Institute (INM). The employer registers with INM and files the job offer; the worker obtains a visa at a Mexican consulate, then a temporary resident card in Mexico. | Ley de Migración |
| Employment contract requirements | Must be in writing, in two copies, stating the parties' details (including CURP and RFC), contract type, duties, workplace, hours, salary, pay day, training and other conditions. The employer must register the employee with IMSS within 5 business days. | Ley Federal del Trabajo, Arts. 24–25 |
Employer obligations in Mexico, topic by topic
Filter by primary service relevance
Does an employment contract in Mexico have to be in writing, and what must it include?
What are the working-hour and overtime rules in Mexico, and how does the 40-hour reform work?
What is the minimum wage in Mexico in 2026, and how must salaries be paid?
How much vacation, holiday and family leave must employees get in Mexico?
What social security contributions and payroll taxes does a Mexican employer pay?
How much does it cost to dismiss an employee in Mexico?
How can a company hire a foreign national in Mexico?
Can you engage contractors instead of employees in Mexico?
What does Mexico's 2021 outsourcing ban mean for companies using service providers?
Key employment laws in Mexico and official sources
- Constitución Política de los Estados Unidos Mexicanos, Article 123 — Sets the constitutional basis for working hours, rest, minimum wage, profit sharing and protection against unjustified dismissal.
- Ley Federal del Trabajo (Federal Labour Law) — Main employment statute: contracts, hours, leave, aguinaldo, PTU, dismissal, outsourcing and labour justice.
- Decree reducing the working day (DOF, 1 May 2026) — Phases the maximum workweek down to 40 hours by 2030, changes overtime limits and requires electronic time records from 2027.
- Ley del Seguro Social (Social Security Law) — Sets IMSS registration, contribution rates and caps, and sickness, maternity, work-risk and retirement benefits.
- Ley del Impuesto sobre la Renta (Income Tax Law) — Governs income tax on salaries, employer withholding and exempt payments such as part of aguinaldo.
- Ley de Migración (Migration Law) — Sets residence categories, work permission and employer registration with the National Migration Institute.
FAQs: hiring employees in Mexico
Can a foreign company hire employees in Mexico without a local entity?
Directly hiring usually requires Mexican tax and IMSS employer registrations, which most companies obtain through a local subsidiary. Without one, companies often use an Employer of Record that employs the worker directly and runs payroll, IMSS and tax compliance. Because the 2021 reform bans the subcontracting of personnel, check how the provider structures the arrangement and whether it holds any required REPSE registration.
How much does an employee cost in Mexico on top of gross salary?
Employer social security contributions (IMSS, 2% retirement, 5% INFONAVIT housing and an old-age rate that rises each year to 2030) usually cost roughly 20–30% of salary up to the 25 UMA cap. State payroll tax adds about 2–4%. Mandatory extras add more: aguinaldo of at least 15 days’ pay, a 25% vacation premium and 10% PTU profit sharing for profitable companies.
What is the minimum wage in Mexico in 2026?
From 1 January 2026 the general minimum wage is MXN 315.04 a day, a 13% increase, or about MXN 9,577 a month. In the Northern Border Free Zone it is MXN 440.87 a day, a 5% increase. Higher professional minimum wages apply to some trades. CONASAMI sets new rates each December, effective 1 January.
How much notice and severance does an employer owe when dismissing an employee in Mexico?
There is no notice period, but there is no at-will dismissal either. Without a legal cause, the employer owes 3 months’ integrated salary, usually 20 days’ salary per year of service, a seniority premium of 12 days per year (capped salary) and accrued benefits. Dismissal for cause needs written notice within 5 business days, and settlements should be ratified before a Conciliation Centre.
Can a company hire a foreign national in Mexico, and what permit is needed?
Yes. The worker needs a residence status with permission to work from the National Migration Institute (INM). The employer registers with INM and files the job offer, the worker obtains a visa at a Mexican consulate, then exchanges it for a temporary resident card after arrival. At least 90% of each company’s workers must be Mexican.
Is it risky to engage contractors instead of employees in Mexico?
Yes. The Federal Labour Law presumes employment whenever someone provides personal, subordinated work for pay, regardless of the contract’s label. Reclassified contractors can claim severance, aguinaldo, vacation premium and PTU, and IMSS and INFONAVIT can assess back contributions with surcharges. The 2021 outsourcing reform also bans supplying personnel through third parties, with joint liability and lost tax deductions.
Related NNRoad resources for Mexico: Employer of Record in Mexico · Payroll in Mexico · Hiring foreign employees in Mexico · Contractors and on-demand talent in Mexico · Mexico employer cost calculator
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Regulation Updates in Mexico
Discover the latest employment and compliance updates in Mexico — helping you stay ahead in a changing regulatory landscape.
Decree Amending and Adding Various Provisions of the Federal Labor Law and the Federal Copyright Law, Regarding the Rights of Performing Artists
What it is: A decree amending and adding provisions of the Federal Labor Law and the Federal Copyright Law regarding the rights of performing artists, including new obligations for employers.
What it changes: Employers must provide appropriate dressing rooms and must stipulate specific remuneration and consent terms for the use of artists’ image or voice by artificial intelligence or other technology, creating new employer obligations under mandatory benefits in the Federal Labor Law.
Who is affected:
- Employers
What employers should do:
- Ensure provision of appropriate dressing rooms for performing artists.
- Include stipulations on remuneration and consent for use of artists’ image or voice by artificial intelligence or other technology.
Notes: Effective month: 2026-05.
Decree Reforming, Adding and Repealing Various Provisions of the Federal Labor Law
What it is: A federal decree reforming the Federal Labor Law introduces changes to working time, including a gradual reduction of maximum weekly working time to 40 hours, and new obligations for employers to implement an electronic time registry and revised overtime rules.
What it changes: The policy changes establish a 40-hour maximum weekly work limit and require an electronic timekeeping system, along with updated overtime rules, creating new employer obligations related to working time and timekeeping that affect payroll and compliance operations.
Who is affected:
- Workers
- Employers
What employers should do:
- Implement an electronic time registry system
- Prepare for updates to overtime rules and payroll processes
- Ensure compliance with the new working time and timekeeping requirements
Notes: Effective month: 2026-05.
Decree Amending, Adding and Repealing Various Provisions of the Federal Labor Law Regarding Reduction of the Workweek
What it is: A federal decree amending the Federal Labor Law to implement a gradual move to a 40-hour workweek, including new employer obligations related to working time.
What it changes: It harmonizes secondary law to reduce the workweek to 40 hours and imposes new employer obligations on how working time is recorded and managed, including changes to overtime limits that must be operationalized.
Who is affected:
- Workers
- Employers
What employers should do:
- Prepare to implement the updated standards for the 40-hour workweek and revised overtime limits.
- Establish or update electronic time-recording processes to comply with the new working time obligations.
Notes: Effective month: 2026-04.
Reform to the Federal Labor Law on Workweek Reduction and Electronic Timekeeping
What it is: A reform of the Federal Labor Law requiring a gradual reduction of the workweek to 40 hours and mandating the implementation of electronic time-recording systems by employers.
What it changes: The policy introduces a phased path to a 40-hour workweek and establishes an obligation for employers to adopt electronic timekeeping, with new requirements related to working time and employer record-keeping.
Who is affected:
- Employers (as the entities required to implement electronic time-recording systems and adapt to the reduced workweek).
What employers should do:
- Prepare to implement an electronic time-recording system as mandated.
- Align scheduling and records management practices with the new working time and record-keeping requirements.
Notes: Effective month: 2026-05.
Decree amending Articles 59, 61 and 69 of the Federal Labor Law regarding reduction of the working day
What it is: A proposed decree amends the Federal Labour Law to reduce the working day by establishing a maximum 40-hour workweek and a five-day workweek with two days of rest, without reducing wages.
What it changes: It introduces a maximum 40-hour workweek and a five-day workweek with two days of rest, while maintaining current wage levels.
Who is affected:
- Workers or employers explicitly mentioned or clearly implied by the policy summary.
What employers should do:
- Prepare for the transition to a 40-hour, five-day workweek with two days of rest while keeping wages unchanged.
- Review scheduling practices to align with a 40-hour maximum weekly limit and ensure compliance with the new structure once effective.
Notes: Effective month: 2026-02.
Jul 2025: Mexico Reduces Minimum Retirement Age for State Workers
A presidential decree formally lowers retirement age thresholds for public sector employees, aiming to ensure a fair and dignified pension system.
Update first published on NNRoad in Jul 2025. The current rules are summarised in the sections above.