Hire in Mexico

Mexico PEO &

Employer of Record

Hire & manage teams remotely in Mexico without a local entity. We handle HR compliance, payroll & taxes so you can focus on your business.

Business Language

Spanish

Salary Currency

Mexican Peso (MXN)

Payroll tax

36.69% - 43.72%

Payroll Cycle

Monthly

Time zone

UTC -5/-8

Capital city

Mexico City

Hire Employees in Mexico

NNRoad provides employer of record (EOR) & professional employment organization (PEO) services to ensure that your business in Mexico complies with local labor laws and regulations. We process monthly payroll and act as the Employer of Record, taking on all local employer liabilities.

The NNRoad Advantage ☺

Pay as you go

No set-up or overhead costs to global expansion.

Global account manager

One point of contact for all of our 50+ serviced countries and regions.

Compliance

Ensured compliant contracts and operations.

Fast Onboarding

Start working with your remote employees/contractors within a week.

Foreigner Visas

NNRoad assists with overseas foreign hires visa needs.

Platform

Access your payroll reports and employee pay stubs on our portal.

Employer of Record in Mexico

Employer of Record (EOR) services are for companies who do not have a legal entity in Mexico, but who want to hire localy. Employment and full liability are outsourced to NNRoad.

01. Candidate Selection

You interviews & select the candidates you want to hire in Mexico.

02. Employee Onboarding

We sign a local labor contract with your employees based in Mexico.

03. Compliance & Payroll

We manage monthly payroll, mandatory benefits & all HR compliance in Mexico.

04. Payroll Reporting

See all payroll reports on our platform & focus on your business in Mexico.

DETAILS: Our EOR service includes: [click to expand]

Recruiting process outsourcing – including but not limited to resume screening, shortlisting candidates, coordination for interviews, and assistance for salary negotiation.

Hiring and termination of employees/local labor contracts (contract administration – engagement, extension termination and conversion to permanent hire).

On-boarding and off-boarding employees following labor law practice.

Complete payroll solution and benefit administration

Employee management – employee record retaining, time keeping, bonus and allowance management, expense and claims, and leave employee database management accordingly to the local law.

Mandatory insurance compliance (i.e. pension, labor and health insurance) according to the local labor laws.

Payment management (Invoicing customers/clients and vendor payments).

Work VISA application assistance, if needed.

Local individual income tax reporting.

Payroll & PEO in Mexico

Professional Employment Organization (PEO) services are for companies who have a legal entity in Mexico, and want to outsource their payroll. Employment liabilities are shared between your organization and NNRoad.

01. Compliance & Payroll

We manage monthly payroll, mandatory benefits & all HR compliance in Mexico.

02. Payroll Reporting

See all payroll reports on our platform & focus on your business in Mexico.

DETAILS: Our PEO service includes: [click to expand]

Registering the necessary company and personnel information for payroll calculation in the payroll software and system

Monthly Payroll Processing

Year-End Adjustment and Annual Declaration

Taxes & Payroll in Mexico

Employee Income Taxes:

Individual income tax rates in Mexico are based on progressive tax brackets.

Individual income tax, locally known as Impuesto Sobre la Renta de las Personas Físicas (ISR), is a tax levied on individual citizens. It applies to all forms of income including wages, salaries, investments and overseas income.

Taxpayers must submit an individual annual declaration to the Mexican Tax Administration within three months of the end of each fiscal year. Different personal deductions can be applied in order to reduce individual’s final taxable amount depending on individual’s circumstances. The standard rates for individual income tax range from 1.92% up to 35%. In addition, taxpayers are also required to pay a flat rate local tax, called Derechos de Impuestos Locales (DIL).

In order to ensure compliance with individual income tax obligations, taxpayers are required to keep accurate records of all their financial transactions. Mexico has also implemented a withholding system in which employers must withhold individual income tax payments from an individual’s salary and pay it directly to the Mexican Tax Administration on behalf of the individual.

Overall, individual income tax is an important source of revenue for the Mexican government and understanding the rules and regulations surrounding this type of taxation is essential in staying compliant with one’s individual income tax obligations. Individuals should ensure that they remain informed about any changes or updates related to individual income taxes in order to avoid any non-compliance issues.

Tax Brackets

1.92%: 0.01 – 8,952.49 MXN
6.40%: 8,952.50 MXN – 75,984.55 MXN
10.88%: 75,984.56 MXN – 133,536.07 MXN
16.00%: 133,536.08 MXN – 155,229.80 MXN
17.92%: 155,229.81MXN – 185,852.57 MXN
21.36%: 185,852.58 MXN – 374,837.88 MXN
23.52%: 374,837.89 MXN – 590,795.99 MXN
30.00%: 590,796.00 MXN – 1,127,926.84 MXN
32.00%: 1,127,926.85 MXN – 1,503,902.46 MXN
34.00%: 1,503,902.47 MXN – 4,511,707.37 MXN
35.00%: Over 4,511,707.38 MXN

Sample Calculation

Single taxpayer yearly income = 180000 MXN

1.92% * 8,952.49 = 171.85
6.4% * (75,984.55 – 8,952.50) = 4,298.05
10.88% * (133,536.07 – 75,984.56) = 6,273.98
16% * (155,229.80 – 133,536.08) = 3,470.68
17.92% * (180,000 – 155,229.81) = 4,437.19

Yearly income tax = 171.85 + 4,298.05 + 6,273.98 + 3,470.68 + 4,437.19 = 18,651.75 MXN

Employer Costs in Mexico

Employers in Mexico are responsible for making a number of contributions and payments towards the benefit of their employees. These employer costs include social security contributions, vacation pay and severance pay. Mexico has a federal social security system administered by the Mexican Social Security Institute (IMSS). All employers are required to make mandatory contributions to IMSS for each of their employees. The employer must also contribute 3% of the employee’s salary to the National Workers’ Housing Fund Institute (INFONAVIT) and one percent as an additional contribution for old age retirement.

Vacation pay is another prerequisite cost employers must factor into their budget when hiring staff, which amounts to 6 days per year for workers employed between 1-3 years; 8 days for 7-10 years of service; and 10 days for 11 or more years. The labor laws also require employers to provide employees with a minimum of 15 working days’ severance pay upon termination, which must be paid within 24 hours.

Employers in Mexico must take into account these employer costs when budgeting for staff, as the Mexican government enforces strict regulations and hefty fines on companies that fail to comply. It is important for employers to ensure they are up-to-date with Mexico’s ever-evolving labor codes and laws to ensure compliance and avoid any potential legal issues.

Employer Contribution

26.54% – 33.58% – Social Security contributions (IMSS) (Maximum annual contribution 138,479.00 MXN)
5.15% – Retirement
5% – National Housing Fund (INFONAVIT)

Total employment cost: 36.69% – 43.73%

Employee Contribution

1.65% – Social Security contributions (IMSS) (Maximum annual contribution 22,243 MXN)
1.125% – Retirement/Old age insurance

Total employee cost: 2.775%

Benefits & Insurance in Mexico

Pension Fund

Mexico’s present pension system is a fully funded defined contribution system with three pillars:

a guaranteed minimum pension for low-wage workers;
mandated individual savings accounts with competitive mutual fund management;
voluntary savings.
Both men and women who have attained the age of 65 and have made at least 1,250 weeks of social security contributions are eligible for normal retirement benefits. At the age of 60, an early retirement benefit is offered.

Healthcare Insurance

All workers, including members of production cooperatives, worker-run and joint worker-management companies, traditional agrarian communities of common ownership, joint property communities, small farmers, small property owners organized in groups, and local societies or credit unions covered by the Agricultural Credit Law, are required to be covered by social security.

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

The law now states that Social Security serves the following purposes:

Medical assistance

Protection of fundamental subsistence requirements

Individual and communal well-being necessitates the provision of social services

Providing a pension that will be guaranteed by the state if all legal requirements are met

Housing Fund

INFONAVIT is the major Mexican government agency in charge of ensuring that families are able to exercise their constitutional right to adequate housing.

Working Hours in Mexico

Mexico has a 40-hour workweek consisting of 8 hours per day. The law also requires 1 mandatory rest period of at least 12 consecutive hours per 24-hour period. The maximum daily working time is 10 hours, with 4 additional hours allowed in certain circumstances. Additionally, all employers are required to provide workers with one fixed day off each week as well as 14 paid national holidays annually, though industries such as tourism may be exempt from this rule.

Mexico’s labor regulations are enforced by the Secretaría del Trabajo y Previsión Social (STPS) and employers found in violation of the labor laws may be subject to fines or other penalties. It is important for employers and employees to understand work hours regulations in order to comply with the law and ensure that all workers are properly compensated for overtime hours. Mexico’s labor regulations serve as an important safeguard for protecting workers’ rights and should always be respected.

Working Hours Per Week

The typical working week consists of 8 hours a day or 40 hours per week.

Overtime

Overtime pay is typically set at 1.5 times the regular hourly wage for the first 9 hours of overtime in a week, and double the regular hourly wage for any additional overtime hours. Certain sectors and types of work may have specific regulations, but in general, employers are required to compensate employees fairly for their extra work hours.

Termination Laws in Mexico

Only when an employee shows cause for dismissal can an employer fire him or her. Employees must demonstrate “integrity at work” according to Mexican labor law. When work is completed with great care, attention, and effort at the agreed-upon time, place, and manner, an employee is said to be acting with integrity. In addition, “lack of integrity” is a common reason for dismissal.

Severance

The termination payout is computed based on the following factors:

Employer must pay all benefits owed, including sales incentives, on a prorated basis up to the termination date if the employee voluntarily resigns.

Employer must pay all benefits owed, including commissions, on a prorated basis until the day of termination, as well as the seniority premium of twelve days of salary for each year of service, if the employee is terminated with cause.

Employees who are terminated without cause are entitled to the following lump sum severance:

three months’ aggregate daily salary, plus;

twenty days’ aggregate daily salary for each year of service;

a seniority premium of twelve days’ salary for each year of service (but with a cap of twice the minimum daily salary);

benefits due.

Employment Contract in Mexico

Employment Contract

Written contracts are mandatory in Mexico. In Mexico, it is valid the principle of stability and the contracts are signed usually for an indefinite term unless otherwise indicated differently.

Probation Period

As a general rule, the probation period is for 3 months. For executive positions is extended to 6 months.

Types of Leaves in Mexico

Annual Leave

Paid leave in Mexico is defined as a minimum of 6 days of paid vacation per year, plus an additional two days per year of service after completing a year of service.

Sick Leave

Employees are entitled to up to 52 weeks of sick leave paid at 60% of regular salary when verified by the IMSS affiliated medical authorities. For work-related injury, the employee is entitled to 100% paid sick leave.

Maternity Leave

All female employees are entitled to 12 weeks of paid maternity leave, which the employee must take six weeks before the birth and six weeks after that. The IMSS contributes 60.00% of the cost and the employer 40.00%.

Paternity Leave

Fathers are entitled to 5 days paid leave.

Public Holidays in Mexico

Public Holidays

New Year’s Day – January 1st

Constitution Day – February 7th

Benito Juarez’s birthday – March 21st

Maundy Thursday – April 14th

Good Friday – April 15th

Labour Day – May 1st

Independence Day – September 16th

Revolution Day – November 21st

Day of the Virgin of Guadalupe – December 12th

Christmas Day – December 25th