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.
Hire Employees in Mexico
The NNRoad Advantage ☺
Pay as you go
Global account manager
Employer of Record in Mexico
Compliance & Payroll
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
Compliance & Payroll
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, 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.
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
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.
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%
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
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;
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.
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:
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 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.
The termination payout is computed based on the following factors:
Employees who are terminated without cause are entitled to the following lump sum severance:
Employment Contract in Mexico
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.
As a general rule, the probation period is for 3 months. For executive positions is extended to 6 months.
Types of Leaves in Mexico
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.
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.
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%.
Fathers are entitled to 5 days paid leave.