In Mexico, labor law is very protective of the worker, for this reason, some foreign companies encounter difficulties with personnel management, since Mexican labor laws differ greatly from those of their country of origin. In order not to encounter problems, it is advisable that foreign companies and/or employers be advised by lawyers in Mexico specialized in labor law before hiring an employee in Mexico.
Hiring a worker in Mexico
The Federal Labor Law (LFT) regulates labor relations between employers and employees in Mexico. Below are some aspects of interest for those companies wishing to hire a worker in Mexico:
- Hiring of foreign workers: Foreign workers of a company in Mexico may represent a maximum of 10% of the entire workforce and the company must have its employer’s certificate issued by the National Immigration Institute, as well as issue job offers to foreigners so that they may obtain their work visa. This regulation does not apply to directors, administrators and managers of the companies.
- Directly or indirectly employ their workers: As compliance with labor and social security laws in Mexico can be quite complicated to achieve, some companies choose to hire the services of outsourcing companies to reduce costs associated with the hiring and maintenance of the payroll and at the same time, to be able to concentrate their resources on the main activities of the company.
- Labor contracts: There is a contractual relationship between the worker and the employer, regardless of the existence of the written contract, which as we will comment below, is also necessary.
- Unions: Unions have a lot of weight in labor relations in companies in Mexico, so every employer must be aware of the regulations. Unions can affiliate the employees of the foreign company, as well as to negotiate and sign a collective bargaining agreement.
Obligations when hiring a worker in Mexico
The following are the main obligations of the employer of an employee in Mexico:
- To sign an employment contract.
- Comply with applicable legislation.
- Make monthly or biweekly salary payments.
- Make social security contributions, income tax withholdings and other applicable contributions such as pension savings.
- To grant all benefits provided by labor law.
- Register all workers with the IMSS.
- Provide adequate equipment and tools for the performance of work activities.
- Implement health and safety protocols in the workplace.
Regulations for hiring employees in Mexico
All foreigners must have the legal right to work in Mexico, granted by the National Immigration Institute (INM). In an employment contract, all employees in Mexico are entitled to the following:
- Minimum Wage: In Mexico, the minimum wage is 123.22 pesos per day, about $6.
- Vacation: There is a minimum of 6 days vacation for the first year. From the second to the fourth year of employment, it will increase by 2 days each year. Thereafter, it will increase by 2 days every 5 years.
- Sick leave: As long as the employee has a medical certificate to show, if he/she is unable to attend work for more than three days due to illness, the employee will receive 60% of his/her salary if he/she is unable to attend work for more than 3 days due to illness.
- Christmas Bonus: The Christmas bonus in Mexico is known as “Aguinaldo”, and is a mandatory bonus that must be paid before December 20 of each year. This bonus is calculated based on a minimum of 15 days of the employee’s monthly salary each year.
- Overtime: If an employee works for the maximum 48 hours per week, he/she is entitled to an overtime rate of 200% per hour, based on the hourly wage after the 48 hours.
- Maternity leave: Maternity leave will last 6 weeks before the birth of the child and 6 weeks after. The mother will be entitled to two thirty-minute breaks from work during the first 6 months back to work. The father will be entitled to 5 days of paternity leave.
- Foreign personnel: A company can only have 10% of foreign personnel in junior functions, whereas when it comes to executive level there is no limit.
Profit sharing: Each employee may be entitled to a % of the pre-tax profits earned by the employer. - Social Security: Each employee must contribute to the Mexican Social Security Institute (IMSS). Employers must withhold funds at a rate of 5% of Gross Salary for the national workers’ housing fund institute and the recruitment savings program, which is under the Infonavit tax sent to the IMMS.
- In addition, in the first year, the employee will be entitled to an additional 25% monetary bonus.
- Probationary period: This is not mandatory in contracts. For employees with technical or specialized backgrounds it is 90 days, while for managers and senior executives, this can last up to 180 days. The worker will not receive any IMSS benefits and the employer will only withhold income tax.
- Termination of employment: Mexico provides strict safeguards and protections for employees. Maximum legal benefits that can be claimed during termination include:
-3 months’ severance pay.
-20 days of salary for each year that the employee is working for that company.
-Seniority bonus, available for those who have worked for the same company for 15 years or more.
The team of lawyers in Mexico of Delvy offers soft landing services in Mexico for those Spanish entrepreneurs who want to expand their borders and land in the Mexican market. You can contact us through our contact form, through our email or call us at (+34) 93 518 53 85.
