Employ Candidates Compliantly in Mexico

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  1. Overview: Mexico
  2. Global HR Compliance
  3. Global PEO and payroll
  4. Work permit for hiring expats via PEO
  5. Expand without a company set up
  6. Contractor vs. employee: which is better?
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Global HR Compliance in Mexico

If you hire an international workforce, or plan to hire, then Hiring and Firing Workforce in Mexico Guide below will help you understand the nuances of labor legislation in the country.

When the company is planning to enter a new foreign market of Mexico and has a need to employ a local national there, the first question to answer is how it is going to make local hires.

We have designed a Global Employer of Record service to help you outsource global employment of your foreign workforce to companies like ours.

This solution helps you employ your global sales force in Mexico as well as in other 180+ countries of the world, and provide pay and benefits to your employees, as well as administer any business expenses with our help.

Our solution is different from other hiring modes in that it helps you engage your foreign workforce in full compliance with the local labor legislation. This means you are protected from any non-compliance and employee misclassification risks while we bear all employment risks, not you.

So, it looks very much like hiring your in-house sales force in your home country. However, you focus on only on your global business development while we admin your global HR. In addition, you don’t need to open your own entities in the foreign countries and can leverage our infrastructure in Mexico instead. With our service, you can become a global company with reduced costs and minimized time and effort on your end.

Your employed foreign sales force will devote 100% of their time to your company product and may stay with you longer than foreign independent sales reps.

Global Employer of Record solution is 100% compliant solution that guarantees you and your employees fully compliance with local legislation in Mexico .

We are experts in global workforce employment in Mexico, and our goal is to become your single provider. Instead of working with numerous local staffing agencies and legal advisors, Acumen International can solve your global business challenges and save you time, costs, and resources.

Our team of English-speaking professionals frees you from working through language nuances. Acumen International works 24/7 and can assist you whenever you need, regardless of time zones. Our goal is to create tailored labor solutions for you that are managed legally and in full compliance with the local employment laws.

With our knowledge and deep understanding of local nuances, you easily satisfy your need for skilled professionals in your global industry. With our qualified local partners, you can trust that your global workforce satisfies all local tax, social security, and immigration requirements in Mexico.

Hiring and Firing Workforce in Mexico Guide

#Employment Agreements

Permanent employment contracts

Contracts of this type include those for undetermined work relationship or those that exceed 180 days.  In this case, a trial period that does not exceed thirty days may be established. This trial period can be used for the sole purpose of verifying that the worker meets the requirements and knowledge necessary to carry out the work that has been requested. 

Casual employment contracts  

Federal Labor Law states that a specific time period for labor contracts in Mexico can be stipulated only when required by the nature of the work provided.  This stipulated time can also be defined when the contract with an individual is for the purpose of temporarily replacing another worker. Contracts also exist for specific jobs. This type of contract generally arises if someone is hired for an assignment, and the contract ends when the assignment is complete.

Fixed-term contracts

Any individual employment relationship is subject to the principle of ‘job stability’, that is, subject to the employee’s right to keep his job as long as the employment relationship so requires. The FLL assumes, as a general principle, that an employment agreement has been executed for an indefinite term, unless the nature or the particular type of service to be provided calls for an employment agreement for a specific job or term, or if the parties agree to execute an employment agreement for initial training or subject to a probationary period.

Collective Agreements

In the case of Unions, there is an additional agreement that is negotiated and entered into by the Union and the employer in order to promote the creation or improvement of the labour conditions for the employees as a collective and in turn the employer obtains a loyal and solid workforce. The Collective Bargaining Agreement is renewable and cannot contain provisions that stipulate the waiver of the basic constitutional and statutory rights or benefits for the employees as a collective. It can always be more favourable than the constitutional and statutory requirements but never less than the latter.

#Employment Termination and Severance Pay (Dismissal)

Fair cause refers to significant violations by employees of employment terms to the detriment of the employer. Termination with fair cause may be justified if the employee:

  • Falsifies credentials or lacks legal ability to perform his or her job.
  • Engages in work-place violence, dishonesty, abusive treatment, sexual harassment, or slander against fellow employees, managers, employers, clients, suppliers or administrative personnel or their families.
  • Intentionally or negligently produces material damages in the work place.
  • Compromises the security of the working place or personnel through negligence.
  • Performs immoral acts in the work place, including reporting for work under the influence of drugs or alcohol.
  • Reveals manufacturing secrets, or publishes reserved matters, causing damage to the employer.
  • Disobeys the employer without just cause on a work-related matter.
  • Becomes incarcerated.

In case of “employees of trust” (i.e. employees responsible for inspection, security, investigation or personnel) the employer may terminate with fair cause if there is reasonable cause to have lost confidence in the employee.

In Mexico, unilateral termination is only possible for cause:

  • If the employee, or the union that proposed or recommended the employee, deceives the employer by means of false certificates or references attributing to the employee certain abilities, skills or qualities that he/she does not have.
  • Dishonest or violent behavior at the job.
  • Dishonest or violent behavior against coworkers that disrupts work discipline.
  • Threatening, insulting, or abusing the employer or the employer’s family or the employee’s coworkers, unless provoked or acting in self-defense.
  • Intentionally damaging the employer’s property.
  • Negligently causing serious damage to the employer’s property.
  • Carelessly threatening workplace safety or harassment against any person in the workplace.
  • Immoral behavior in the workplace, including labor or sexual harassment.
  • Disclosure of trade secrets or confidential information.
  • More than three unjustified absences in a 30-day period.
  • Disobeying the employer without justification.
  • Failure to follow safety procedures.
  • Reporting to work under the influence of alcohol or nonprescription drugs.
  • A prison sentence.
  • The lack of the documents required by laws and regulations that are needed to provide the services.
  • The commission of any other acts of similar severity.

#It is prohibited to dismiss

Mexican employment legislation is subject to the “job security” principle. As a result, all employees are granted protection from dismissal so that an employer can only terminate the employment relationship with an employee where the employee commits any of the specific wrongdoings as provided for in the FLL. The parties cannot agree to additional causes for termination of employment outside of those specifically provided for in the FLL.

All employees are entitled to protection against dismissal (except for just cause), regardless of their seniority.

#Notice period

There is no notice period and therefore no payment in lieu of notice. However, within 30 days of discovering the facts that justify or form the basis for the dismissal, the employer must notify the employee with a written notice about the causes for the termination and the effective date of the termination. Otherwise, the dismissal may be deemed unjustified regardless of the cause. 

#Severance payment

If the employer is not willing to reinstate the employee, it must give the employee a severance payment equivalent to three months’ salary, as well as 20 days’ composite salary for each year of service and a seniority premium. The employee is also entitled to receive salary from the dismissal to the date on which the employer complies with the Labor Board’s decision. Employees dismissed with or without cause, as well as those who resign with 15 or more years of seniority, are also entitled to a seniority premium equivalent to 12 days’ salary for each year of service provided. The seniority premium, however, may not exceed twice the minimum salary in effect in the economic zone where the work is performed (plus prorated vacation, vacation premium, and Christmas bonus). 

#Employee Benefits and Contributions

Mandatory benefits required by law to be provided by an employer

  • Employees are entitled to a share in the company’s profits. However, new companies are exempted from this requirement during their first year of operation. In addition, the highest-ranking officer of a company is not entitled to this benefit.
  • Paid vacation and mandatory holidays.
  • Christmas bonus: Employers must give each employee the equivalent of 15 days’ salary by December 20 of each year.
  • Social Security System.

Non-mandatory benefits that are offered by an employer

  • Food Coupons: Grocery Coupons is not a statutory requirement but it is a common benefit that employers utilise. This is a benefit that you might not have encountered before, and you may be wondering how to manage it for your assigned employees. Very simply, once a month all employees are provided with grocery coupons for personal use. This is like a pre-paid card they can use at the supermarket.
  • Vouchers: Although providing coupons or vouchers of a predetermined value is not mandated by Mexican law, companies in certain competitive labor markets may choose to offer them to their maquiladora workers. These could include nominally valued for coupons to purchase food, medicine or transportation services. It is also customary in some markets, particularly along the U.S. – Mexico border to provide cafeteria service as part of workers’ compensation. This may include one, or two, hot meals a day.
  • Savings Fund: This is a federally mandated worker benefit in Mexico whose purpose it is to encourage savings for retirement in Mexico among the country’s workforce. Workers can save a percentage of their pay during each pay period. This is matched with an employer contribution.

#Minimum statutory salary

The minimum salary is set annually and becomes effective on January 1st. Under special circumstances, it may be modified during the year at the request of one of the parties in the tripartite National Commission, if it is deemed by the Commission as a whole, that the economic circumstances warrant it. 

#Probationary period

Probationary periods are allowed in Mexico. Individual employment agreements may be subject to a probationary period when the employer hires an employee for an indefinite term or for a specific task or fixed term, provided that the duration of the labor relationship in these cases is greater than 180 days. The probationary period is limited to up to 30 days for regular employees and up to 180 days for executives, managerial positions or to perform a specialized technical or professional job. During this time, the employee shall be entitled to social security and the salary and benefits corresponding to the position performed by him/her.

#Work hours

The Federal Labor Law (FLL) establishes as maximum weekly work shifts the following:  

  • Eight hours per day shift (equivalent to 48 hours per week).
  • Seven hours per night shift (equivalent to 42 hours per week).
  • Seven-and-a-half hours per mixed shift (equivalent to 45 hours per week).

During a continuous shift all employees shall have a break of at least 30 minutes. Breaks of 60 minutes or more will be unpaid if the employee is allowed to leave the employer’s facilities during the break.

#Annual leave

Employees are entitled to a paid vacation period based on their seniority as follows:

Seniority in Years   Paid Vacation Days  
1 6 days
28 days
310 days
412 days
5-914 days

Sick leave

An employee’s entitlement to sick leave varies depending on the type of illness and degree of incapacity/disability. In case of illness or injury, an employee must obtain a certificate from the ISS. The ISS determines the employee’s entitlement to sick leave as well as the amount paid to the employee during the illness or injury. The ISS, not the employer, pays the employee’s income during the leave. There are no mandatory unpaid medical leaves of absence in Mexico. If the employee needs an unpaid medical leave of absence due to a condition not recognized by the ISS, then he/she can agree with the employer to such a leave of absence, however the employer is not obliged to grant it. All employees must be registered with the Mexican Social Security Institute (ISS). Once an employer has registered its employees with the ISS, the employer is subrogated by the ISS in all benefits, economic and in-kind.

#Parental leave

Maternity leave

Working mothers are entitled to 42 days prior to and 42 days after childbirth as maternity leave, and the ISS pays them 100% of their registered salary during such leave. Working mothers are also entitled to transfer up to four weeks of the pre-birth maternity leave to the period after childbirth with prior written medical authorization of the corresponding social security institution and considering the nature of the job, as well as the opinion of the employer. If a disability results from the childbirth requiring medical care at a hospital, the maternity leave may be extended up to eight weeks after childbirth.  Adoption leave for working mothers is six paid weeks after the placement of the child.

Paternity leave

The Federal Labor Law (FLL) also provides a paternity leave of five paid days for childbirth or adoption. 

Acumen International can help you fast-track your possibilities of entering and expanding your business in Mexico by providing you with an Employer of Record services. Our unique mix of PEO/EOR solutions will enable you to jumpstart your global operations almost immediately, cost-effectively and compliantly without you having to set up a legal entity there.

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