Employer of Record in Mexico

An Employer of Record (EOR) in Mexico is a company that legally hires employees on your behalf. This means you can build a team in Mexico without setting up a local entity. The EOR handles all the HR tasks like payroll, taxes, benefits, and employment contracts, ensuring you comply with Mexican labor laws. You still manage your employees' day-to-day work. For a compliant EOR provider, consider Rivermate.

How an Employer of Record (EOR) Works in Mexico

Using an EOR in Mexico simplifies hiring. Here is how it generally works:

1. You find the talent. You recruit and select the employees you want to hire in Mexico.
2. The EOR hires them. The EOR legally employs the workers under their local, compliant entity. They handle the employment contracts and onboarding.
3. They manage HR. The EOR takes care of payroll, taxes, and benefits administration according to Mexican law.
4. You manage the work. Your team members work for you, just like your other employees. You direct their daily tasks and projects.
5. They handle changes. If you need to terminate an employee, the EOR manages the process in compliance with local regulations, including severance pay and notice periods.

Benefits of Using an EOR for Hiring in Mexico

Using an EOR to hire in Mexico offers several advantages. It allows you to enter the Mexican market and hire talent quickly, without the time and expense of establishing a legal entity. This significantly speeds up your expansion.

• Faster Market Entry. Hire employees and start operations in a fraction of the time it would take to set up your own company.
• Cost Savings. Avoid the high costs associated with entity registration, legal fees, and setting up local HR and payroll teams.
• Compliance Assurance. EORs are experts in Mexican labor law, reducing your risk of non-compliance with complex regulations.
• Simplified HR. Offload the administrative burden of payroll, tax withholding, and benefits management.
• Access to Expertise. Benefit from the EOR's knowledge of local market practices and statutory requirements.

Rivermate's transparent pricing model eliminates complexity with a single, competitive monthly fee per employee. Unlike traditional PEO providers, our pricing in Mexico includes comprehensive HR support, benefits administration, compliance management, and access to our proprietary dashboard for real-time workforce analytics. No hidden costs, no setup fees—just straightforward pricing that scales with your business needs while ensuring full legal compliance in Mexico.

Hiring in Mexico is a smart move for many companies. The country has a large and growing economy with a diverse talent pool. But, before you start, it's important to understand the local labor laws. Mexico has strong regulations that protect employees. This guide will walk you through the key things you need to know.

Employment contracts & must-have clauses

In Mexico, you must provide a written employment contract. Verbal agreements are not enough. The contract formalizes your relationship with the employee and outlines the terms of their employment. Most contracts are for an indefinite period, meaning there is no set end date.

Your contracts must be in Spanish to be legally binding and should include the following clauses:

• Personal information: Full name, nationality, age, sex, marital status, and addresses for both you and the employee.
• Job details: A clear description of the job duties and where the work will be performed.
• Contract type: State whether the contract is for an indefinite term, a fixed project, or seasonal work.
• Working hours: Define the daily and weekly work schedule.
• Compensation: Clearly state the salary, including how and when it will be paid.
• Benefits: Detail all benefits, such as vacation time and bonuses.
• Training: Mention that the employee will receive training according to your company's plans.

Probation periods

You can include a probation period in your employment contracts. This allows you to see if a new employee is a good fit for the role. The length of the probation period depends on the type of position.

• For most roles, the probation period can be up to 30 days.
• For executive, managerial, or specialized technical positions, this can be extended to 180 days.

These periods must be included in the written contract to be valid. Probation periods can only be applied to contracts that are for 180 days or more.

Working hours & overtime

The standard workweek in Mexico is 48 hours, spread over six days. There are three recognized work shifts:

Any work done beyond these hours is considered overtime. Overtime is limited to three hours per day, three times a week. The first nine hours of overtime per week are paid at double the employee's regular rate. Any additional hours are paid at triple the rate.

Public & regional holidays

Mexico has several national public holidays. You must give employees a paid day off for these holidays. If an employee works on a public holiday, they are entitled to double pay.

Here are the official public holidays for 2025:

• January 1: New Year's Day
• February 3: Constitution Day
• March 17: Benito Juárez's Birthday
• May 1: Labor Day
• September 16: Independence Day
• November 17: Revolution Day

Some other holidays, like Holy Thursday and Good Friday, are widely observed but are not official national holidays.

Hiring contractors in Mexico

You can also hire independent contractors in Mexico. This can offer more flexibility than hiring full-time employees. However, it's crucial to classify workers correctly.

An independent contractor in Mexico is self-employed. They typically:

• Work on their own schedule.
• Use their own tools and equipment.
• Can work for multiple clients at once.

Misclassifying an employee as a contractor can lead to serious penalties. This can include back taxes, social security contributions, and fines. The Mexican government has become stricter about misclassification to ensure workers receive the protections they are entitled to.

An Employer of Record (EOR) can help you avoid these risks. An EOR can legally hire employees on your behalf, ensuring compliance with all local labor laws. This way, you can focus on managing your team and growing your business without worrying about the legal complexities of hiring in Mexico.

Navigating compensation and payroll in Mexico means understanding a few key components. You'll deal with social security contributions, housing fund payments, and a progressive income tax system. It’s a system designed to provide a strong social safety net for employees. Payments are made in Mexican Pesos, and your payroll schedule will typically be weekly or bi-weekly.

Payroll cycles & wage structure

You can pay employees on a weekly or bi-weekly schedule. For office-based roles, bi-weekly pay is common. Manufacturing industries often use a weekly payroll cycle.

Beyond the base salary, Mexico's wage structure includes a few important elements:

• Aguinaldo: This is a mandatory, yearly Christmas bonus. You must pay it by December 20th. The minimum amount is equal to 15 days of your employee's regular pay.
• Profit Sharing: You are required to share 10% of your company's pre-tax profits with your employees. This payment is due by the end of May each year.
• Vacation Premium: When an employee takes vacation, they are entitled to a bonus of at least 25% of the pay they would normally receive for those vacation days.

Overtime & minimums

The standard workweek in Mexico is 48 hours, typically spread over six days. Anything beyond this is overtime.

• Overtime Pay: You must pay 200% of the normal hourly rate for the first nine hours of overtime in a week. If an employee works more than nine hours of overtime, you must pay 300% of their standard rate.

Mexico updates its minimum wage annually. As of 2023, the daily minimum wage is MXN 207.44 for most of the country. There is a higher rate of MXN 312.41 per day for the Northern Border Free Zone.

Employer taxes and contributions

As an employer, you are responsible for several contributions that fund social programs. These are calculated on top of an employee's gross salary.

Employee taxes and deductions

You must withhold certain taxes and contributions from your employees' paychecks.

In Mexico, benefits and leave are a core part of employment. The law provides strong protections for employees. This means you need to understand your obligations from day one. Getting it right keeps your team happy and your business compliant.

Statutory leave

Mexican law mandates several types of paid leave.

• Annual Leave: After one year with your company, employees get 12 days of paid vacation. This increases by two days for each year of service, up to 20 days. After the sixth year, they earn an additional two days for every five years of service.
• Vacation Premium: You must pay a vacation premium of at least 25% of an employee's regular salary during their vacation time.
• Maternity Leave: Mothers receive 12 weeks of paid maternity leave, typically split into six weeks before and six weeks after childbirth. The Mexican Social Security Institute (IMSS) covers the pay during this time.
• Paternity Leave: Fathers get five days of paid leave after the birth or adoption of a child.
• Sick Leave: The IMSS provides paid sick leave for up to 52 weeks. An IMSS doctor must certify the illness.

Public holidays & regional holidays

Employees are entitled to a paid day off for official public holidays. If they have to work on these days, you must pay them their regular salary plus double time.

Here are the national public holidays for 2025:

Some businesses also observe other holidays, though it is not a legal requirement. These often include:

• Holy Thursday and Good Friday
• Battle of Puebla (Cinco de Mayo)
• Day of the Dead

Typical supplemental benefits

Beyond the legal requirements, many companies offer extra benefits to attract and retain talent. Here’s a look at what is required by law versus what you can offer as a competitive perk.

How an EOR can help with setting up benefits

Setting up a compliant benefits package in a new country can be complex. An Employer of Record (EOR) simplifies this process for you.

An EOR already has a legal entity in Mexico. This means you don't have to set one up yourself. They handle all the administrative work.

Here is what an EOR does:

• Ensures you comply with all of Mexico's labor laws.
• Manages payroll and withholds the correct taxes and social security contributions.
• Administers all statutory benefits for your employees.
• Helps you create a competitive supplemental benefits package to attract top talent.

Using an EOR saves you time and reduces risk. You can focus on growing your business, knowing that your team in Mexico is taken care of.

When you part ways with an employee in Mexico, you need to follow a specific process. Mexican labor law protects employees, so you can't just end a contract for any reason. The rules are in place to make sure terminations are fair and that employees receive the payments they are entitled to. Understanding your obligations is key to a smooth and compliant offboarding process.

Notice Periods

One of the first things to know is that Mexico's labor law doesn't require a standard notice period for termination. This might be different from what you're used to. If you are terminating an employee without cause, you will provide a severance payment instead of a notice period.

However, if you are terminating an employee for misconduct, you must give them a written notice. This notice must detail the reasons for the termination. You have 30 days from when you become aware of the misconduct to provide this notice.

Severance Pay

Severance pay is a critical part of the termination process in Mexico, especially for terminations without cause. If you end an employment relationship without a legally recognized reason, you must pay severance.

A standard severance package includes:

• Three months' salary
• A seniority premium after 15 years of service
• Payment for any accrued benefits, like unused vacation days and bonuses

For terminations with just cause, such as serious misconduct, you are not required to pay severance. However, you still need to pay any outstanding wages and accrued benefits.

How Rivermate Handles Compliant Exits

Navigating the details of Mexican labor law can be complex. That's where we come in. At Rivermate, we manage the entire offboarding process to ensure you stay compliant.

Here’s how we help:

• Clear Documentation: We prepare all necessary termination documents, including the written notice that clearly states the reasons for the exit.
• Accurate Calculations: We calculate all final payments, including outstanding wages, accrued benefits, and any required severance.
• Compliance Checks: We make sure every step of the process follows Mexico's Federal Labor Law, protecting you from potential legal issues.

By partnering with us, you can be confident that your employee exits are handled professionally and legally. We take care of the complexities so you can focus on your business.

Navigating visas and work permits in Mexico can feel complicated, but it boils down to a few key paths. If you plan to hire someone to work in Mexico for more than 180 days, they will likely need a Temporary Resident Visa with work authorization. This visa is tied to their employment with a specific company in Mexico. For shorter-term work, a Visitor Visa with work authorization might be an option. The entire process is managed by Mexico's National Institute of Migration (INM), and it's crucial to get the right permissions before any work begins.

Employment Visas & Sponsorship Realities

When you want to hire someone who needs a work visa in Mexico, the process starts with the employer. You must have a legal entity in Mexico to sponsor an employee's visa application with the INM. Once the INM approves the application, the employee can proceed with their part of the process at a Mexican consulate in their home country.

This is where an Employer of Record (EOR) comes in. If you don't have your own legal entity in Mexico, an EOR can act as the legal employer for your team members. This means the EOR can sponsor the necessary work visas on your behalf.

Here’s what an EOR can typically do:

• Act as the legal, in-country employer for your employees.
• Sponsor Temporary Resident Visas with work permits.
• Manage local payroll, taxes, and benefits in compliance with Mexican law.

However, there are practical limits. Visa sponsorship is not always guaranteed. Some EOR providers may have limitations due to national quotas on foreign employees. Also, the Temporary Resident Visa is tied to the sponsoring employer. If the employment contract ends, the employee must find a new sponsor to transfer their visa or leave the country. After four years on a temporary visa, an individual can apply for permanent residency, which grants the right to work without a specific sponsor.

Business Travel Compliance

For short-term business trips, the rules are different. If you are traveling to Mexico for activities like business meetings, training, or client discussions for less than 180 days, you generally won't need a formal work visa. Most business visitors can enter Mexico with a visitor permit, often referred to as an FMM (Forma Migratoria Múltiple).

Keep these key points in mind for business travel:

• No Paid Work: A visitor permit does not allow you to earn income from a Mexican source. Your salary must come from your employer outside of Mexico.
• 180-Day Limit: You can stay in Mexico for up to 180 days for business activities.
• Clear Purpose: Be prepared to explain the purpose of your visit to immigration officials at the port of entry.

It's important to respect the distinction between business travel and employment. Attempting to work long-term on a visitor permit can lead to legal issues. If a role requires more than short-term, non-remunerated activities, you need to pursue a proper work visa.