Overview

Capital
Mexico City
Currency
Mexican Peso (MXN)
Date Format
dd/mm/yyyy

Contributions

Employer

Employer Payroll Contributions

5.25%
Sickness & Maternity
1.75%
Disability & Death
2.00%
Retirement
1.75%
Layoff and Retirement Benefits
1.00%
Child Care
0.50% - 3.00%
Work Related Accidents (depends on the state)
5.00%
Housing Tax
0.50% - 3.00%
Payroll State Tax (depends on the state)
up to 22.75% Total Employment Cost
Employee

Employee Payroll Contributions

5.25%
Sickness & Maternity
1.75%
Disability & Death
3.15%
Layoff and Retirement Benefits
10.15% Total Employee Cost

Employee Income Tax

1.92%
Up to 7,735.00
6.40%
7,735.00 - 65,651.07
10.88%
65,651.07 - 115,375.90
16.00%
115,375.90 - 134,119.41
17.92%
134,119.41 - 160,577.65
21.36%
160,577.65 -323,862.00
23.52%
323,862.00 - 510,451.00
30.00%
510,451.00 - 974,535.03
32.00%
974,535.03 - 1,299,380.04
34.00%
1,299,380.04 - 3,898,140.12
35.00%
Over 3,898,140.12
Employer Taxes
3 HIGHEST
3 LOWEST
Brazil
China
Slovakia
Mexico
South Africa
Georgia
Macedonia
82.39%
41.12%
37.2%
22.75%
2%
2%
0%
Employee taxes
3 HIGHEST
3 LOWEST
Romania
Macedonia
Netherlands
Mexico
Georgia
Belarus
Ukraine
45%
28%
27.65%
10.15%
2%
1%
0%

Minimum Wage

General

The minimum wage is 141.70 MXN per day. It is 213.39 MXM per day in the Free Economic Zone of the Northern Border.

Minimum wage (per month)
$4000
$2663
$2518
$877.16
$36.80
$17.24
$2.33
Geneva
Luxembourg
Australia
Mexico
Angola
Tanzania
Venezuela
3 HIGHEST
3 LOWEST

Payroll

Payroll Cycle

The payroll cycle is bi-weekly. Payments are made every 15th day & last day of the month.

13th Salary

Employees receive 15 days of pay on 20th December as a Christmas bonus.  

Paying 13th and 14th salaries is also a common practice.

Working Hours

General

Full time employment is considered 8 hours daily, 48 hours weekly.

Overtime

Employees who earn minimum wage can work up to 9 hours exempt per week. The following 9 hours will be paid at a rate of 200% salary, with any hour beyond that paid at a rate of 300%.

Employees that earn more than the minimum wage are exempt for only 50% of the overtime worked per week up to 5 minimum wages per week. The first 9 hours will be paid at a rate of 200% and the following hours will be paid at a rate of 300%.

Leave

Paid Time Off

Mandatory Vacations:

1 year seniority = 6 days

2 years seniority = 8 days

3 years seniority = 10 days

4 years seniority = 12 days

5 to 9 years seniority = 14 days

10 years or above – additional 2 days per 5 years.

No Carryover policy

Vacation days
Public holidays
3 HIGHEST
3 LOWEST
Spain
Austria
Brazil
Mexico
Michigan
China
Federal
30
14
44
30
13
43
30
13
43
6
8
14
2
11
13
5
7
12
10
10
Public Holidays

8 public holidays.

Sick Days

No minimum required by law.

Maternity Leave

Up to 3 months of leave fully paid by social security.

PAID MATERNITY LEAVE (DAYS)
413
410
365
90
45
30
0
Norway
Bulgaria
Serbia
Mexico
United Arab Emirates
Tunisia
Federal
3 HIGHEST
3 LOWEST
Paternity Leave

1 week of leave fully paid by the employer.

Parental Leave

Parental leave is not mandatory.

Termination

Termination Process

An employer with cause to terminate an employee must show the reason. Otherwise, the termination may be deemed without cause.

Notice Period

No notice period for termination is required.

Severance Pay

Voluntary resignation: the employer must pay the employee all benefits that are due.  If the employee has 15 years or more of seniority, the employee is entitled to 12 days’ salary for each year employed.

Termination with cause: The employer must pay the employee all benefits that are due. In addition, 12 days of salary for each year employed.

Termination without cause:  3 month’s salary, 20 days for each year in the company, and a seniority bonus of 12 days per year of service.  The employee will also receive back salary from the date of dismissal to the day that the employer complies with the Labor Board’s decision.

Probation Period

Optional, but the common practice is 3 months.

VISA

VISA

To get a work permit in Mexico, a candidate would first need to apply for a residence visa, which can be temporary (6 months to 4 years) or permanent. After that, a work permit can be obtained by applying to the Instituto Nacional de Migración (INM) for permission to work.

For short visits (up to 180 days):

Visitor Visa with Permission to Work – For short visits (up to 180 days) for people who are working at a Mexican branch of a foreign company. The visa cannot be extended beyond 180 days and cannot be used for receiving payment from a Mexican company.

For visits longer than 180 days:

People who plan to work in Mexico for more than 6 months need a resident visa and a work permit.

Temporary Resident Visa – Those who plan to live and work in Mexico but do not plan to remain there permanently can request a temporary resident visa.

The applicant must have a job offer from a local business and the employer must request a permit from the INM. When the permit is granted, the applicant must submit a request as well from outside Mexico and allow up to 45 days for the request to be processed. The visa is valid for 4 years. After that, the visa holder must apply for a permanent resident visa or leave the country.

Permanent Resident Visa – someone who plans to move to Mexico permanently can request a permanent resident visa if the requirements are met. Conditions include family connections in Mexico, or having sufficient livelihood, or having held a temporary resident visa for 4 years. This visa entitles the holder to work in Mexico.

VAT

General

16% standard rate.

Papaya Global offers full Mexico PEO services for companies not wishing to open a local entity

Version History

January 1, 2021
Minimum wage rose to 141.70 MXN per day and to 213.39 MXN in the Free Economic Zone of the Northern Border
Employee income tax rates were adjusted.

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    Questions & Answers

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    Ben B.
    Ben B.
    8 months ago

    If a new mother wants to extend maternity leave beyond 3 months, does the government continue to pay her salary?

    Alex Margolin
    Admin
    8 months ago
    Reply to  Ben B.

    If a mother extends her maternity leave, the government will continue to pay at a rate of 50% for an additional 60 days.

    Peter Winn
    Peter Winn
    7 months ago

    Is it standard practice to grant a vacation bonus to employees? If so, what is the standard amount.

    Alex Margolin
    Admin
    7 months ago
    Reply to  Peter Winn

    Hi Peter,

    It is a common practice and a very strong expectation in Mexico that employees will receive a 25% bonus for at least 6 days of their vacation.

    Matt Teumer
    Matt Teumer
    4 months ago

    Can payroll payments to employees be made by a payment service provider on behalf of the employer?

    Emily Kuhnert
    Admin
    4 months ago
    Reply to  Matt Teumer

    Hi Matt, thank you for your question. In large, yes, it is possible.

    Patricia
    Patricia
    3 months ago

    Hi, We have a travel related business in Mexico and we have be shut down by the government due to unpaid Social Security for employees. We have been closed/struggling for 1 year due to Covid and no tourism and no income, but we have continued paying our employees with loans and credit cards. However, we owe 1 year of employee Social Security payments to the government. I was told that if we can not pay the past Social Security debt and ‘release’ our employees, that the employees will lose ALL their pension they’ve earned for the last 22 years they have worked for us. They will have no retirement monthly pension coming in from what we have paid toward their retirement. This doesn’t seem right. Is this false information?

    Emily Kuhnert
    Admin
    3 months ago
    Reply to  Patricia

    Hi Patricia, this is out of the scope of things that we cover and do not offer legal advice. We recommend that you seek legal counsel in Mexico to understand how you as a company are liable.

    VilCap, Inc
    VilCap, Inc
    3 months ago

    Are employers required to provide health insurance in Mexico? Our company currently provides health insurance stipends to staff to purchase private health insurance plans. Is this common and/or allowed? If allowed, how is it taxed?

    Emily Kuhnert
    Admin
    2 months ago
    Reply to  VilCap, Inc

    Hi, employers are not required to provide health insurance. If this is offered as an allowance, then it is treated as a salary component and is taxed as such with the regular payroll.

    VilCap, Inc.
    VilCap, Inc.
    2 months ago

    If employees incur business expenses on behalf of the company, can the employees receive reimbursement via the payroll company as a non-taxable element of their paycheck?

    Alex Margolin
    Admin
    2 months ago
    Reply to  VilCap, Inc.

    Employees can be reimbursed for expenses tax-free in Mexico as long as they provide a detailed electronic invoice (not a paper invoice) in the name of the company (not the employee) and the total is under a certain limit, usually 2,0000 MXN. It must be invoiced as an expense for the company, not a form of income for the employee. The electronic invoice should include the company’s name and tax ID number, the amount of the expense, the payment method, and date of the expense, and should in either PDF and XML format. The expense should be made by credit card or e-transfer.

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