Globalization Partners offers employer-of-record services for clients that need to hire Mexican labor but don't want to open a Mexican subsidiary or branch office. Your candidate may be hired in accordance with Mexican labor laws and onboarded in days with the help of Globalization Partners' Mexico PEO. The individual is responsible for meeting your requirements inside the nation and will work closely with your team as if they were an employee of your company.
Our Global PEO service and Global Employer of Record strategy relieve our customers of the administrative burden of processing payroll in Mexico by handling all of the necessary HR services, tax filings, and compliance monitoring on their behalf. As a global PEO expert, we make sure that employment contracts, benefits, employee expenses, and (if required) severance and termination agreements all follow industry standards. As an added service, we will inform you of any developments in the domestic labor laws in Mexico.
There is less of a learning curve for new recruits, and they are more likely to completely commit to your team and the work they are hired to do. While recruiting, you may rest easy knowing that competent employment specialists are on the case. The top minds from 187 countries' worth of experience are at your fingertips with Globalization Partners.
Possibilities for Gainful Employment in Mexico
In Mexico, a person's ability to cultivate dependable relationships is more highly prized than their level of skill or years of experience. Hence, it is important to take cultural factors into account while hiring, negotiating, and doing business in Mexico. For instance, some employees may see being punctual as less important than engaging in light chat before arriving at work. The best way to get a formal understanding is in person, when the terms can be discussed and clarified without the distraction of the phone. Keeping at it until you succeed is really important and may even be seen as an indication of how seriously you take the whole thing. Finally, it's important to remember that deadlines are often seen more as recommendations than as constraints.
Unions are legal under federal law because they allow employees to collectively bargain for better working conditions. In Mexico, workers may join one of numerous unions that will fight for their interests and rights. A collective bargaining agreement is a contract negotiated and signed by representatives of an employer and a labor union in response to the existence of the labor union. Collective bargaining agreements are reviewed by unions and their employers every two years. A union is legally allowed to represent workers at an establishment if at least 20% of employees sign a union card.
While discussing pay and other terms of employment with a Mexican worker, you may want to take into account the following popular benefits:
Labor Contracts in Mexico
Employment contracts in Mexico must be official, well-drafted documents between the employer and employee. The compensation, perks, and termination clauses of the employment relationship must all be spelled out in a written contract in the country's official language. Numbers relating to salary or other forms of compensation in an offer letter or employment contract issued in Mexico should always be expressed in Mexican pesos rather than a foreign currency such as the US dollar. Our employment contract template is available to you when you choose Globalization Partners to operate as your employer of record and PEO in Mexico.
Work hours in Mexico
The standard workday for an office worker used to be from 8 a.m. to 6 p.m., but nowadays many people don't leave the workplace until 7 p.m. It's crucial to know that CEOs in Mexico receive three hours for lunch, while average workers get one. A "siege" is no longer part of everyday life because of the rise of the modern economy.
When working hours go above the allotted period, extra compensation must be given. Overtime is compensated at twice the regular hourly rate. Weekend and holiday premium pay rates of 200% are mandatory. An employee may work up to 11 hours a day, or 50 hours a week, at most. Each worker is entitled to one 24-hour period of downtime every week.
Enjoy a relaxing getaway in Mexico
Every year, the people of Mexico celebrate eight national holidays.
Benito Juárez's birthday and the start of the new year's Constitution Day celebrations
May Day, Labor Day, Workers' Holiday, or Labor Day Celebration of the Declaration of Independence
It's Election Day! (every six years for the election of the president)
Season of greetings
Mexico celebrates a wide variety of festivals.
religious celebrations (celebrations that have been observed traditionally) (traditional holidays to honor religious events)
The aforementioned municipal holidays are required by federal law to be observed by all employers. But, federal law does not mandate that employers provide employees with a paid holiday for these celebrations.
If an employee is compelled to work on a lawful holiday, the employer must pay them three times their usual rate and adhere to a mutually agreed work schedule.
Mexican Vacation Days
If one works longer for the company, he or she is entitled to a greater share of the annual vacation days available. Starting on January 1, 2023, the first year or anniversary of service, the minimum statutory annual vacation days are 12 days. In subsequent years after the first one, employees are entitled to an additional vacation day for each year that has passed. When an employee reaches the fifth year of their job, they will be eligible for an additional two weeks of paid vacation for every five years of service. An example of the required progressive vacation balance days chart is shown below:
Employee Contract Duration Twelve years of service equates to one additional week of vacation. The second is the promise of more vacation time after 14 years of service. After 16 years of service, you're entitled to three more vacation days. Fortieth Anniversary of Employment > Increased Vacation Time Twenty Years of Service > Paid Time Off Bonus Five-to-Ten Stars > Extra Vacation Time After Twenty-Two Years of Service 11–15 Extended Leave of Absence After 24 Years of Service Expanded vacation time for employees with 16–20 years of service. 26 years Those with 21–25 years of service are eligible for additional time off. 28 years Workers with 26–30 years on the job get more vacation time at year 30, while those with 31–35 years get additional time off at year 32.
Most firms provide 15–18 paid vacation days during the first two years of work. This grows each year until it reaches the minimum number of holidays mandated by law.
Vacation pay is not refundable until employment ends. There will be no carryover of vacation days once 18 months have passed from the anniversary date. Businesses may save money by encouraging employees to use all of their vacation time at once.
Employees are entitled to paid time off on public holidays as well. The number of days an employee may take off for illness or vacation is limited.
The Day I Got Sick in Mexico
When an employee requests time off due to illness, their employer may offer them paid or unpaid time off at the discretion of their supervisor or the company's top executive.
The IMSS Leave Certificate or a private doctor's letter justifying the absence from work due to sickness is often required when an employee requires time off from work (the latter may be granted at the discretion of the supervisor or general manager). For absences to be excused as "occupational sickness, only the IMSS Leave Certificate will do.
An employee must provide a medical certificate to the government in order to get a subsidy equivalent to 60% of their pay when out sick due to an illness that is not work-related. In cases where the illness is directly related to work circumstances, this figure might increase to a maximum of 100%. If an employee's salary is more than the maximum allowed by law, their employer may make up the difference by contributing to the worker's Social Security.
Going to Mexico to Raise a Family
Mothers who work for a company are eligible for 12 weeks of paid leave, of which 6 weeks must be taken before the due date and the remaining 6 weeks after the baby is born.
All dads are entitled to five days of paid paternity leave.
During maternity leave, instead of being paid by the company, the employee might rely on Social Security to do so. The maximum payout is set at twenty-five times the standard US federal minimum wage. When an employee's salary is higher than the maximum allowed by law, some companies may make up the difference by making a larger Social Security payment on their behalf.
Assurance de Salud México
According to regulations issued by the Mexican Social Security Institute, all workers in the country must enroll in a national health insurance program (Instituto Mexicano del Seguro Social, IMSS). Notwithstanding the flaws of the public health care system, such as excessive wait times to see a doctor or specialist, a scarcity of doctors, a lack of flexibility, etc., many employers offer their employees extra private medical insurance.
Financial remuneration isn't the only perk some companies provide; some also throw in private health insurance for employees. Even though just 3% of Mexicans have private health insurance, 52% of all healthcare expenditures go toward private treatment. Private health insurance may be preferred by some since it may cover more costly medical procedures.
If you're a customer in Mexico, our Global Employer of Record may be able to assist you with arranging private medical insurance for new recruits. The third alternative is to provide the employee with a certain amount of money per month to go toward the premiums of personal health insurance coverage. Companies could consider replacing health insurance with a stipend for their workers more often than not, as per our recommendations. An insured worker's regular monthly compensation is 2,000 MXN. A family of four in Mexico may expect a monthly payment of about $4,000 to $6,000 MXN if they have health insurance.
Remunerations Made to Mexico at the Expense of Taxes
In Mexico, many companies just give the bare minimum in employee benefits. Flexible work schedules, job sharing, and other methods of balancing personal and professional responsibilities are commonplace. Reallocation allowances for workers working overseas, as well as life insurance, are examples of extras that some companies may provide on top of the bare minimum salary.
An Aguinaldo is the name given to the yearly bonus that certain workers in the Philippines receive. The annual Aguinaldo is at least 15 days of salary. At most companies, the Aguinaldo is worth four weeks' salary, whereas in larger businesses, it's worth six weeks' income. The Aguinaldo is often split between four weeks in December and two weeks in the summer for companies that pay for six weeks instead of five. In Mexico, commissions and quota bonuses are the primary sources of income for salespeople. Compensation for managerial positions is very goal-dependent and hence highly unpredictable.
Lost Job in Mexico
Depending on the position, businesses in Mexico may offer new workers a shorter 30-day trial term or a longer 180-day trial period. It should be noted, however, that the lack of case law protecting workers during probationary periods is often seen as a major issue in Mexico. A 30-day trial term is the standard, but employers should be prepared to pay severance to any employee who has been with the company for longer than that. In our opinion, a 30-day probationary term is the maximum that should be imposed. If an employee is let go during the first 30 days on the job, they won't be eligible for severance pay unless their dismissal was the result of their inability to perform the duties of their position.
Only in cases where the requirements of the post require it or a replacement is required temporarily are employment contracts with a set duration permissible. The working relationship is supposed to last forever.
Some valid reasons for completing an employment contract early include:
We have reached an agreement as a group (including resignation).
Worker fatality inability to work as a result of an impairment suffered by an employee
Mostly because of this
Termination pay may include:
Unpaid wages are a reward for taking time off in the thirteenth month (Aguinaldo bonus).
Payments in the form of bonuses or commissions
In addition to the severance and seniority bonus payments, other benefits under the employment contract, such as gratuity, provident fund, etc., are due if the employee is terminated without cause.
If the employer wants to terminate an employee without cause, the worker is entitled to three months' salary, plus 20 days' pay for every year of service, plus a seniority premium. The employee's total income, including bonuses, commissions, and benefits, would be used to determine the amount of the three months' worth of severance pay to be paid out. Seniority bonuses cannot exceed 12 days' compensation per year of service, or two times the state's minimum wage. The 90-day notice period is typical, but proving "cause" in Mexico might be very costly. Globalization Partners can facilitate a simple transition for any of our employees.
In the case that a departing employee is entitled to vacation, a vacation bonus, or Aguinaldo holiday pay, we will pay them out pro rata (Christmas bonus).
Taxation in Mexico As such, if the corporation recognizes a trade union and later wishes to lay off union members or make modifications to the applicable collective agreement, it must first enter into negotiations with the union.
Taxes paid by employees in Mexico increase with time. The maximum rate, which is over 35% as of 2016, kicks in at a salary of MXN 3,001,001 or more.
Organizations called AFOREs (Administradora de Fondos para el Retiro in Spanish) oversee retirement savings plans for their workers. Every employee, whether they are members of the IMSS, the ISSTE (which pertains to government employees), or operate independently, may register an AFORE account. To dissect an AFORE account, here are the three components:
subcategory of Retirees and Senior Citizens (RCV): As people age, they become less employable and more likely to retire.
Employer contributions of 2% toward retirement Age discrimination claims of up to $25,000 Costs for benefits are shared among employees (1.125%), employers (3.25%), and the government (0.25%). Further daily support of 1.45 pesos is provided by the Mexican government.
Infonavit, the Mexican government organization for worker housing, administers this program; AFORE's role is limited to that of registrant and custodian. The business will put in 5%.
The term "voluntary contributions" refers to the additional savings an employee makes toward their retirement above the minimum required by law.
It's important to remember that not all government workers are subject to the aforementioned contribution rates.
Workers are required to choose their preferred retirement date for retirement planning purposes. After one year on the job, if an employee has not selected an AFORE, the Mexican Commission of Retirement Savings (CONSAR) will do so automatically, allocating their account to the AFORE with the lowest commissions and moving any contributions made during that period to the selected AFORE. The employee has the option of updating their BEFORE at any time.
Why Working Together Is Necessary in Today's Globalized World
Traditional Mexican staff recruitment began with the daunting task of figuring out how to set up a Mexican subsidiary or branch office. Using Globalization Partners' Global PEO and Global Employer of Record solution streamlines and reduces the cost of employing Mexican personnel. We'll add your worker to our locally compliant payroll system and send you an easy-to-understand bill every month. By allowing us to file your expense reports, deal with your individual income tax issues, and arrange for the establishment of the employee's statutory local benefits in Mexico, you may save yourself the trouble of establishing a Mexican subsidiary.
Please get in contact with Globalization Partners if you'd like more information on how our employee leasing and PEO services may simplify hiring a Mexican worker.
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