Located at the southern end of North America, Mexico is one of the most important economic partners to the United States and Canada. Mexico’s rich history and its ever growing economy has turned the country into an appealing destination for digital nomads. The country’s strong university system also makes Mexico one of the best places to recruit developers, marketers, and other knowledge workers.
If you're looking to build a hub in Mexico or hire full-time employees without stepping foot in the country, you might consider partnering with an EOR service to streamline onboarding, payroll, and other HR processes.
Learn about the hiring, employment, payroll, and benefit requirements for workers in Mexico, and how an employer-of-record (EOR) service and local HR experts can help you manage your international employment needs.
An employer of record (EOR), sometimes known as an international PEO, enables you to quickly hire and onboard workers in Mexico, often in as little as 1-2 business days, without having to take on the cost and risk of establishing a local entity or building an on-the-ground HR team in Mexico.
Manage international payments, payroll, employment contracts, and statutory benefits
Navigate payroll deductions, taxes, and other hyper-specific HR processes
Support full-time workers from onboarding to offboarding and everything in between
Provide immigration assistant, including work visa sponsorships
Save up to $200,000+ USD and thousands of hours
1.076 trillion USD
Minimum hourly salary
The federal minimum wage in Mexico is 178.87 pesos per day. Closer to the Northern Mexico border, the minimum wage is 260.34 pesos per day
Working hours are normally 8am-6pm
Number of public work holidays
Penalties for misclassifying employees come with fines ranging from $192,440-$4,811,000 MXN ($10,338-$258,463 USD)
Time to hire with an EOR in Mexico
Hiring in Mexico is a little different than hiring in the US, Canada, or Europe. It’s important to keep these differences in mind before expanding to Mexico and hiring employees.
The work culture in Mexico is known for being relationship-oriented, hierarchical, and hardworking. Personal connections and social relationships are highly valued in Mexican culture. Building trust and establishing rapport is crucial in business relationships.
Workers in Mexico are generally hardworking and dedicated to their jobs, and a strong work ethic is highly valued. Punctuality is also important, although there may be some flexibility in start times, especially in more relaxed environments.
In terms of communication style, workers in Mexico tend to be indirect and polite, often using euphemisms and avoiding direct confrontation or criticism. They value harmony and avoiding conflict, so communication may be more implicit rather than explicit.
Mexico has four time zones, so if it’s 9am in New York City it's:
6am in Baja California, Baja California Sur, Chihuahua, Nayarit, Sinaloa, and Sonora
8am in Chihuahua (only in some municipalities), Durango, Nuevo León (only in a few municipalities), San Luis Potosí (only in one municipality), and most of Mexico's central states, including Aguascalientes, Guanajuato, Hidalgo, Jalisco, Mexico City, Michoacán, Querétaro, San Luis Potosí, Zacatecas, and parts of Tamaulipas.
8am in the state of Quintana Roo (most of the state).
In Mexico, working hours are normally from 8am to 6pm. Overtime includes anything over 12 hours per day or over 48 hours in 1 week. Overtime in Mexico is twice the normal rate, and any overtime over 9 hours is triple the employees normal pay. Further, employees are legally entitled to at least one 30-minute rest each day, with one rest day after 6 days.
When you hire new employees in Mexico, you will have typical employer overhead costs.
Typical costs to hire an employee in Mexico include:
Contributions to the IMSS (Mexico’s social security system)
Benefits package, including private health insurance
Vacation and sick days
Onboarding and training
In Mexico, full-time workers are entitled to 10 paid holidays each year. All employees are eligible as soon as they begin. The 10 holidays that garner paid time off are:
New Years Day (1/1/2023)
Anniversary of Constitution 1917 (2/5/2023)
Benito Juarez Day (3/20/2023)
Maundry Thursday (4/6/2023)
Good Friday (4/7/2023)
Labor Day (5/1/2023)
Independence Day (9/16/2023)
Revolution Day (11/20/2023)
Day of the Virgin of Guadalupe (12/12/2023)
Christmas Day (12/25/2023)
Mexican employees receive bonus payments, which are typically referred to as "aguinaldo" or "Christmas bonus." The Christmas bonus is a legal requirement under Mexican labor law, and it is typically equivalent to 15 days of salary. This bonus must be paid to employees by December 20th of each year.
Profit sharing is also another perk that employees are legally entitled to when working in Mexico. Employees are entitled to 10% of the profits generated during the year for any company with profits over 300,000 MXN. Employers are not required to pay profit sharing during their first year of business.
Permanent workers, subcontractors, and temporary workers with over 60 days of employment are entitled to profit sharing payments. Employers must pay this 10% no later than 60 days after the company the tax deadline.
Although not available in some of the more rural areas in Mexico, around 78% of the population has access to the internet. Average download speeds sit around 24.28 making the country a newly emerging hotspot for digital nomads.
Remote work is becoming increasingly popular in Mexico, especially in industries such as technology and digital media. Many Mexican companies have adopted remote work policies, and there is a growing number of startups and small businesses that operate entirely remotely.
Mexico has a lot of blossoming industries and is a leader for fintech and startups in Latin America.
Industries that thrive in Mexico include:
Depending on the needs of your business, you can either choose to hire a full-time employee or a contractor.
Some general distinctions between employees and contractors:
Employees are on payroll while contractors are paid per project
Contractors file and deduct their own taxes
Employees are entitled to benefits while contractors are not
Contractors are not entitled to notice or severance
Contractors set their own hours and completion of projects while employees have a set schedule
An EOR can help you quickly decide if you need to hire a contractor or an employee.
The main governing body of legislation for employment law in Mexico
Federal law that establishes and defines the country's social security system including health care, retirement, disability and unemployment benefits, and general employee benefits like maternity and sick leave
A distinct section of the Federal Labor Law that protects employees and defines employees from discrimination in the workplace
Start recruiting Mexican talent using your in-house recruiter or by partnering with a recruiting agency based in Mexico (Via can introduce you to one of our local recruiting partners)
Choose the EOR partner that fits your hiring needs in Mexico. Via, for instance, is the best EOR for onboarding 20-100+ workers in Mexico and building your local HQ without an entity
Complete visa sponsorship for employees who are not residents or citizens of Mexico
Fill out and sign compliant employment contracts
Begin onboarding full-time employees with best-in-class local benefits such as private health insurance
Manage new worker onboarding, as well as ongoing payroll, benefits, compliance, and other local HR processes for your growing hub
Scale your hub to up to 100 workers without an entity
Offboard workers with compliant severance packages
To terminate an employee in Mexico, employers need to provide a justification. If your business does not have a justified cause when terminating the employee, the company must compensate the unfairly terminated employee.
Employees are entitled to different types of severance payments depending on what type of employment contract they have with their employer.
Once you’ve decided that you want to expand your global business to Mexico, you’ll need to decide between partnering with a PEO, opening your own subsidiary, or partnering with an EOR service provider like Via.
PEO’s are a simple option if you need help with HR outsourcing.
Pros of a PEO
Cons of a PEO
Best for HR outsourcing and payroll
Still need to set up an entity in Mexico
Located in Mexico
Enter into a co-employment agreement which makes you partially liable if any compliance problems arise
In-country knowledge about compliance in Mexico
Communication with a Mexican PEO can be limited (which can lead to compliance problems and mismanagement)
Another option is to open your own subsidiary in Mexico.
Pros of opening a subsidiary
Cons of opening a subsidiary
Direct management of your entity in Mexico
Registering a subsidiary in Mexico starts at $100 USD but can go into the thousands depending on your business needs, especially after legal & accounting fees
Hire your own local HR team to work directly with your employees in Mexico
Entity setup normally takes at least 8-12 weeks
Tailor your business practices to Mexican culture
Each state in Mexico has different local authorities and regulations for incorporation, so you’ll need to hire a local legal team
One of the easiest and most straightforward options is to hire an EOR service provider.
Pros of an EOR
Cons of an EOR
Save your business time and money by avoiding entity incorporation in Mexico
Not the best option if you need to hire more than 500+ workers in Mexico
Support with visa process and sponsorship
May have less control over how HR is managed (but this can help you focus on your day-to-day operations)
Help with benefit and payroll management, support during the onboarding and offboarding process
Learn more about EOR services.
Via makes hiring talent around the world and building your global team seamless by helping you onboard workers in as little as 2-3 business days. With our easy-to-use platform, Via helps you manage local HR processes for direct employment such as work visas & permits, employee data privacy compliance, benefits, global payroll, background checks, and more. Our team of local labor lawyers and on-the-ground experts provide 24-hour local support and ensure that your company remains compliant while expanding abroad. As your employer-of-record/entity abroad, Via assumes responsibility for employment liability, so that you can focus on what matters: recruiting and managing your team.