Mexico Employee Compensation & Benefits
Capital
Mexico City
Official Language
Spanish
Currency
Mexican peso
Payroll cycle
Bi-monthly
Quick facts about Mexico
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.
Offering a competitive and compliant compensation & benefits package in Mexico can be challenging, which is why companies partner with an EOR to onboard employees in the country.
To hire and retain the best talent, employers in Mexico should plan to provide additional benefits and perks, such as private health insurance, additional PTO, travel funds, and even an internet stipend for employees working from home.
Not sure where to begin? Read our guide to learn more.
Understanding mandatory benefits packages in Mexico
Global businesses that employ full-time workers in Mexico are required to offer certain benefits, including a Christmas bonus known as Aguinaldo and a specific amount of paid vacation days based on years of service, as well as register with the Social Security department.
Social security and health care registration
Mexican employers are required to register their employees with the Social Security institute (IMSS) upon hiring.
Employee’s social security is withheld from their salary, and the employer must pay into social security alongside the employee. The rate paid into social security by employee and employer varies and is based upon minimum wage.
Once registered with the Social Security institute, employees automatically receive basic medical benefits from the government. This covers routine checkups, maternity care, disability, and injury. However, many companies are now offering employees private health insurance to stay competitive.
Medical leave
There is no mandated amount of time that an employee is allowed medical leave in Mexico. They are entitled to 1 day-52 weeks of medical leave for illness. After 52 weeks, the medical leave falls into the disability category and varies based on the degree of time off. Medical leave is paid directly to the employee through their social security.
Profit sharing
Profit sharing is also another benefits 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% profit sharing no later than 60 days after the company the tax deadline.
Christmas bonus/Aguinaldo
On or before the 20th of December, workers must be paid a Christmas bonus, also known as Aguinaldo. The amount is worth 15 days of the employee’s base salary for one year.
Vacation and vacation bonus
In November 2022, the Mexican Senate passed a bill, known as Vacaciones Dignas, which increases the minimum number of vacation days workers receive after 1 continuous year of service.
To qualify for vacation days, employees must have been employed by a company continuously for at least 1 year. For example, workers who have been employed continuously for 1 year will now receive 12 vacation days, as opposed to 6.
For the first 5 years of employment, the number of vacation days increases by 2 for each year of continuous service. So employees with 2 years of service will receive 14 vacations, and so on.
Prima
Employees garner a 25% vacation premium on top of their normal salary. This benefit is known as Prima.
Holidays
In Mexico, full-time workers are entitled to 10 paid holidays each year. All employees are eligible as soon as they begin:
New Years Day (January 1, 2023)
Anniversary of Constitution 1917 (February 5, 2023)
Benito Juarez Day (March 20, 2023)
Maundry Thursday (April 6, 2023)
Good Friday (April 7, 2023)
Labor Day (May 1, 2023)
Independence Day (September 16, 2023)
Revolution Day (November 20, 2023)
Day of the Virgin of Guadalupe (December 12, 2023)
Christmas Day (December 25, 2023)
Weekly rest day/Sunday bonus
By law, employees are allowed 1 day of rest after working 6 days in 1 work week. If an employee works their rest day, they receive a Sunday Bonus of 25% of their salary on top of their normal pay.
Maternity and paternity leave
Women are entitled to 12 weeks of maternity leave. Men, on the other hand, can take 5 days of paid rest after the child is born.
Women who are breastfeeding have an allowance of 2 extra breaks per day to feed the child, or pump. This is equal to a reduction of 1 hour of their workday for up to 6 months after having a child.
Daycare
IMSS provides daycare services to eligible children for cleaning, feeding, recreating, feeding, and education.
Old-age severance and insurance
This type of severance is for individuals who are over the age of 60.
In order to qualify, employees must have either contributed 500 weeks of work under the original 1973 IMSS regime or 1,250 weeks of work under the 1997 regime.
For those who have reached the age of 65, they can receive old-age severance for either the 500 weeks or 1,250 weeks.
Old-age severance
Age | Percentage |
60 | 75% |
61 | 80% |
62 | 85% |
63 | 90% |
64 | 95% |
65 | 100% |
Old-age insurance contribution
Age | Percentage |
60 | 75% |
61 | 80% |
62 | 85% |
63 | 90% |
64 | 95% |
65 | 100% |
Understanding recommended and elective benefits in Mexico
Offering the bare minimum in terms of benefits and compensation will keep your company compliant, but it might not be the best approach for retaining and recruiting the best talent in Mexico.
To keep your employees happy and healthy, consider adding benefits such as food vouchers and private health insurance to keep your team motivated.
Remote work
Many companies have already started offering employees that option to work remotely in Mexico in fields that allow them to. Some companies offer hybrid-models that require employees to come into work some days and work remotely others, while many have started allowing employees to work remotely full-time to offer more flexibility.
Food vouchers and paid lunch
Many companies in Mexico offer food vouchers that employees can use in grocery stores or restaurants. Other businesses offer catered lunch or on-site cafeterias, though this option takes more planning from the business.
Employer sponsored supplemental health insurance
By law, employees are only required to register with the IMSS so that they have basic healthcare. However, employers can also offer supplemental or private health insurance, especially for dental and vision.
Supplemental health insurance bolsters existing coverage by offering better hospital infrastructure, shorter wait times for appointments, and better care options.
Life insurance
Some employers opt to provide employees with life insurance in the event that something occurs to the employee. It’s pretty common for employers to pay all or part of the premium.
Savings Fund
Many companies also set up a Savings Funds plan, which deducts contributions directly from the employee’s paycheck for retirement benefits. Employees can contribute up to 13% of their monthly gross pay. Yearly contributions are capped at 1.3 UMA. Employers will match what you contribute, up to 1.3 UMA.
Productivity bonuses
Employees can receive productivity bonuses when they meet or exceed specific goals, such as completing a number of sales. Productivity bonuses are usually tiered.
Transportation bonuses/stipends
Many companies offer transportation stipends to help cover expenses such as bus passes, metro passes, gas, parking fees, taxis, and even car payments. These resources are supposed to help employees use public transportation in large cities and even rural areas.
For employees who are in high enough positions in a company, employers can also offer a company car.
Loans
Some employers also offer loans to employees at lower rates than those offered by the large banks. These loans tend to be personal, payroll or automotive.
Why companies partner with Via
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.
