Employer of record in Mexico

Small and medium companies

Small and medium-sized enterprises are a determining link in the chain of economic activity and are essential for regional and local development. 95.4% of companies across the country are SMEs. Their contribution is 52% of GDP. In addition, they represent 72% of the jobs in Mexico.

Population

Mexico has a population of 127 million citizens. About 1/5 of the population lives in or near Mexico City (the capital) and the neighboring State of Mexico, which together house 25.1 million people.

It has a predominantly young population, compared to other industrialized countries. In the 2015 census, more than 55% of the population was under 30 years old. Although the majority of the population speaks Spanish, more than 7 million Mexicans also speak one of the 62 indigenous languages in the country.

Maya and Nahuatl are the most widely spoken. The states with the highest percentage of speakers of indigenous languages are Oaxaca, Chiapas and Yucatan.

Economic opportunities

Mexico is a leading commercial destination due to the availability of cheap labor. Costs are a fraction of the United States and English is available, especially in Baja California.

The average annual salary for an engineer in the United States is US$85,663, while the average annual salary for a mechanical engineer in Mexico is the equivalent of US$15,514. This is just one of the many professions in which salaries are substantially lower, without compromising quality.

Key sectors of the national economy

Mexico’s economy is diversified, including high-tech industries, oil production, mineral exploitation, and manufacturing. Agriculture represents 3.4% of Mexico’s GDP and employs more than 13% of the country’s active population. Mexico is among the world’s largest producers of coffee, sugar, corn, oranges, avocados, and limes.

The banking sector is also growing rapidly and represents an opportunity for investors. The government has expressed its desire to modernize the country’s infrastructure, including hospitals and transportation, and is seeking to attract more FDI.

Human talent

• 25% of university students graduate in science, technology, or engineering; the eighth-highest percentage in OECD countries and the sixth with the majority of engineering graduates.
• 4th fastest-growing workforce.

Guadalajara, the Mexican Silicon Valley

Guadalajara, the second-largest city in Mexico, is known as “the Mexican Silicon Valley” for constituting the most important technological cluster in the country, recognized worldwide thanks to the development of the software industry.

The state government has invested in infrastructure to turn Guadalajara into an international technology center. Technology giants like IBM, Oracle, HP, and Motorola have been established for several years in this city.

To date, the city’s exports have exceeded $20 billion, and this figure is expected to increase in the coming years. Telecom and computer equipment from Guadalajara accounts for about a quarter of Mexico’s electronics exports.

All of this is based on technological talent: Guadalajara has an excellent engineering school, the University of Guadalajara, which graduates more than 10,000 highly qualified engineers every year.

Technological ecosystem

Mexico has one of the best startup ecosystems in Latin America. In the last year, it has established itself as one of the most outstanding countries in the field of innovation in fintech, the financial technology sector.

With more than 350 successful startups, it is the largest ecosystem in the region and one of the main drivers of financial innovation in Latin America. The Mexican startup sector is currently 2.5 times larger than that of Colombia, the third in the region with 124 new companies. In addition, startups in Mexico have a lower failure rate: 12% compared to the 14% identified in Brazil.

Advantages for foreign investment 

Mexico offers extremely favorable advantages for foreign investment. The procedure for establishing a new company in Mexico is particularly agile and efficient. Another example is the series of subsidies, renewed and improved day by day, aimed at promoting the exchange of goods and services with other nations.

However, complicated taxes and compliance can make the administration of a company quite complicated. Working with trusted partners is essential to avoid major risks.

Mexican Gastronomy: regional, street and hipster food

Mexican food has some of the best known and loved dishes in the world. Mexican cuisine varies by region due to local climate, geography, and ethnic differences among indigenous inhabitants.

There are seven culinary regions in Mexico, each with its own unique dishes: the North, the North Pacific Coast, El Bajio, the South Pacific Coast, the South, the Gulf and Central Mexico.

Considering its uniqueness and influence on the cultural and social facets of Mexican society and the world, the United Nations Educational, Scientific and Cultural Organization, UNESCO, arranged a special honor. In 2010, Mexican cuisine we placed on the Representative List of the Intangible Cultural Heritage of Humanity.

Street food, or “garnachas” have existed since pre-Hispanic times: the Aztecs ate at the Tlatelolco market. From the typical taqueria (taco stand) to the mobile food stall, the streets of Mexico are smorgasbords of culinary delicacies.

Mexico’s extensive culinary tradition is increasingly combined with innovation, with many cutting-edge chefs reinventing it and projecting it into the future. Standout innovators such as Enrique Olvera, Daniela Soto-Innes, Francisco Ruano or Jorge Vallejo place Mexico as one of the most important gastronomic destinations in the world.

General highlights

What you need to know about employing personnel in Mexico

Laws that regulate labor relationships

Key tax and labor authorities

Labor contracts

Individual employment contracts are one by virtue of which a person is obliged to give another a valuable labor or service in exchange for a salary. The lack of the document does not deprive the worker of the rights derived from relevant labor standards.

The hiring of children under 15 years of age is illegal. Those who are under 18 must have concluded the equivalent of a middle school education. People under 18 cannot work in a situation where their health, security, or morality can be at risk.

The minimum age to provide any work in Mexico is 15. Those over 15 and under 16 need authorization from their parents or guardians. People over 18 can work without authorization from anyone else.

Types of contracts

The labor relations may be for a specific task or period of time, seasonal or indefinite, and, where appropriate, may be subject to testing or initial training. Unless stated otherwise, the relationship will be assumed to be for an indeterminate period.

Basic requirements

Established in Article 25 of the Federal Labor Law, a contract must contain:

• Name
• Nationality
• Age
• Sex
• Marital status
• Unique population registration code
• Federal taxpayers registry
• Address of the worker
• Address of the employer

If the employment relationship is determined by season, initial training, or for an indefinite period and if it is subject to a trial period (when applicable), it must contain:

• The service or services that must be provided
• The place or places where work should be provided
• The form and amount of the salary
• Other working conditions such as days of rest, vacations, and any other agreement between the worker and the employer

Payroll 

The payroll is one of the most important documents within a company, since there is a control of all the withholdings, at or about legal minimums, of the salary of the employees. From their operation, the final amount that a worker will receive and the amount that the company will invest in a given period is obtained.

Legal benefits in Mexico

Work benefits are additional benefits provided through a worker as a condition of their labor relationship. The benefits are established in a contractual relationship and will be independent of salary, they may consist of an economic, cultural, or medical nature.

The law establishes mandatory benefits that every employer must grant to their employees, the others will be agreed by mutual agreement in the individual work contract

Employers contribution or labor cost

The employer contributions turn out to be those sums of money that the employer will be obliged to contribute to the state for having employees. They are not recoverable for the employer.

Types of disabilities 

In the Federal Labor Law it is established in Article473 that occupational hazards are accidents and diseases to which the workers is exposed in the course of performing their duties.

Employers must pay the corresponding compensation, depending on whether said injury resulted in death or simply temporary or permanent inability to work. Their responsibility will still exist even if the employee was hired through an intermediary.

A work accident is any organic injury or functional disturbance that can be shown immediately or later on, or can cause death or grievous during the activities of the employee’s work. This includes accidents that may occur when the worker moves directly from their home to the place of work or vice versa

Occupational disease is any pathological state derived from the continued performance of work in a hazardous environment that has exposed them to a contagion, carcinogenic, or otherwise harmful environmental factor.

Disabilities caused by occupational hazards will generate compensation, which must be paid directly to the worker, in cases of mental disability the payment must be made to the person or persons in whose care it is left, and in the case of death of the worker it will be paid to their beneficiaries.

Disabilities

The worker must go to a medical clinic that is registered with Mexican Institute of Social Security (IMSS). There they will be evaluated by a doctor, who will decide whether to grant the disability.

Disability due to general illness

According to the Federal Labor Law, the worker will receive 60% of their salary, their fourth day off the job up to a limit of 52 weeks. IMSS will cover this amount during the temporary disability period. It is the client’s decision whether to pay the employee for the first 3 days that the IMSS does not pay. The client may also choose to pay the remaining 40% of the salary that he/she will not receive from the IMSS.

Disability due to a work accident

The worker receives 100% of their salary from the IMSS, starting from day one up to 52 weeks (the limit may be less, depending on an IMSS medical assessment).

Maternity disability

The worker receives 100% of her salary, paid by the IMSS, at the beginning of week 34 of pregnancy, for a total of 84 days’ paid leave.

When the worker is absent due to illness and does not deliver a disability issued by the IMSS, it is not the employer’s obligation to pay him/her for these days.

It is up to the client if they want to grant the employee these days as PTO with their full salary.

Workday and holidays

According to Article 58, LFT, the “workday” is the time during which the worker is available to the employer to lend their work.

The worker and the employer will set the duration of the workday, without exceeding the legal maximum of 8 hours per day or 48 hours per week.

For every six days of work the employee must enjoy at least one rest day.

During the continuous work day the worker will be granted at least one half hour break.

The work day may be extended due to extraordinary circumstances, never exceeding three hours a day or three times in a week, (Essentially “overtime”: Maximum 9 per week)

According to the Article 715 of the Federal Labor Law (LFT), business days are all days of the year except Saturdays and Sundays, mandatory rest, and holidays indicated by the working days calendar and those in which the labor authorities indicated that the work is suspended (for natural disasters, etc.)

Public holidays

Immigration process

To obtain a work permit it is necessary to have a formal offer letter and employment contract in Mexico before arriving in Mexico to begin said work.

The employer in Mexico must make the petition directly to the National Institute of Migration (INM) in Mexico.

Subsequently, one must start the process of “Temporary residence visa, of a visitor with permission to perform paid activities” requested from the National Migration Institute for employment offer.

According to the Article 715 of the Federal Labor Law (LFT), business days are all days of the year except Saturdays and Sundays, mandatory rest, and holidays indicated by the working days calendar and those in which the labor authorities indicated that the work is suspended (for natural disasters, etc.)

If the resolution is favorable, a visa authorization will be given to the employer.

Once the hiring company has received their authorization with their unique registration number for their process (NUT number), the employee will have to schedule an appointment to conduct an interview at a consulate at any country outside of Mexican territory.

On the day of the consular appointment the (prospective) employee must present:

• A visa application with all fields filled The signature must be the same as the passport.
• Copy of the initial authorization by INM.

• Original and copy of the valid
• Original and copy of the offer of employment

A color photograph with a white background, with the face visible and without glasses, measuring 32 millimeters x 26 millimeters or 39 millimeters x 31 millimeters.

Note:

Once the procedure is authorized, the visa will be delivered on the same day during business hours, otherwise, the INM representative has 10 business days to give you an answer on your visa, in accordance with the guidelines of Immigration Laws.

The visa does not guarantee admission to national territory. The admission to Mexico is subject to the approval of the immigration authorities and may denied in the case of criminal convictions, etc.

Employee termination 

The worker or employer may terminate the employment relationship at any time, with just cause: The worker has deceived their employer in a material way (expenditures, inventory, etc.)

• The worker presents, a lack of integrity, a lack of honesty, acts of violence, threats, or insults, whether during or outside of working hours
• The worker, intentionally, causes property damage during the performance of work
• The worker commits immoral acts or harassment and or sexual harassments against their coworkers
• The worker reveals secrets or confidential information from the company
• More than three absences in a period of thirty days, without the employer’s permission or just cause
• The worker arrives at the work site in a state of intoxication

An employer who dismisses a worker must give written notice clearly stating the conduct or behavior that motivate the decision and the date or dates during which they were committed.

The lack of notice to the worker or the relevant government authorities will provide the employee with grounds to successfully claim that the dismissal was unjustified.

Labor termination settlement

If the employer does not verify the cause of the termination it is considered a termination without cause. The worker will then have the right to be reinstated in its job position or to be compensated.

The employer will be exempt from the obligation to reinstate the worker, by paying the compensation:

1. Three months of salary
2. 20 days of salary per each year of service
3. Payment of overdue wages, if applicable
4. Vacation and Christmas bonuses accrued by the time of dismissal.