Hire Employees in Mexico

A Mexican entity is normally a sociedad anónima or sociedad de responsabilidad limitada, requiring notarised formation, entry in the Public Registry of Commerce, and registration with SAT for tax, IMSS for social security, INFONAVIT for housing and the state finance ministry for payroll tax.

An Employer of Record signs the Mexican contract, calculates the integrated salary base, remits IMSS, INFONAVIT and state payroll tax, issues CFDI electronic payroll receipts and administers aguinaldo, vacation premium and profit sharing. Mexico’s reform of outsourcing in 2021 restricted labour subcontracting sharply, so the EOR must be employing for its own account rather than supplying personnel.

The 2021 outsourcing reform changed the landscape. Subcontracting of personnel is prohibited except for specialised services registered with the labour ministry and unrelated to the client’s core business. Arrangements that dress up employment as a service contract now carry criminal as well as civil exposure.

Break-even rule of thumb: EOR fees begin to exceed the running cost of a small Mexican entity somewhere between 15 and 20 employees. Model both before committing, see EOR vs Entity for the full comparison, and plan any later migration so employees keep seniority.

Already paying someone in Mexico as a contractor? Run the risk check before the arrangement is tested by an audit.

Not sure which model fits? A GX specialist will cost EOR vs entity for your exact headcount, free, within two business days. Get a model recommendation

The general minimum wage is set nationally with a higher rate for the northern border free zone. Increases have been substantial in recent years and are announced annually, so budgets should assume movement rather than stability.

Payment is at least twice monthly for most workers, and must be made in Mexican pesos. Every payment requires a CFDI de nómina, a digital tax receipt validated by the tax authority. Payroll cannot be run compliantly without it, and it is the mechanism by which the authorities cross-check reported wages.

Contributions are not calculated on salary but on the Salario Base de Cotización, the integrated base, which adds the accrued value of the aguinaldo and vacation premium. For a first-year employee on statutory minimums the integration factor is 1.0493, and it rises with seniority as vacation entitlement increases.

The SBC is capped at twenty-five times the daily UMA, which sets a ceiling on most contributions.

The pension contribution is progressive and still climbing, and the entire increase falls on the employer. The severance savings fund (Cesantía) en Edad Avanzada y Vejez was a flat 3.150% until 2022. The 2026 step, the fourth of eight, runs from 3.150% at one minimum wage to 7.513% for workers at 4.01 UMA and above, and it reaches 11.875% in 2030. The employee share stays fixed at 1.125% throughout. Any model using a flat rate is describing the pre-2023 system. Two timing details catch people out. The UMA changes on 1 February rather than 1 January, so two values apply within a calendar year, MXN 113.14 then MXN 117.31 for 2026, and the SBC ceiling moves with it. And while the SBC cap limits IMSS contributions, INFONAVIT’s 5% has no ceiling at all and runs on full actual salary. Note too that holiday entitlement rises with tenure and feeds the Factor de Integración, so employer cost increases automatically as employees accrue service.

Four representative profiles, costed with the 2026 contribution rates above. Salaries are illustrative market midpoints, not GX operating data, use them to see how the on-cost percentage behaves as pay rises, not as a salary benchmark for a specific role. IMSS by statutory branch on the contribution base (fixed sickness quota, cash benefits, pensioner medical, invalidity, childcare, class-I occupational risk, retirement and the progressive CEAV), plus 5% INFONAVIT, 3% state payroll tax and the aguinaldo and prima vacacional accruals. The occupational-risk premium shown is class I; higher-risk activities pay more. State payroll tax varies from 1% to 4% by state and 3% is assumed here. For real market data on your roles, ask for a costing.

Benchmarks pending GX Mexico payroll data. Any benchmark must be built on the integrated salary base rather than base salary, or it will understate cost.

Mexico applies both monthly withholding tables and an annual adjustment, and the tables are updated when inflation accumulates past a threshold rather than every year, so a payroll system can be correct for several years and then need changing.

The minimum wage treatment is unusual and worth knowing: under Article 96 of the ISR Law no tax is withheld, and under Article 36 of the Social Security Law the employer pays the employee’s IMSS share as well. The minimum wage is therefore effectively a net figure.

Employment is indefinite by default under the Federal Labour Law, and fixed-term contracts are lawful only where the nature of the work justifies them. Written contracts are required and must state the role, salary, hours and workplace.

Probation is capped at 30 days, extending to 180 for management and specialist technical roles. It must be in writing and cannot be renewed. IMSS registration and the full statutory package apply from day one.

The double-then-triple structure is a genuine constraint rather than a pricing question. Overtime beyond nine hours in a week is not simply more expensive: it is outside what the employer can require, and imposing it is a labour violation independent of whether the premium was paid.

Sunday work attracts a prima dominical of at least 25% above the ordinary rate, payable even where Sunday is the employee’s ordinary working day.

Mexico has seven statutory holidays (días de descanso obligatorio). Several fall on a fixed Monday rather than a fixed date. Work on a statutory holiday is paid at triple the ordinary rate: the ordinary day plus a 200% premium. Additional days apply in federal election and presidential transition years.

The statutory package is substantial. Aguinaldo of at least fifteen days’ salary is due by 20 December. Vacation entitlement begins at twelve days after one year following the Vacaciones Dignas reform, with a 25% vacation premium on top. Profit sharing of 10% of taxable profit is a constitutional entitlement, distributed by 30 May.

IMSS provides health cover and INFONAVIT the housing fund, both employer-funded. Because IMSS service levels are variable, private major medical insurance is standard at professional level and is often the deciding factor in an offer.

Food vouchers (vales de despensa) are widespread and carry tax advantages up to a defined ceiling. Savings funds (fondo de ahorro) with matched employer contributions are similarly common and tax-advantaged.

Many employers pay aguinaldo above the fifteen-day minimum, thirty days is common in professional roles, and this becomes contractual once granted consistently.

Justified cause is narrowly defined in Article 47 and must be notified to the employee in writing within thirty days of the conduct, or delivered through the labour court if the employee refuses receipt. Failure to give proper written notice makes the dismissal unjustified regardless of the underlying facts.

Most separations are handled by mutual agreement, formalised before the labour authority to make the settlement binding. Since the 2019 reform, contested claims go through mandatory conciliation before reaching the new labour courts.

The employer registration with the Instituto Nacional de Migración is the gating item and must be in place before any offer is made. An EOR already holding the constancia removes that step. After entry the employee has thirty days to exchange the visa for a resident card.

Mexico’s domestic PE definition is broader than the OECD model in several respects, and the tax authority has taken an assertive line on commissionaire and similar structures. Manufacturing and assembly arrangements have their own maquiladora regime with specific safe harbours. Take Mexican tax advice before the first commercial hire.

Article 21 of the Federal Labour Law presumes employment between the person providing a personal service and the person receiving it. The burden falls on the employer to rebut it. Long-term honorarios arrangements with a single client, fixed monthly amounts and integration into the team are routinely reclassified.

The five working day IMSS registration deadline is strict and the penalty for late enrolment includes liability for any benefit the employee would have received. Register before the start date rather than after.

Work backwards from the start date. For a local hire through an EOR, 1 to 2 weeks is realistic once identity documents, bank details and the signed contract are in hand. For a foreign national requiring a permit, add the immigration timeline set out above before promising a date.

Confirm three things before making an offer: that the candidate has the right to work in Mexico; that the salary clears any statutory or sector minimum that applies to the role; and whether the work involves concluding contracts locally, which can create a taxable presence for the client entity.

Collect the statutory registrations early. Social security enrolment, tax registration and any mandatory insurance generally must be in place before the first payroll runs, not after it.