Hiring guide in Mexico

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What should I know about hiring in Mexico?

Mexico is a country featuring a vast pool of talent, especially in the IT and tech sectors. As much as hiring in the country can be beneficial, it can also impose many challenges, such as navigating through the complex Mexican labour laws.

More specifically, employers need to understand labour regulations such as payroll procedures, tax requirements, employment contracts, and other compliance-related intricacies. In addition to being compliant with labour laws, it’s of great importance to become familiar with the country’s culture, traditions, norms, and business practices to successfully hire and onboard team members.

Why is Mexico a good choice for finding remote employees?

Mexico has a large and very diverse talent pool, with many skilled professionals in various fields, such as software development, marketing, design, and more. Mexico’s tech industry is growing day to day, and so is the number of qualified individuals who are eager to work remotely in international companies.

Aside from the wide talent pool, Mexico also offers many cost advantages, compared to some other countries. As Mexico’s living costs are generally low, employers can easily find a skilled workforce at more affordable rates. Not only does this cut a lot of hiring costs and expenses, but it also allows employers to offer more competitive compensation packages to their Mexican employees.

How can Native Teams help you hire in Mexico?

With Native Teams’ Employer of Record solutions, every global employer can easily hire individuals from Mexico without owning a company in the country. Our teams of tax and legal experts will provide you with the necessary guidance and support to employ team members, run payroll, and stay compliant with all the tax regulations in the country.

 Hire your first Mexican employee with Native Teams.

Legal requirements for hiring in Mexico

The following are the most important legal requirements for hiring individuals from Mexico:

Legal framework

Mexico is the first country in the world to recognise and incorporate employees’ rights in its constitution as early as 1917. Today, Mexican labour laws focus on managing employment matters, safeguarding workers’ rights, addressing labour-related concerns, and protecting the interests of both employers and employees. 

Each employment relationship in Mexico is protected by an employment contract governed by the Mexican Constitution and the Federal Labour Law, where both parties are obligated to adhere to the terms outlined in the contract during the employment relationship. 

Employees in Mexico enjoy a wide variety of rights, including the freedom to join labour unions, the assurance of a safe and secure workplace, and protection against unwarranted termination.

Types of employment contracts

There are different types of employment contracts in Mexico, depending on the type of employment relationship.

Starting from indefinite-term contracts they are commonly used for employing individuals on a full-time basis without a deadline restriction, while fixed-term contracts regulate employment relationships for a specific task, project, or time. Employment contracts such as initial training or trial period contracts are used to hire workers and provide them with the necessary skills and knowledge before full-time employment. Finally, seasonal employment contracts regulate relationships for work or services that last for a fixed period of time.

Content of an employment contract

Employment contracts in Mexico regulate the terms and conditions of the employment relationship. As such, each must include details like the employee’s personal information, the type of employment, job description, work location, work schedule, salary, payment details, and other information. Additionally, employment contracts should outline the beneficiaries for salary and benefits in case of the employee’s death or disappearance due to criminal activity.

Download a free employment contract for Mexico through Native Teams.

Oral, written or electronic employment contracts

Before November 30, 2012, it was common for many companies in Mexico to provide verbal employment contracts only. After this date, employment contracts in Mexico must be in written format. If an employment relationship exists without a written agreement, the constitutional and statutory rights of the employee are still intact and not affected by the lack of documentation.

Working hours and night work

The standard workweek in Mexico consists of 48 hours, divided into six days of eight-hour shifts, with one full day of rest. However, some sectors, such as the government, banking, and the private sector, have adopted a 40-hour workweek, typically over five and a half days. 

While daytime work typically occurs from 6 am to 8 pm, nighttime work in Mexico is considered from 8 pm to 6 am. The maximum duration of day work is 8 hours per day, while night work is 7 hours per day, 42 hours per week. Full-time night shift workers in the country typically put in an average of 42 hours per week.

Breaks and annual leave

According to the Federal Labour Code (FLL), Mexican employees are granted at least one full day of rest per week, typically on Sunday. Beyond the weekly rest day, the FLL mandates a minimum half-hour unpaid break during the workday.

Regarding annual leave, the duration is based on the length of service with the employer. The entitlement increases gradually over the years, with employees with less than two years being eligible for six days, while those with 15 to 20 years receive 18 days, with two extra days added for every additional five years.

During annual leave, employees receive their regular wages and a supplement of at least 25%.

Public holidays

Mexico celebrates public holidays to support workers and honour traditional celebrations. Some of the statutory holidays are New Year’s Day, Constitution Day, President’s Day, Labour Day, Independence Day, and others. Besides statutory holidays, there are unofficial holidays in Mexico, which recognition depends on each organisation’s policy.

Salary and contributions

Salaries in Mexico represent the remuneration an employer agrees to pay to an employee in exchange for their labour or services. This compensation can take various forms, including payment per unit of time/work, commission, fixed prices, and others.

When establishing salaries based on time, it’s imperative to ensure compliance with maximum working hours, social security rights, and other regulations that protect employees.

When the salary is fixed per unit of work, the remuneration must be defined by the nature of work, the quality and quantity of materials involved, the condition of tools provided by the employer, and other factors.

To calculate the salary and taxes in Mexico, click here

Sick leave

Employees in Mexico are entitled to sick leave with a doctor’s order from the Mexican Social Security Institute (IMSS), which also disburses the employee’s income during the leave. 

While there’s no mandatory provision for unpaid sick leave in Mexico, there is a provision for discretionary unpaid leave by the employer, which applies to health conditions that are not recognised by IMSS. 

The Federal Labour Law of Mexico can extend leave provisions for circumstances such as occupational injuries, industrial accidents, and occupational diseases.

Parental leave

Parental leave is a customary entitlement that grants new parents time off in the events of maternity, paternity, breastfeeding, and adoption leave. 

Such provisions extend beyond biological parents to encourage and support all forms of family building. For instance, adoptive mothers are eligible for six weeks of parental leave, which can be extended in cases of child disability, while adoptive fathers get a five-day parental leave with full salary coverage.

Maternity and paternity leave

Working mothers in Mexico are eligible for 42 days of maternity leave after childbirth, during which the IMSS ensures full compensation amounting to 100% of their salary. The maternity leave can be extended in cases where work becomes impracticable due to pregnancy or delivery. 

Male employees in Mexico are entitled to a paid paternity leave lasting five days, applicable upon the birth of their child or in the event of adoption.

Methods of employment termination

Employment relationships in Mexico can be terminated under different circumstances, such as a mutual agreement between the parties, in the case of the death of the employee, completion of the work, physical or mental incapability of the employee, and other instances. 

In Mexico, at-will employment does not exist, and therefore, termination without cause is not allowed for employees. However, the Mexican Federal Labour Law specifies valid reasons for termination without liability, among which are false statements about work qualifications, vandalism, sexual harassment, alcohol in the workplace, and others.

If there is no valid reason or substantial evidence, the employment relationship can be terminated through a voluntary agreement where the employee receives statutory benefits and possibly compensation.

Ordinary dismissal by employer

According to Mexican labour law, employers should meticulously document every employment termination, whether justified or not. When it comes to dismissals with cause, employers must also prove that the employee was properly informed of the termination notice.

Employees with over 20 years of service in Mexico have extra protection, as they can only be dismissed for a justified cause and if their misconduct is extremely serious. 

When employers dismiss an employee for a justified cause, they must provide written notice that details the misconduct and its date. If the employer fails to do so, the dismissal is presumed unjustified.

Notice period and challenging the dismissal

If the employment is terminated without a cause or isn’t negotiated, the employee can claim wrongful termination and seek reinstatement or sue for statutory benefits, lost wages, and severance.

In case of unjustified termination, both sides attend a conciliation hearing within 45 days of the event. In the case of failed conciliation, employees can challenge the dismissal in 60 days. 

In the case of a successful dismissal challenge, employees may be reinstated or receive compensation of up to three months’ wages and, in some cases, receive back pay for the period between the dismissal and the ruling, up to 12 months’ wages.

Rights and obligations of unemployed individuals

While Mexico does not have a nationwide unemployment insurance system, it offers five different systems to help unemployed individuals. 

For instance, individuals who become unemployed and were previously formal workers have the right to a severance payment, which depends on the type of previous employment contract. However, quitting a job does not give the worker the right to receive severance payments. 

Workers in the formal sector have access to fringe benefits consisting of health care, life insurance, housing loans, retirement pensions, and severance payments. On the other hand, workers in informal jobs do not have a legal right to any of these benefits, as their work relationships and wages are a matter of personal agreement between the employer and the employee.

Severance pay

Eligibility for severance pay in Mexico depends on the cause of termination.

Employees who voluntarily resign are entitled to all the accrued benefits. Employees with over 15 years of service are entitled to a seniority premium of twelve days’ salary per year, capped at twice the minimum daily wage.

In cases where termination is justified, the employee still receives the accrued benefits, along with prorated commissions and the seniority premium in the applicable cases.

If the termination occurs without justification, the employee receives a lump sum severance, which includes three months of the employee’s daily aggregate salary, twenty days of the aggregate salary for each year of service, seniority premium, and all accrued benefits.

Probationary period

The initial probation period in Mexico, referred to as “periodo de prueba”, is only allowed with indefinite-term employment contracts and other engagements lasting beyond 180 days. The probationary period is set at the start of the employment relationship, to allow the employer to evaluate if the new hire is a good fit for the role and the company. 

Probationary periods in Mexico typically last 30 days, during which the employee receives regular pay and benefits. However, for some roles requiring managerial, administrative, or specialised skills, the period can be extended to 180 days. 

By the end of the probationary period, the employer must determine whether the employee is meeting the job requirements. Following consultation with any applicable training and productivity committee, the employer can terminate the employment without any compensation liabilities.

Intellectual property rights

Intellectual property rights in Mexico fall under different categories and have the purpose of safeguarding creativity and innovation. Some of the categories are inventions, such as patents and utility models; brands, including logos, trade names, slogans, and others; other creations, technology, and proprietary interests, such as copyright, rights for performers and producers, and others. 

Employee data privacy

Employee data privacy in Mexico is regulated by the Federal Law for Personal Data Protection (DPL), which came into effect on July 6, 2010, to ensure individuals’ right to privacy and informational self-determination.

Both the DPL and its regulations regulate the privacy rights of employers and employees while also outlining obligations to safeguard personal data processed during work activities. Companies are not required to register with the Mexican data protection agency following the DPL regulations, but they must adhere to these regulations.

For instance, employers must create an inventory of processed personal data and categorise them based on sensitivity, where sensitive data, like financial information, requires explicit written consent for collection and processing. 

Personal data collection and processing also requires informing individuals through a privacy notice. While consent may not be needed if the data processing is necessary for legal obligations under an employment contract, this does not apply to job candidates, as they lack a legal relationship with the employer.

Prohibition of competition

Non-compete clauses and non-solicitation agreements are common ways for employers to protect their confidential information and maintain fair competition. If an employee engages in activities that compete with their employer’s business while still employed, it can lead to termination even without a non-compete agreement. Such clauses are part of the employment contract or stand as separate agreements. 

As a basic principle in Mexico’s constitution, individuals have the freedom to choose their work, profession, industry, or trade as long as it’s legal. However, this right may be restricted or denied only by a competent authority if it infringes on the rights of others or society.

Remote working policy

Remote work in Mexico involves employees working from home or a chosen location without direct employer supervision. Employers who opt for remote work must register with the Labour Inspectorate to provide essential information.

Since November 2022, Mexico has updated its remote work regulations to ensure that teleworkers receive equal support and benefits as on-site employees. Remote workers, defined as individuals conducting 40% or more of their work remotely, must be equipped with necessary tools like computers and be reimbursed for utilities. Employers are also responsible for providing ergonomic furniture and ensuring workspace hygiene. 

Even in remote settings, employers must report remote workers’ hours and duties, and female employees have the right to take maternal breaks.

Responsibilities within a remote work arrangement

Remote workers in Mexico have the same rights and privileges as on-site workers, while employers are responsible for safeguarding the safety, confidentiality, privacy, and well-being of their remote employees.

In the case of transitioning an employee to remote work, it’s legally required to provide mutual consent and the drafting of a distinct agreement outlining the most important terms of the remote arrangement. 

In the case of recruiting for remote positions, job offers must provide comprehensive details regarding the role’s objectives, candidate qualifications, expected responsibilities, and the benefits available to the employee.

Health and safety at home

Mexico has recently introduced the NOM-037 workplace safety standard for teleworkers, with the goal of ensuring the safety and health of remote workers.

NOM-037 was created to establish clear guidelines aimed at preventing accidents and promoting a safe and healthy working environment. 

With this standard, employers must maintain updated records of remote workers, ensure their home workplaces meet safety standards, implement telework policies, and provide all the necessary equipment. 

To comply with NOM-037, employers need to consider updating their remote work policies, documenting remote workers’ information, adjusting employment agreements, and other compliance activities.

What are the advantages of hiring employees from Mexico vs other countries?

There are many advantages to hiring employees from Mexico compared to hiring from other countries.

First and foremost, Mexico offers more cost-effective labour compared to the US, Canada, and many European countries. The costs for other operational aspects are also more affordable in Mexico, including costs for office space, utilities, and other expenses.

However, cost-effectiveness doesn’t mean less skilled employees, as Mexico has a growing number of universities and technical schools that produce a skilled and highly educated workforce. The workforce in Mexico is also diverse, with skills ranging from engineering to IT and customer service. In addition, Mexican professionals are bilingual, speaking both English and Spanish, which can be very beneficial for working in the international market.

Finally, Mexican cities like Mexico City, Guadalajara, and Monterrey are becoming developed tech hubs, and as such, more attractive for remote professionals and digital nomads. With the growing number of incubators, accelerators, and venture capital firms, global employers have many opportunities to expand their businesses in Mexico.

Why use Native Teams for hiring in Mexico?

Native Teams lets you employ team members ‘like a local’ meaning you get all the benefits of a global team, wherever you are based. Here are the reasons why you should use Native Teams for hiring:

  • No paperwork: We will handle all the necessary paperwork for you.
  • Save on taxes: We help you handle your taxes.
  • No company set up: You can expand your business using our company entitles.
  • Online onboarding: We’re here to ensure your onboarding process is trouble-free.
  • No accounting: We will handle all of your accounting needs, including invoicing, payroll, and more.
  • Increase your profit: We assist you in growing your business and maximizing your profits.
  • Compliance expertise: we can assist your company in navigating the regulatory environments and ensure you meet all relevant requirements.
  • Local support: We can assist you in understanding and complying with the relevant local laws.
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*Note: The provided information was accurate at the time of writing.

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