How to hire and pay employees in Mexico
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Before hiring
Before hiring employees in Mexico, there are some key things you’ll need to know. Firstly, while it’s not legally required, it’s very common to offer team members private health insurance as well as a grocery coupon card (vales de despensa).
In Mexico, there’s actually no legal obligation for employers or employees to give notice of termination or resignation. Rather than require a notice period, all employees who are terminated for reasons other than gross misconduct (deception, unaccounted absences, physical abuse, harassment, etc) are entitled to three months of their salary as compensation.
We know keeping track of all this might sound overwhelming—but it doesn’t have to be. A solution like Oyster eliminates the barriers for you. With Oyster, you can automate compliance across 180+ countries, easily managing HR and payroll—all in one, easy-to-use platform.
Get an overview of what you need to know when hiring in Mexico below.
At a glance
CURRENCY
MXN
OFFICIAL LANGUAGE
SPANISH
PAYROLL FREQUENCY
MONTHLY, BI-MONTHLY
EMPLOYER TAXES
22.75%
13th / 14th SALARY
Mandatory 13th salary at end of the year
Good to know
- There’s a mandatory Christmas Bonus (aguinaldo) in Mexico which is typically 15-30 days of salary given to the employee in December. There’s also a vacation premium which is no less than 25% of an employee’s daily pay that is given for the days the employee takes vacation.
- There is actually no obligation for employers or employees to provide any notice period in advance of dismissal or resignation. Notice periods can only be enforced if agreed in advance.
- Rather than require a notice period, all employees who are terminated for reasons other than gross misconduct (deception, unaccounted absences, physical abuse, harassment, etc.) are entitled to three months of salary as compensation.
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Labor laws in
Mexico
Working hours and overtime
In Mexico, the standard full-time workweek is 48 hours. An employee may work overtime as long as it does not exceed 9 hours in a week and no more than 3 hours of overtime per day. Overtime hours are compensated at 200% of the regular rate for the first 9 hours, and 300% for any additional hours beyond that.
Employees can only be required to work overtime in exceptional circumstances.
Minimum wage
Employment contracts
There are no statutory language requirements for employment contracts in Mexico, but Spanish is recommended.
Non-compete agreements
In Mexico, non-compete clauses are allowed but are subject to limitations, particularly after termination. While exclusivity during employment is enforceable under labor law, post-employment non-competes are considered civil agreements and must be enforced through civil courts. To be valid, they must have a limited duration, defined geographic scope, clearly described restricted activities, and offer fair compensation (commonly 50–70% of salary). Broad or indefinite restrictions risk being declared unenforceable.
Calculate costs to hire internationally
Benefits and leave in
Mexico
Vacation time
The minimum number of statutory paid holidays depends on the employee's length of service and varies upward from 12 days.
For example, an employee with one year of service is only entitled to a minimum holiday of 12 working days, while an employee with five years of service is entitled to a minimum holiday of 20 days.
In addition to the paid holiday entitlement, employees in Mexico are also entitled to a vacation premium consisting of 25% of their base salary, payable during the vacation period.
Sick leave
An employee is entitled to sick leave, depending on the type of illness and degree of disability. The IMSS determines the employee’s entitlement to sick leave as well as the amount paid to the employee during the illness or injury.
Maternity and paternity leave
Parental leave
Pregnant employees can take up to 12 weeks of paid maternity leave of absence. Mothers are also entitled to additional rest breaks during the nursing period, which is six months after their baby’s birth.
Holidays
View a list of recognized public and local holidays in Mexico here. To see the list of mandatory public holidays, login to our platform.
Employer tax
Employers in Mexico are taxed up to 22.75% of an employee’s salary. The tax breakdown is as follows:
Sickness & Maternity: 5.25%
Disability & Death: 1.75%
Retirement: 2.00%
Layoff and Retirement Benefits: 1.75%
Child Care: 1.00%
Work Related Accidents: 0.50% - 3.00%
Housing Tax: 5.00%
Payroll State Tax: 0.50% - 3.00%
Individual tax
Employees in Mexico are taxed between 1.92% and 45% depending on their income bracket. Employees also pay into social contributions totalling 10.15%.
Termination in
Mexico
Employees in Mexico terminated without cause are entitled to claim reinstatement or severance in the amount of:
- 90 days of their daily total compensation (this includes pro rata portion of employment benefits ordinarily paid to the employee)
- 12 days of daily base salary for each year of service that the employee has worked (for purposes of calculating this, the employees' salary is capped at twice the amount of the daily minimum wage) plus any accrued salaries and benefits (including paid vacation, vacation premium, Christmas bonus, and any other accrued benefit)
There is actually no obligation for employers or employees to provide any notice period in advance of dismissal or resignation in Mexico. Notice periods can only be enforced if agreed in advance.
Rather than require a notice period, all employees who are terminated for reasons other than gross misconduct (deception, unaccounted absences, physical abuse, harassment, etc.) will be entitled to three months of salary as compensation.
Start hiring employees in
Mexico
Setting up a business entity everywhere you want to hire a new employee isn’t scalable—it takes too long and the legal fees are high. At the same time, understanding and adhering to the local labor laws and employee expectations can be complex and time consuming. And it’s hard to find reliable information on up-to-date employment information for all the countries where you’re considering hiring. Not to mention tracking down invoices and managing employee contracts over email and spreadsheets—that gets messy fast.
We can’t afford to take risks when it comes to compliance—we need to make sure we follow the local guidelines, especially when it comes to taxes and legalities.
With Oyster, you can manage HR and payroll, and automate compliance across 180+ countries—all in one, easy-to-use platform.
Disclaimer: The information provided in this resource is for general educational purposes only and shall not be construed as legal advice. While Oyster strives to provide current and accurate information, Oyster makes no warranties or representations as to the correctness of the content provided and accepts no liability or responsibility for any errors or omissions in the content provided. By using this resource you acknowledge and agree that you do so at your own risk. The content of this resource is subject to change without notice.
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