Employee Leasing in Mexico

Content:

• Advantages of Employee Leasing in Mexico
• Employee Leasing Services Offered by FMC Group
• Advantages of the Mexican market
• Recruitment in Mexico
  • Minimum Wage and Payroll
  • Social Contributions and Taxes
  • Working Hours and Overtime
  • Vacation Days
  • Parental Leave and Sick leave
  • Notice Period

• Expanding business activity into Mexico through employee leasing offers clients unmatched ease and flexibility in their market entry.
• Employee leasing allows clients to focus on business decisions and let FMC Group handle the administrative management of employees.
• Recruiting local employees improves clients’ competitiveness by reducing the time needed for integration and adaptation.
• Employee leasing lets clients benefit from the large Mexican talent pool without setting up a local company.

• Searching for the best candidates that match the client’s requirements;
• Negotiating and signing employment contracts;
• Paying the necessary taxes and social contributions;
• Ensuring payroll accounting that matches international standards;
• Paying all types of expenses and allowances;
• Monitoring paid vacations;
• Implementing private health insurance if requested;
• Maintaining regular contact with clients.

• Mexico is located close to two of the world’s largest consumer markets (the US and Canada) and serves as a bridge between North America and Latin America. The local market itself is one of the largest in the world. With a population of more than 130 million people, Mexico is the second-most-populous country in Latin America, only outranked by Brazil, and the 10^th in the world.
• Mexico has one of the most stable economies in Latin America, maintaining an average GDP growth of more than 2.0% over the past two decades before the COVID-19 pandemic. Annual inflation rates have also remained relatively low, especially when compared to other countries in the region.
• Mexico has signed 14 Free Trade Agreements with 50 different countries, notably the United States-Mexico-Canada Agreement, the Treaty of Transpacific Association (with Australia, Brunei Darussalam, Canada, Chile, Japan, New Zealand, Malaysia, Peru, Singapore, and Vietnam), the EU-Mexico Trade Agreement, the Mexico-Central America Free Trade Agreement, and more than 20 other bilateral agreements with countries in Latin America and beyond.
• Mexico has a large network of highways, totaling over 150,000 kilometers in length, which includes over 48,600 kilometers of federal highways, 92,500 kilometers of state highways, and 9,400 kilometers of toll highways. The country is also connected to its neighboring countries through the northern section of the Pan-American Highway, running from Alaska to Panama through nine countries.
• The Mexican government is consistently investing in the improvement and expansion of the country’s infrastructure. In 2014, it launched a national infrastructure program focusing on the sectors of transportation and communications, energy, water treatment, public health, housing and urban development, and tourism, with a global budget of nearly USD 600 billion.

Minimum Wage and Payroll

• The daily minimum wage in Mexico goes from MXN 172.87 (EUR 8.12) to MXN 260.34 (EUR 12.23). It is higher in the Northern Border Zone, which includes Mexican state municipalities bordering the US.
• Salaries are usually paid bi-weekly, on the 15^th and the last working day of each month.
• The 13^th-month bonus salary is mandatory in Mexico. It is paid on December 20^th of each year and it is calculated as the salary of 15 working days, plus an additional allowance.

Social Contributions and Taxes

Employer Contributions
Social Security (capped at MXN 166,174 per year)	26.54% – 33.58%
Retirement Insurance	5.15%
National Housing Fund	5.00%
Total	36.69% – 43.72%
Employee Contributions
Social Security (capped at MXN 23,804 per year)	1.650%
Retirement Insurance	1.125%
Total	2.775%
Employee Income Tax
Up to MXN 7,735 yearly	1.92%
Between MXN 7,735 and MXN 65,651	6.40%
Between MXN 65,651 and MXN 115,375	10.88%
Between MXN 115,375 and MXN 134,119	16.00%
Between MXN 134,119 and MXN 160,577	17.92%
Between MXN 160,577 and MXN 323,862	21.36%
Between MXN 323,862 and MXN 510,451	23.52%
Between MXN 510,451 and MXN 974,535	30.00%
Between MXN 974,535 and MXN 1,299,380	32.00%
Between MXN 1,299,380 and MXN 3,898,140	34.00%
From MXN 3,898,140	35.00%

 

Working Hours and Overtime

• Legal working hours cannot exceed 48 hours per week and eight hours per day for employees who work day shifts, between 6 a.m. and 8 p.m.
• The weekly working hours limit is reduced to 42 hours for employees who work night shifts, between 8 p.m. and 6 a.m., and to 45 hours for employees who work mixed shifts.
• Overtime work is paid at a rate of 200% of the regular pay for the first nine hours every week, or the first three hours in a single extra shift.
• Overtime work is paid at a rate of 300% of the regular pay after the total overtime work exceeds nine hours in one week, or after it exceeds three hours in one extra shift.

Vacation Days

• Employees in Mexico have the right to six days of paid vacation per year. Between the first and fourth years of service, the maximum duration of paid vacation increases by two days each year. Afterward, two additional days of annual paid leave are earned every five years of service.
• Mexico commemorates 10 public holidays
  • New Year’s Day: January 1^st;
  • Constitution Day: February 5^th;
  • Benito Juarez’s Birthday: March 21^st;
  • Maundy Thursday and Good Friday: Between March and April (moveable);
  • Labor Day: May 1^st;
  • Independence Day: September 16^th;
  • Day of the Dead: November 2^nd;
  • Revolution Day: November 20^th;
  • Christmas Day: December 25^th.

Parental Leave and Sick Leave

• Female employees in Mexico are entitled to 12 weeks of paid maternity leave, including six weeks before delivery and six weeks after. New mothers are paid fully during maternity leave. Pay is covered at a rate of 60% by social security and 40% by the employer.
• Fathers are entitled to five days of paid paternity leave after a new child is born.
• Employees in Mexico are entitled to 52 weeks of sick leave, renewable once if certain conditions are met. Pay during sick leave is covered by social security at a rate of 60% of the regular salary. If the sick leave is due to a work-related injury, employees are entitled to 100% of their salary.

Notice Period

• Mexican law does not oblige employees wishing to leave their job to respect a notice period, but it is customary for employees to present a resignation letter at least two weeks before leaving.