Mexico’s large talent pool and proximity to the US are a draw, but its labor laws can be complex. Omnipresent acts as your Employer of Record (EOR), handling compliance with SAT regulations without a local presence.

We streamline payroll, benefits like the aguinaldo bonus, and taxes, so you can manage teams in Mexico City or Guadalajara with ease. Our platform delivers a tailored solution for Mexico’s dynamic market.

• Fast, compliant onboarding.
• Contracts in MXN, locally aligned.
• Guidance on market norms.
• Hassle-free expansion support.

Hiring employees in Mexico requires a comprehensive understanding of mandatory employer contributions, which vary based on factors such as employee salary and role. Employers must account for payments toward healthcare insurance, workplace risk insurance, and housing fund contributions. Omnipresent ensures all employer obligations are met accurately, reducing the administrative complexities of managing payroll costs.

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Employer costs include Social Security, Federal/State Tax, and Christmas Bonus. Use the OmniCalculator to estimate costs, or contact us for further information.

Income taxes

0% - 35%

Tax rates range from zero to 35%.

Mexico's federal income tax rates are levied on a progressive scale, with rates for residents ranging from 1.92% to 35% and rates for nonresidents ranging from zero to 30%. By partnering with Omnipresent, businesses can ensure compliance with tax-related mandatory obligations.

Employee Contributions

Effective from Feb. 1, 2024, to Jan. 31, 2025, the daily maximum contribution base is 25 times the daily UMA value of Mex$108.57, which is Mex$2,714.25; and the monthly maximum base contribution salary is 25 times the monthly UMA value of Mex$3,300.53, which is Mex$82,513.25.

Disability and life insurance (seguro de invalidez y vida, abbreviated as SIV)

Employees are assessed a contribution equivalent to 0.625% of their base contribution salary.

Illness and maternity insurance (seguro de enfermedades y maternidad, abbreviated as SEM):

- Surplus fee (cuota excedente): contributions to fund benefits in-kind: the taxable amount of wages paid to each employee during a month is the employee's monthly base contribution salary as capped by the monthly maximum base contribution salary, minus the product of three times the monthly unit of measure and update, with the employee contribution rate of 0.4% applicable to this taxable amount.

- Contributions to fund cash benefits (prestaciones en dinero): employees are assessed a contribution equivalent to 0.25% of their base contribution salary.

- Contributions to fund medical expenses for pensioners and beneficiaries (gastos médicos para pensionados y beneficiarios): employees are assessed a contribution equivalent to 0.375% of their base contribution salary.

Insurance for retirement, unemployment in advanced age, and old age (seguro de retiro, cesantía en edad avanzada y vejez, abbreviated as SRCV)

Employees contribute 1.125% of their base contribution salary as a contribution for elderly unemployment and old-age insurance funding.

Working hours are 48 hours per week on a day shift, 42 on a night shift and 45 for mixed (swing) shifts. Overtime is capped and compensated.

Employees are entitled to paid time off sick leave in the case of illness or injury, whether or not such illness or injury was work-related or not. The Mexican Social Security Institute will provide a subsidy equal to 60% of total salary starting on the fourth day of the illness and up to a 52-week period, which can be extended for another 26 weeks.

Maternity leave: 12 weeks' paid maternity leave. The Mexican Social Security Institute (IMSS) pays at a rate of 100% of the employee's salary. However, this is capped at 25 times the general minimum wage.

Paternity leave: 5 days of paid leave. Parental leave: Parental leave is not mandatory.

Minimum annual leave in Mexico is based on seniority and ranges between 12 days to 5 days up to 5 years of service. After 5 years of service the annual leave allowance increases by 2 days in 5 year increments, as required by Mexican labor laws.

Severance depends on the cause of termination. Below is a breakdown for indefinite contracts. Severance also applies to fixed-term contracts, but is calculated differently on a case-by-case basis and can be higher than the below.

Voluntary resignation: Seniority premium (after 15 years service) - 12 days’ salary for each year employed.

Termination with cause: Seniority premium (after 15 years service) - 12 days’ salary for each year employed.

Termination without cause: 3 months' salary, plus 20 days for each year in the company, plus a seniority premium of 12 days per year of service. The employee will also receive back salary from the date of dismissal to the day that the employer complies with the Labor Board’s decision.

In Mexico there is no prescribed process for terminating an employee for cause, but it is important to to handle employment contracts properly and notify the employee of the specific reasons.

Termination without a justified cause would be seen as an unjustified dismissal, and statutory severance would be paid to the employee. 

In the case of unjustified dismissal, the employee is entitled to demand at the proper Conciliation and Arbitration Board either to be reinstated or indemnified in an amount equal to 3 months’ salary, plus lost wages.