Currency, Mexican Peso

129.15 million


2.31 trillion



Ease of Doing Business




Payroll Cycle

Grow your team in Mexico

Whether you plan on hiring a single employee or building a brand-new team, our EOR solution provides flexibility to grow your business in Mexico on your timeline.

Benefits of hiring in Mexico

Mexico, the region’s second-largest economy, is among the 15 largest economies in the world and the leading exporter in Latin America. The World Economic Forum projects Mexico will be the world’s seventh-largest economy by 2050.

Mexico is a strategic international business partner with various commerce agreements and trade bloc partnerships. It has 13 free trade agreements with 50 countries; this includes USMCA, which substituted the North American Free Trade Agreement (NAFTA), supporting reciprocal trade between North American countries.

Mexico’s manufacturing produces $175 billion annually, with electronics, medical devices, and automotive sectors as the country’s leading industries.

The Mexican government passed a financial technology institutions law in 2018 that promotes new fintech innovation and integration within the country, prompting positive responses from international fintech companies and investors.

Mexico is among the 15 largest economies in the world, and it’s the leading exporter in Latin America.

Challenges of hiring in Mexico

Mexico’s construction permits are difficult to obtain for companies constructing new offices. Obtaining the necessary permits and completing required inspections are known to take a significant amount of time, and these processes notably give sticker shock to businesses.

Companies anticipate a strenuous tax process in Mexico. There are specific tax reporting requirements per industry, and the approximately 240 hours necessary to correctly file taxes is laborious for businesses. However, with the help of an EOR in Mexico, you can easily navigate this tax reporting process.

The Mexican economy is heavily dependent on the U.S. economy. Roughly 80% of Mexican exports are delivered to the U.S. alone, creating a risk of being highly susceptible to U.S. economic fluctuations.

Roughly 80% of Mexican exports are delivered to the U.S. alone, which creates a risk of it being highly susceptible to U.S. economic fluctuations.

Cultural nuances of doing business in Mexico

It is common in Mexican business culture to greet with a handshake, use gendered titles, and address colleagues by their first surname since many Mexicans have two. Afterward, you may be invited to address them by their first name.

If speaking in Spanish with your colleagues, use the formal “usted” conjugation instead of the informal “tu” conjugation to show respect.

Personal relationships are a crucial factor in Mexican business culture. Third-party introductions are often key to business success, as Mexicans value working with those they know and trust.

When doing business in Mexico, there is a strong preference for face-to-face meetings and communication as much as possible instead of over the phone or virtually.

The business structure is usually hierarchical, where decisions are made by senior colleagues.

Personal relationships are a crucial factor in Mexican business culture. Third-party introductions are often key to business success, as Mexicans value working with those they know and trust.

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Hiring in Mexico

  • Employment agreements in Mexico

    In Mexico, a written employment agreement, signed by both employer and employee, is mandatory by law. Employment agreements must include the following information:

    • Personal information of the employer and employee
    • Employment duration
    • Probationary period, if applicable
    • Training and instruction provisions
    • Employee’s duties
    • Place of work
    • Work schedule
    • Salary
    • Employment benefits
    • Any other terms agreed between employer and employee
    • Employee’s beneficiaries, in case of employee’s death
  • Probationary periods in Mexico

    There is no requirement for a probationary period in Mexico. However, initial training periods must not exceed 90 days for employees. Probationary periods cannot extend beyond 30 days for indefinite-term employment contracts or employment exceeding 180 days. Additionally, initial training periods of up to 180 days can take place for leadership or management positions.


Easily navigate payroll laws, contributions, and requirements


Tax due date in Mexico

In Mexico, the annual tax deadline is April 30 for individuals and March 31 for businesses.


Payroll cycle in Mexico

Mexican labor law allows for both biweekly and monthly payroll cycles. However, a biweekly payroll cycle is most common in the country.


Standard workweek in Mexico

A standard workweek for Mexican employees is 48 hours, with 40% of Mexicans working six days per week. 

  • Minimum wages and salaries in Mexico

    Mexico’s National Minimum Wage Commission (CONASAMI) raised the general minimum wage in Mexico (salario minimo) on January 1, 2022 to 172.87 pesos per workday.

    CONASAMI raised the 2022 Northern Border Zone (NBZ) wage to 260.34 pesos per workday. The NBZ is a set of 43 municipalities in Mexico’s northern states bordering the United States.

  • Bonus payments in Mexico

    Article 87 of Mexico’s federal labor law states that all employees in Mexico are entitled to an annual bonus. The bonus is known as an aguinaldo and must be paid by December 20, giving it the nickname of a Christmas bonus. Aguinaldo is separate from vacation pay, equivalent to 15 days of wages for all employees with one year or more of service.

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Taxes and social security in Mexico

Individuals are considered Mexican tax residents if they have established a residence in the country, regardless of the number of days spent in Mexico.

Mexican residents pay Mexican income tax on their worldwide income. Non-residents are taxed only on their Mexican-sourced income.

Tax thresholds in Mexico

As of 2022, the Mexican income tax brackets are:

  • Up to MXN 7,735.00: 1.92%
  • MXN 7,735.01 – MXN 65,651.07: 6.4%
  • MXN 65,651.08 – MXN 115,375.90: 10.88%
  • MXN 115,375.91 – MXN 134,119.41: 16%
  • MXN 134,119.42 – MXN 160,577.65: 17.92%
  • MXN 160,577.66 – MXN 323,862.00: 21.36%
  • MXN 323,862.01 – MXN 510,451.00: 23.52%
  • MXN 510,451.01 – MXN 974,535.03: 30%
  • MXN 974,535.04 – MXN 1,299,380.04: 32%
  • MXN 1,299,380.05 – MXN 3,898,140.12: 34%
  • Above MXN 3,898,140.12: 35%

The corporate income tax rate in Mexico is 30%.

Health insurance in Mexico

Mexico enjoys an efficient healthcare system consisting of public and private schemes. The majority of Mexican hospitals are internationally recognized as high quality and staffed by expertly trained medical personnel. Mexico has universal health coverage, and its public healthcare is used by most of the country’s residents. Mexico’s public healthcare is administered through the Instituto Mexicano de Seguro Social (IMSS); this covers patients for most health services and prescription medications. Employed residents are automatically enrolled in the IMSS system, and their contributions to the scheme are deducted by their employer. Although public healthcare in Mexico is relatively high, service quality differs between hospitals, and residents may experience long waiting periods for non-emergency procedures.

Pension in Mexico

According to Mexico employment law, employees in Mexico are subject to eligibility requirements for the state’s old-age retirement pension. Qualifying conditions for the state’s old-age pension include being at least 65 years old and submitting at least 1,250 weeks of contributions to the IMSS. The legal monthly minimum for the old-age retirement pension is 3,123.18 pesos.


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Leave entitlements in Mexico

  • Annual leave in Mexico

    Mexican federal labor law guarantees employees annual paid leave dependent on the employee’s length of service. The statutory minimum amount of annual leave days are as follows:

    • After one year of service, six days of annual leave
    • After two years of service, eight days of annual leave
    • After three years of service, 10 days of annual leave
    • After four years of service, 12 days of annual leave
    • After the fourth year of service, an employee’s annual leave entitlement increases by two days for every four years of service

    On top of their regular wages, employees are entitled to a vacation premium. This premium is 25% of their salary, payable during the leave’s duration.

  • Parental and maternity leave in Mexico

    Article 170 of Mexico’s federal labor law provides the right of working mothers to a paid maternity leave of six weeks before and six weeks after childbirth. Mothers are also entitled to additional resting breaks during the nursing period, six months after childbirth.

    Paternity leave in Mexico consists of five days’ paid leave, including in the event of adoption. A new mother is entitled to six weeks of maternity leave in Mexico in the case of adoption.

  • Sick leave in Mexico

    The Mexican federal labor code designates a maximum of 52 weeks of leave in the case of illness or injury. The illness or injury must be certified by medical authorities of Mexico’s national Social Security system, the Instituto Mexicano del Seguro Social (IMSS), for paid time off to apply. IMSS pays employees 60% of their regular wages beginning from the fourth day of their absence.

  • Regional and national holidays in Mexico

    Mexico has seven public holidays in a calendar year, which are not included in the minimum paid leave entitlement, and they are taken in addition to annual leave. The following are national holidays in Mexico:

    • New Year’s Day (January 1)
    • Constitution Day (February, the specific day fluctuates each year)
    • Benito Juarez Day (March, the specific day fluctuates each year)
    • Labor Day (May 1)
    • Independence Day (September 16)
    • Revolution Day (November, the specific day fluctuates each year)
    • Christmas Day (December 25)

Employment benefits in Mexico

Mexico’s government benefits programs are administered by the Mexican Social Security Institute, Instituto Mexicano del Seguro Social (IMSS). The IMSS was founded in 1943, and it’s responsible for providing social security services to Mexican society. It collects contributions from employers and employees to maintain the Mexican Social Security scheme, which maintains pensions, survivor benefits, short-term disability, long-term disability, healthcare, and paid leave entitlements.


Termination and notice period in Mexico

There is no legal obligation in Mexico for employers or employees to notify the other in advance of termination or resignation. Notice periods can only be legally enforced if both employer and employee agree in advance. However, this is uncommon.

Instead of a notice period, employees who are terminated for reasons other than gross misconduct are entitled to a severance payment of three months’ wages.

Employees terminated without cause are entitled to severance payments in all of the amounts described below:

  • 90 days of wages
  • 20 days of wages for each year of service
  • 12 days of wages for each year of service, where the wage is capped at twice the amount of the daily minimum wage
  • Any accrued wages and benefits such as paid leave, leave premium, and Christmas bonus


  • What is an employer of record in Mexico?

    An employer of record (EOR) is a third-party organization that becomes the full legal employer of your workforce in Mexico. The EOR compliantly handles HR responsibilities like onboarding, pay, and benefits while you continue managing the day-to-day operations of your team.

  • How does an employer of record in Mexico help hire talent?

    An EOR enables you to hire talent in Mexico without setting up a legal entity. As an EOR, Velocity Global acts as your talent's legal employer, hiring new team members through local, compliant employment contracts—we handle the logistics so you can focus on your growing business.

  • Can an employer of record run payroll in Mexico?

    When you partner with Velocity Global, our experts compliantly handle all payroll and benefits for your team across Mexico.

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