Payroll and Benefits Guide - Mexico

Mexico
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Currency

Mexican Peso (MXN)
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Capital

Mexico City
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Employer Taxes

36.1 – 44.73%

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Date Format

dd/mm/yyyy
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Fiscal Year

1 Jan – 31 Dec

Fun Facts

Chichen Itza, one of the New Seven Wonders of the World, is located in Mexico.

Mexico is famous for its cuisine, including dishes like tacos, tamales, and guacamole.

Mexico is known for its vibrant festivals, such as Dia de los Muertos (Day of the Dead) and Cinco de Mayo.

The national sport of Mexico is Charrería, which is similar to rodeo.

Mexico is the largest producer of silver in the world.

Mexico has the third-largest Catholic population in the world

Mexico

Contributions

Employee Payroll Tax

Contribution TypeRate
Social Security contributions1.65%
Retirement/Old age insurance1.125%

Employer Payroll Tax

Contribution TypeRate
Social Security contributions24.95% – 33.58%
Retirement5.15%
National Housing Fund6.00%

Payroll

Payroll Cycle

The payroll cycles are semi- monthly.

13th Salary

A 13th-month salary payment is mandatory in Mexico; payment paid by December 20th (Aguinaldo).

Work Hours and Week

The standard working hours in Mexico are 48 hours per week, 8 hours per day.

Overtime

Employees may work up to 3 hours of overtime per day, as long as this does not exceed 3 consecutive days.

Mexico

Leave

Paid Time Off

The minimum requirement is 12 days of paid holiday per year.

Public Holidays

7 public holidays.

Sick Days

Eligible employees are entitled to receive up to 52 weeks of paid sick leave, amounting to 60% of their regular salary.

Maternity Leave

The maternity pay is calculated at full pay, where the IMSS contributes 60% of the cost and the employer 40%. The application for maternity leave must be supported by a medical certification issued by an IMSS approved clinic or a private medical institution.

Paternity Leave

The father is entitled to mandatory paid paternity leave of 5 days.

Parental Leave

There is no additional parental leave in Mexico.

Termination

Termination Process

Termination of employment relationships cannot be done by employers without just cause. The Mexican Federal Labor Law provides a closed list of specific reasons that justify terminating an employee.

Notice Period

They are required to provide written notice to the employee within 30 days of becoming aware of the misconduct.

Severance Pay

The severance payment should amount to three times the employee’s regular monthly salary, plus an additional 20 days’ pay for each year of service beyond 15 years.

Probation Period

Probation Period

The probation period in Mexico for permanent employees is optional and is commonly 90 days.

Immigration

Foreign individuals intending to work in Mexico are required to obtain a work permit and a resident visa.

The National Institute of Immigration is the governing authority responsible for immigration matters in Mexico, including the issuance of work visas.

There are two types of visas in Mexico: temporary and permanent. When foreign nationals intend to reside in Mexico for more than 180 days, they must apply for a temporary resident visa. This visa allows them to live and work in Mexico for up to four years, in conjunction with the Mexico work permit.

For Work Permits

Temporary residency (Residente Temporal) or Permanent Residency (Residente Permanente) and apply for work privileges.

VAT

The standard rate of VAT in Mexico is 16.00%.