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There are two main ways forward for companies thinking about hiring employees in Mexico. The first one is with a employer of record (EOR) company such as Serviap Global. The second one is by setting up your own legal entity in the country. Whichever one suits you best will depend on your particular needs.
However you eventually go about hiring employees in Mexico, you will be gaining access to a vibrant and exciting economy that is developing rapidly. The country has been investing heavily in education and has a growing number of STEM graduates who are highly trained.
Additionally, there is a strong manufacturing sector, which is a key destination for outsourcing, especially nearshoring. A number of US companies in particular are considering moving production plants to their neighbour and considering setting up a Mexican warehouse. This also of course means hiring employees in Mexico to run the operation.
Contact us if you are looking for an employer of record in Mexico.
Types of contracts for hiring employees in Mexico
Contracts may be for a specific task or period of time, seasonal or indefinite, and, where appropriate, may be subject to testing, initial training or a probationary period. Unless stated otherwise when hiring employees in Mexico, the relationship will be assumed to be for an indeterminate period.
Hiring employees in Mexico means following the Federal Labor Law (LFT in Spanish) so that you stay compliant. This is one of the principal reasons for working with an EOR company. Here is a potted guide:
| Contract for an undetermined time (Article 39, LFT) | It is considered an indeterminate work relationship when an agreement exceeds 180 days. In this case, a trial period may be established, which may not exceed 30 days, with the sole purpose of verifying that the worker meets the requirements and knowledge necessary to achieve the work requested. It is important to clarify that the probationary period may be extended up to 180 days, only in the case of management, managerial positions and other persons exercising management or administration functions. |
| Contract for specific work or time (Article 37, LFT) |
A fixed-term contract can only be stipulated when required by the nature of the work to be provided or when it is intended to temporarily replace another worker. |
| Recruitment for initial training. (Article 39 B, LFT) | The law considers that there is period for initial training when a worker is obliged to provide subordinate services under the direction and command of the employer, while the worker acquires the knowledge or skills necessary for the tasks they will do. When the trial or initial training period is over and the employment relationship continues, it is considered to be an indeterminate period contract. |
| Trial Period Contract (Article 39 A, LFT) |
In the case of trial periods when hiring employees in Mexico that will be from 30 and up to 180 days, for administrative, technical, or specialization work, at the end of their period, if the employer may decided to terminate the employee at no obligation to them.
As of 2026, authorities and labor courts have reinforced the need for clear documentation of contract purpose, especially for fixed-term and trial period arrangements. Failure to clearly justify the nature and purpose of these contracts may increase the risk of labor authorities reclassifying them as indeterminate term relationships. |
| Contract for work relationship by season (Article 39 F, LFT) |
A seasonal contract may be used when the activities do not require the provision of services all year. It should be clear that workers who provide services under this type of contract have the same rights and obligations as workers for an indefinite period, in proportion to the time worked. To avoid abuses in the use of these new figures, the contracts must be established in a written agreement and the trial and training periods will be determined. |
Basic requirements for contracts when hiring employees in Mexico
The information that the contract must contain when hiring employees in Mexico is established in Article 25 of the Federal Labor Law:
- Name, nationality, age, sex, marital status, unique population registration code, federal taxpayers registry and physical address of the worker and employer
- If the employment relationship is for work or time determined by season, initial training or for an indefinite period and, if applicable, if it is subject to a trial period
- The service or services that must be provided
- The place or places where work should be provided
- The form and amount of the salary
- Other working conditions, such as days of rest, vacations and other that are agreed by both parties when hiring employees in Mexico
Payroll when hiring employees in Mexico
The payroll is one of the most important documents within a company, since it controls all the withholdings, at or about legal minimums, of the salary of the employees. In their accounts are the final amount that a worker will receive and the amount that the company will invest in a given period. This is important to stay legally compliant when hiring employees in Mexico.
Minimum wage levels and contribution bases for social security (IMSS) and housing fund contributions (INFONAVIT) are adjusted annually by the Mexican authorities. Employers should verify the most recent tables published by the Servicio de Administración Tributaria (SAT), IMSS and related entities each fiscal year to ensure accurate payroll calculations.
Legal benefits when hiring employees in Mexico
Work benefits are additional benefits provided through a worker as a condition of their labor relationship. The benefits are established in a contractual relationship and will be independent of salary, they may consist of an economic, cultural, or medical nature. The law establishes mandatory benefits that every employer hiring employees in Mexico must grant, the others will be agreed by mutual agreement in the individual work contract.
| Minimum wage in Mexico | There are two monthly minimum wages in Mexico as of 2025, with the northern border region where many factories are based having a higher minimum of MXN$9,372.30 (approx USD$550), which an employer of record in Mexico will guarantee is paid, in the event of a project that involves minimum wage employees. The regular minimum wage is MXN$6,310 (approx USD$370) per month. |
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Salary (Articles 5, 82 and 101, LFT) |
The compensation that an employer is obliged to pay its workers for the work they have done during a set period. Pay must be equal for the same work, regardless of sex or nationality. |
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Vacations (Article 76, LFT) |
Workers who have more than one year of service are entitled to enjoy an annual period of paid vacation no less than 12 days with two days being added for each year of seniority to a maximum of 24. |
| Vacation bonus (Articles 79 and 80, LFT) | Workers will be entitled to a bonus of no less than 25% of their regular salary they would have earned during the vacation period. If the employment relationship ends before the year of service is completed, the worker will be entitled to a remuneration proportionate to the time of services rendered. |
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Christmas bonus (Article 87, LFT) |
The workers will be entitled to an annual bonus that must be paid before the 20th day of December, equivalent to at least fifteen days of salary. If terminated before the day in which the bonus is due, the employee is entitled to the proportion of the bonus accrued up to that point in the year. (Ex. If fired in August, they are entitled to 8 months’ contributions to the bonus) |
| Social Security (Articles 15, 38, 56 and 58, LFT) | Social security will provide the employee with medical, surgical, pharmaceutical, and hospital services. The mandatory regime includes insurance for: occupational risk, illness and maternity, disability and death, retirement and currently working elders, day care and social services. |
| Common extra benefits | Examples of work benefits are: food service, transport service, private health insurance, meal vouchers, gas vouchers, savings funds, productivity bonus among others. |
Labor contracts: Workday and holidays in Mexico
According to Article 58 of the LFT when hiring employees in Mexico, the workday is the time during which the worker is available to the employer. The duration of the workday will be mutually agreed, without exceeding the legal maximum of 8 hours per day or 48 hours per week.
For every six days of work the employee must enjoy at least one rest day. During the workday the worker will be granted at least one half hour break. The work day may be extended due to extraordinary circumstances, never exceeding three hours a day or three times in a week.
| Type of work shift | Working hours per shift | Extra pay | Sundays |
| Day shift | 8 hours | 100% over their hourly salary | If the employee is working on Sunday (but still under 48 hours a week), they are owed a 25% bonus over their normal hourly wages. If the work on Sunday is in excess of 48 hours for that week, then the employee is paid a 200% bonus on their Sunday wages. |
| Night shift | 7 hours | ||
| Mixed shift | 7 ½ hours |
According to the Article 715 of the Federal Labor Law (LFT), when hiring employees in Mexico, business days are all days of the year except Sundays, mandatory rest, and holidays.
| Mandatory rest days | Holiday name |
| January 1st | New Year’s Day |
| February 5th | Day of the Constitution |
| March 21st | Benito Juarez’s Birthday |
| May 1st | Labor Day |
| September 16th | Independence Day |
| November 20th | Day of the Mexican Revolution |
| December 1st (Presidential Election year) | Every 6 years |
| December 25th | Christmas |
Employee termination in Mexico
After hiring employees in Mexico, the employment relationship may be terminated at any time, with just cause:
- The worker has deceived their employer in a material way (expenditures, inventory, etc.)
- The worker presents, a lack of integrity, a lack of honesty, acts of violence, threats, or insults, whether during or outside of working hours
- The worker, intentionally causes property damage during the performance of work
- The worker commits immoral acts or harassment and or sexual harassments against their coworkers
- The worker reveals secrets or confidential information from the company
- More than three absences in a period of thirty days without the employer’s permission or just cause
- The worker arrives at the work site in a state of intoxication
An employer who dismisses a worker must give written notice clearly stating the conduct or behavior that motivate the decision and the date or dates during which they were committed. The lack of notice to the worker or the relevant government authorities will provide the employee with grounds to successfully claim that the dismissal was unjustified.
Labor termination settlement
If the employer does not verify the cause of the termination it is considered a termination without cause. The worker will then have the right to be reinstated in their job position or to be compensated. The employer will be exempt from the obligation to reinstate the worker, by paying compensation as follows:
- Three months of salary
- 20 days of salary per year of service
- Payment of overdue wages, if applicable
- Vacation and Christmas bonuses accrued by the time of dismissal.
Serviap Global can help if you are hiring employees in Mexico
At Serviap Global, we support companies hiring employees in Mexico through our Employer of Record (EOR) services, helping you onboard talent compliantly without setting up a local entity. We work with clients across dozens of countries and multiple regions, enabling global teams to hire faster and with confidence.
Through our international EOR services, we handle employment contracts, payroll, statutory benefits, and local compliance — allowing you to focus on growing your business while we manage the administrative complexity.
Contact us today to learn how our Employer of Record services in Mexico can support your expansion, or any other market where you’re planning to hire.
FAQ’s
1) Do I need a legal entity to hire employees in Mexico?
You can hire employees in Mexico either by setting up a local legal entity or by working with an Employer of Record (EOR)/PEO that hires workers on your behalf. The best option depends on your timeline, headcount plans, and compliance capacity. Many companies use an EOR to hire quickly while avoiding entity setup and local employment administration.
2) What is the difference between an EOR and a PEO in Mexico?
In practice, many providers use “EOR” and “PEO” interchangeably. Both models typically allow you to hire local staff while the provider manages employment administration and compliance. The key is to confirm who is the legal employer of record, what liabilities the provider assumes, and which HR/payroll tasks are included in the service.
3) What types of employment contracts are commonly used in Mexico?
Common contract types include indefinite-term, fixed-term (when legally justified), project-based, seasonal, and contracts that include a trial or initial training period when applicable. In Mexico, the default assumption is often an indefinite relationship unless a specific fixed-term basis is clearly established in writing.
4) What must be included in an employment contract in Mexico?
Employment contracts commonly include identification details for employer and employee, job role and duties, work location, salary and pay frequency, working schedule, rest days, and agreed benefits. Contracts should also specify whether the relationship is indefinite, fixed-term, seasonal, or subject to a trial or initial training period, depending on the role and legal basis.
5) What are the biggest compliance risks when hiring employees in Mexico?
Key risks include using the wrong contract type, misclassifying employees as contractors, incomplete written documentation, and payroll/social security non-compliance. Another common risk is improper termination documentation, which can expose employers to disputes and additional costs. A compliant process and clear recordkeeping reduce exposure significantly.
6) Can I hire independent contractors instead of employees in Mexico?
Yes, but you should be careful: contractor arrangements must reflect true independent services and not a subordinated employment relationship. If a contractor is treated like an employee (fixed schedule, direct supervision, exclusivity), misclassification risk increases. If you need long-term, controlled work, an employment relationship (direct hire or EOR) may be safer.
7) What payroll obligations should employers plan for in Mexico?
Payroll obligations typically include running compliant payroll calculations, managing required withholdings and employer contributions, and maintaining payroll records. Employers must also ensure correct registrations and filings according to applicable rules. Working with local experts or an EOR helps reduce errors and keeps payroll aligned with labor and social security requirements.
8) What statutory benefits are mandatory for employees in Mexico?
Mandatory benefits generally include paid vacation, a vacation premium, and an annual Christmas bonus (aguinaldo), among other entitlements depending on the employment conditions. Exact requirements can change over time and may vary by scenario, so employers should confirm current obligations and document all benefits clearly in employment terms.
9) What are standard working hours and rest days in Mexico?
Working hours depend on the shift type, and rules apply for rest breaks, weekly rest days, and overtime. Employers should define schedules clearly in the contract and ensure timekeeping aligns with legal limits. If operations require Sundays or overtime, ensure the correct premium pay rules are applied and documented.
10) What public holidays do employers need to consider in Mexico?
Mexico has mandatory rest days and official holidays that employers should plan for in workforce scheduling and payroll. Holiday calendars can include fixed national dates and special cases (such as election-related days in certain years). Always confirm the official holiday list for the relevant year and align internal policies accordingly.
11) How do terminations work in Mexico?
Terminations can be with just cause or without cause, and documentation is critical. Employers should provide written notice that clearly states the conduct and dates when just cause applies. When termination is not supported as just cause, additional obligations may apply. Using a structured offboarding process and proper paperwork reduces disputes.
12) How long does it take to hire employees in Mexico?
Timelines vary based on role seniority, sourcing channels, and whether you hire via a local entity or an EOR. In general, using an EOR can shorten time-to-hire because entity setup is not required and employment administration is handled by the provider. A clear hiring plan and compliant contract setup also speed up onboarding.
