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Hiring Employees in Mexico?
There are two ways to hire employees in Mexico.The first one is to hire employee with a Global Professional Employer Organization, or PEO, such as Serviap. The second one is by your own. You need to make an offer letter determining if the salary is This will cost more time and money than the first one.
Labor contracts in Mexico
Individual employment contracts is one by virtue of which a person is obliged to give another a valuable labor or service in exchange for a salary. The lack of the document does not deprive the worker of the rights derived from relevant labor standards. The hiring of children under 15 years of age is illegal. Those who are under 18 must have concluded the equivalent of a middle school education. People under 18 cannot work in a situation where their health, security, or morality can be at risk. The minimum age to provide any work in Mexico is 15. Those over 15 and under 16 need authorization from their parents or guardians. People over 18 can work without authorization from anyone else.
Type of labor contracts in Mexico.
The labor relations may be for a specific task or period of time, seasonal or indefinite, and, where appropriate, may be subject to testing or initial training. Unless stated otherwise, the relationship will be assumed to be for an indeterminate period.
| Contract for an undetermined timeArticle 39, LFT | It is considered an indeterminate work relationships when an agreement exceeds 180 days. In their 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 timeArticle 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 activity for which they are going to be hired. When the trial or initial training period is over and the employment relationship continues, it is considered for an indeterminate period. |
| Trial Period Contract Article 39 A, LFT | In the case of trial periods that will be 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. |
| 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 week, month or year. It should be clear that workers who provide services under their modality have the same rights and obligations as workers for an indefinite period, in proportion to the time worked in each period. 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 labor contracts in Mexico
The information that the contract must contain is established in Article 25 of the Federal Labor Law:
- Name, nationality, age, sex, marital status, Unique Population Registration Code, Federal Taxpayers Registry and 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 agree the worker and the employer
Payroll in Mexico
The payroll is one of the most important documents within a company, since there is a control of all the withholdings, at or about legal minimums, of the salary of the employees. From their operation, the final amount that a worker will receive and the amount that the company will invest in a given period is obtained.
Legal Benefits 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 must grant to their employees, the others will be agreed by mutual agreement in the individual work contract.
| Minimum Wage in Mexico | Their amount in theory, would have to cover fundamental expenses to provide the employee with a decent life. |
| Salary Article 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.Regular employees have to be paid biweeklyManual laborers need to be paid weeklyNo salary can be less than the minimumThe salary in cash must be paid precisely in legal currencyPay must be equal for the same work, regardless of sex or nationality |
| Minimum Wage in Mexico | Their amount in theory, would have to cover fundamental expenses to provide the employee with a decent life. |
| Salary Article 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.Regular employees have to be paid biweeklyManual laborers need to be paid weeklyNo salary can be less than the minimumThe salary in cash must be paid precisely in legal currencyPay must be equal for the same work, regardless of sex or nationality |
| Vacations Article 76, LFT | Workers who have more than one year of service are entitled to enjoy an annual period of paid vacation: |
| Vacation Bonus Article 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. |
| Christmas Bonus Article 87, LFT | The workers will be entitled to an annual bonus that must be paid before the twentieth 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 SecurityArticle 15, 38, 56 and 58, LFT | Social security will provide the employee with medical, surgical, pharmaceutical, and hospital services.The mandatory regime includes the insurance for:Occupational riskIllness and maternityDisability and deathRetirement and currently working eldersDay care and social services |
| Superior Benefits **Additional benefits in excess of the legal minimum | Examples of work benefits are:Food service Transport servicePrivate health insuranceMeal vouchers Gas vouchersSavings fundsProductivity bonus |
Labor contracts: Workday and holidays in Mexico
According to Article 58, LFT, the “workday” is the time during which the worker is available to the employer to lend their work. The worker and the employer will set the duration of the workday, 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 continuous work day 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, (Essentially “overtime”: Maximum 9 per week)
| Type of Work Day | Working hours per Day | Extra Hours | Sundays |
| Day | |||
| shiftNight | 8 hours7 | 100% over their hourly salary e) | 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 (125% of normal hourly wages x 3) |
| ShiftMixed | hours7 | ||
| Shift | ½ hours |
According to the Article 715 of the Federal Labor Law (LFT), business days are all days of the year except Saturdays and Sundays, mandatory rest, and holidays indicated by the working days calendar and those in which the labor authorities indicated that the work is suspended (for natural disasters, etc.)
| Mandatory Rest Days | Holiday Name |
| January 1st | New Year’s Day |
| 1st Monday February | Day of the Constitution |
| 3rd Monday March | Benito Juarez’s Birthday |
| May 1st | Labor Day |
| September 16th | Independence Day |
| 3rd Monday November | Day of the Mexican Revolution |
| December 1st (Presidential Election year) | Every 6 years |
| December 25th | Christmas |
Employee Termination in Mexico
The worker or employer may terminate the employment relationship 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 its job position or to be compensated. The employer will be exempt from the obligation to reinstate the worker, by paying the compensation:
- Three months of salary
- 20 days of salary per each year of service
- Payment of overdue wages, if applicable
- Vacation and Christmas bonuses accrued by the time of dismissal.
Why to choose PEO in Mexico?
The recruitment process will be carried out taking into account from the beginning with the skills and characteristics you need for this new member of your team. At SERVIAP, in addition to saving time and money, you will have a customer service manager dedicated to your account. You will be able to use NYRN Cloud where you will find personalized attention and all of the information and reports about your potential employee.
