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Working with a provider of payroll services in Mexico can be a great way to streamline your in-house operations, while handing a crucial financial and administrative responsibility to experts who guarantee compliance with all local regulations.
Every financial jurisdiction is characterized by its own particularities, and failure to navigate them properly can result in legal complications or financial penalties. In Mexico, payroll services must be provided in full compliance with the Federal Labor Law, the Mexican Social Security Institute Law, and the Federal Tax Code, among others.
Working with a provider of payroll services in Mexico also guarantees that payments to all professionals based in the country are reliably administered, with everyone paid on time and the likes of paid time off and statutory bonuses processed properly. That, in turn, helps maintain job satisfaction among everyone working for the company in Mexico and can boost the reputation of the company in local professional circles.
For anyone seeking a provider of payroll services in Mexico, it may be worth examining the possibility of working with an employer of record (EOR).
Such a provider hires international professionals on behalf of other companies, allowing them to quickly and compliantly onboard international team members without setting up a foreign entity. So depending on the nature of the business and number of people being employed, this can be an attractive option that offers significant savings.
Contact us to find out more about EOR and payroll services in Mexico.
Responsibilities a payroll provider will take on
A provider of payroll services in Mexico will be able to take on a significant range of responsibilities, among which some of the most significant include:
Compliant contracts: A provider of payroll services in Mexico will often be able to provide contract frameworks that are compliant with local laws and can be adapted for any professionals being hired locally. Generally contracts in the country will be indefinite term, with other types only suited to specific types of jobs. This is something a payroll services provider can offer advice on.
Incorporation documents: New employees must present a range of documents upon joining a company, including among others: tax and ID numbers (RFC and CURP), social security number (IMSS), voter’s registration number (INE), proof of address, bank certificate, housing fund withholding statement. A provider of payroll services in Mexico will often be given responsibility for receiving, checking, and storing these.
Minimum wage: All salaries must meet minimum wage laws, which vary within the country. In the northern part of the country, bordering the United States, the daily minimum wage is 312 Mexican pesos (approximately US $18), while in the rest of the country it is set at 207 Mexican pesos (approximately US $12).
Maximum hours: In Mexico, by law nobody should work more than 8 hours per day or 48 hours per week as part of their normal working hours.
Statutory bonuses: Like in many Latin American countries, Mexico has a statutory annual bonus that as a minimum must equal 15 days of professional’s standard monthly salary. Note that this bonus could double, which would place it in line with many other countries in the region.
Paid vacation: Following the passing of a new law in 2022, formally employed people in Mexico are entitled to at least 12 working days of PTO after completing one year of service, increasing by two working days for each year of seniority up to a maximum of 24 days.
Public holidays: While public holidays vary each year, there are generally seven paid public holidays granted for New Year’s Day (January 1), Constitution Day (February 5), the Birth of Benito Juarez (March 20), Labor Day (May 1), Independence Day (September 16), Revolution Day (November 20), and Christmas Day (December 25).
Social Security: Paying towards social security is mandatory and covers medical, surgical, pharmaceutical, and hospital services, occupational risks, sickness and maternity, disability and death, retirement, daycare, and social services. The relevant calculations and deductions will be made by a provider of payroll services in Mexico.
Taxes: Similarly a provider of payroll services in Mexico will deduct income tax (ISR), which ranges between 0% and 35% depending on earnings.
EOR vs payroll services in Mexico
Anyone considering working with a provider of payroll services in Mexico may find that EOR services offer a more comprehensive solution to better suits their needs. Because as part of its standard service, an employer of record in Mexico will provide payroll and other administrative services for all professionals hired on your behalf.
So not only is payroll and related compliance taken care of, but those professionals are officially employed by the EOR in the eyes of local authorities, meaning that the vast majority of liability related to being an employer sits with them.
An EOR will also be able to help with recruiting the professionals you need, and will have an established network and expert understanding of the local job market to help them find outstanding candidates in the shortest time feasible.
As part of its recruitment services, an EOR will also be able to carry out interviews — be that undertaking initial interviews to vet candidates before passing them on to be interviewed by the company they will report to, or taking responsibility for putting the right people in place to meet specified needs.
The EOR will also take care of onboarding all those professionals, including coordinating with the company they will report in the acquisition and distribution of any equipment that must be issued, as well as eventually offboarding any departees.
All of this will come at a fee, which will often work out to be significantly less than the costs associated with setting up an entity and employing both the professionals and local support staff needed to administer them.
It is also a more nimble solution, with a company able to have professionals reporting to them from international locations in only the time it takes to find and onboard them. While an EOR may also offer support with other hiring solutions, or be well-placed to assist with expansion into other countries in the future.
For anyone seeking payroll services in Mexico who already has an entity, but will be looking for support with recruiting the professionals they need, an EOR may still be able to help. Because, in some cases they will also offer standalone recruitment services.
Serviap Global offers EOR and payroll services in Mexico
Serviap Global offers payroll services in Mexico, among a range of services that include international PEO / EOR services, contractor hiring, and global talent acquisition to help source direct hires.
Having started out in Mexico, we know the country like no other provider, so we can guarantee you the support you need when hiring or doing business there.
Contact us to find out more.