PEO & Employer of Record (EOR) in Mexico
Expand Your Business With Our Mexico PEO
GlobalPEO delivers a top tier employer of record service for clients that are looking to recruit, hire, and operate payroll services without first setting up their own subsidiary in Mexico.
How it Works: Our Mexico PEO hires your candidate while abiding by local labor laws and cultural customs. The newly hired employee will communicate directly with your company and perform all job functions as if they were your own employee. We act as your in-country HR department and handle the entire onboarding, payroll, and benefits process in strict accordance with Mexico’s regulations.
Why Choose our Mexico PEO?
Without needing to setup a local entity in Mexico, companies save thousands when expanding with GlobalPEO. From $400 USD.
Scale and onboard your workforce in days, not months by using our local entities and experts in Mexico.
Minimize risk by ensuring your company is compliant with local laws and cultural customs and protecting your business from potential fines and legal fees.
Streamlined process for managing your payroll, benefits, and HR responsibilities with full flexibility to make changes at any time.
Mexico PEO & Employer of Record
Hire, onboard, and manage employees in Mexico quickly and easily with GlobalPEO. Working with our Mexico PEO and Employer of Record solution eliminates the headaches that come with establishing a foreign legal entity and guarantees full compliance with local regulations.
Local Employer of Record
Your employees based in Mexico will sign a local employment contract with GlobalPEO's in-country entity. Labor contracts are available in English and Spanish, with employee payments processed in the local Mexican Peso currency. As the local Employer of Record, GlobalPEO operates with full compliance to the laws and regulations of Mexico's Bureau of Labor.
Payroll Processing
GlobalPEO's complete payroll processing includes:
- New employee setup
- Social Insurance contributions
- Individual income tax declaration
- Expenses declaration
- Payslip provision
- Dedicated payroll officer
- Support for standard employment documents
Employee Onboarding
After officially hiring your local candidate, our Mexico HR team will schedule an onboarding conference call with both the candidate and client. The onboarding process typically takes between 3-5 days.
Legal Liability Coverage
Our PEO solution covers the following functions to take legal liability as the local employer of record:
- Obligatory social and pension insurance enrollment.
-Employee income tax withholding
- Liabilities of early-termination, including severance calculation and mediation.
- Onsite health and safety liability coverage, which is shared with the client
Termination Guidelines
In the event a client decides to pause or end their presence in Mexico when employing staff through our PEO and Employer of Records service, there are no termination fees to be paid as long as the client adheres to the 60 day termination-notice period.
#1 - Fast Facts For Hiring in Mexico
Building Relationships Is Essential
It is common when doing business in Mexico to engage in small talk and getting to know potential partners before discussing business.
Working With Large Labor Unions
Approximately 20% of Mexico's workforce belongs to a large labor union that protects the worker's employment rights and focuses on negotiating additional bonuses and salary increases for employees who hold seniority in their positions/industry.
Understand Cultural Agreement Protocols
The majority of business and hiring deals made in Mexico take place in person, as opposed to being done over the phone. GlobalPEO's entity in Mexico is there to assist with the hiring process and act in full compliance with Mexico's regulations and cultural norms.
#2 - Working Hours in Mexico
Weekly work time in Mexico is limited to 11 hours per day and cannot exceed 50 hours in a week. Most jobs operate from 8am to 6-7pm during the week. Increased payments are required for all overtime pay.
Overtime is paid at 150% of the regularly employee payment, with payments increasing to 200% for any overtime worked on Sundays or National Holidays. Keep in mind that all employees, regardless of seniority, are legally required to receive at least one 24 hour period of rest each week.
#3 - Mexico: Employment Contracts
Employment contracts in Mexico must clearly state the employees’ responsibilities, compensation details, benefits, grievance procedures, and requirements for termination. All offer letters, compensation details, and any document where employee income is discussed should be stated in Mexican Pesos. Most contracts also specify provisions relating to employee confidential information and non-compete restrictions.
GlobalPEO includes all these services along with everything else in the jurisdiction of international expansion in Mexico through our Employer of Record service.
#4 - Mexican Holidays
There are 8 nationally celebrated holidays in Mexico. They include New Year’s Day, Constitution Day, Benito Juarez’s birthday, Labor Day, Independence Day, Revolution Day, Election Day, and Christmas Day.
Employees who are required to work on any of these 8 national holidays are legally entitled to receive 3x their standard rate of pay, along with a predetermined number of hours they will work on those days.
#5 - Bonus Payments in Mexico
All employees operating in Mexico are granted a yearly bonus known as an Aguinaldo. The Aguinaldo is usually equal to 2-6 weeks of normal pay.
It is common for management positions to have performance-based bonus incentives that have variable rates of payment. Employees who make the majority of their income in the sales industry are also subject to receive regular commissions and bonus payments.
#6 - Health Insurance and Employment Benefits in Mexico
#7 - Sick Leave in Mexico
In the event of an employee misses work due to sickness or personal injury, they must submit the official Leave Certificate by the IMSS or a medical prescription from a private doctor. Employers have the right to grant sick leave with or without pay at the discretion of the immediate manager or supervisor of the employee.
If the sickness or personal injury is deemed to be work-related, employers are required to continue paying 100% of the employee salary for the duration of the employee’s leave.
#8 - Maternity Leave in Mexico
Women working in Mexico are granted a total of 12 weeks maternity leave, which consist of 6 weeks’ paid leave before and after the birth of the child.
Fathers have the right to take up to 5 days of paid paternity leave.
All maternity and paternity related leave is paid for by Social Security, not the employer. If an employee’s salary exceeds 25 times the minimum wage, it is often customary for employer’s to pay the difference of the income that the female employee will not receive from Social Security.
#9 - Termination & Severance in Mexico
While it is required to provide a probationary period before terinating an employee, we recommend that you do not designate a probationary period that lasts longer than 30 days. If an employee’s probationary period exceeds 30 days, the employer may be subject to paying severance for the employee following their dismissal.
If not expressed otherwise, all employment contracts in Mexico are assumed to be for an indefinite term-length.
Employment agreements in Mexico may be terminated by a mutual agreement between employee and employer, the death of the employee, or a physical or mental disability that renders the employee no longer capable of performing the required work duties.
If the employer does decide to terminate their employee, they will be required to pay any outstanding wages, accrued vacation time, the Aquinaldo bonus, and any additional compensation owed to the employee.
#10 - Mexico's Tax Laws
Employees operating in Mexico are required to pay high income taxes which can reach up to 35%. Employees have the opportunity to open an “Administrator of Retirement Funds” account that they can contribute to on a monthly or yearly basis. There are a variety of AFOREs available, so employee’s must choose which fund they would like to contribute to before adding funds to an account. If an employee fails to designate an AFORE after 1 year of employment, a low-commission fund will be automatically assigned to their name.
Employer’s are required to contribute up to 10% of the employee’s paycheck to their retirement fund, which covers unemployment due to old age, housing costs, and additional retirement related expenses as negotiated by the employee or their representing labor union.
Why Choose GlobalPEO?
Global expansion is a great step for your business – and now it’s easier than ever. Setting up your own entity in each country where you wish to operate can be expensive, complicated, and requires deep knowledge of the specific rules and regulations. Let GlobalPEO take care of everything. From International PEO & EOR, Global Payroll and International Recruiting we deliver our exceptional services at an affordable price.