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Hire in Mexico,
compliantly,
without the complexity.

We become the legal employer for your international workforce in Mexico. You keep full control of your team — we handle payroll, taxes, benefits, and local compliance.

Official NameUnited Mexican States (Estados Unidos Mexicanos)
CapitalMexico City (CDMX / Guadalajara: 'Silicon Valley of Mexico' / Monterrey: Industrial Titan)
CurrencyMexican Peso (MXN / $)
Official LanguageSpanish
Population~130 million (2nd largest economy in Latin America / G20 member, ~$1.8T USD GDP)
Time ZoneCST (UTC-6, CDMX/Guadalajara/Monterrey) / MST (UTC-7) / PST (UTC-8)
Daily Minimum WageMXN $248.93 / day (General) / MXN $374.89 / day (Northern Border Free Zone - ZLFN)
Mandatory 13th-Month Salary (Aguinaldo)Minimum 15 days' salary paid before 20 December
Mandatory Profit Sharing (PTU)10% of company pre-tax profit distributed to employees in May (capped at 3 mo salary)
Social Security (IMSS & INFONAVIT)~25%–35% Employer (IMSS Health/Pension/Risk + 5% INFONAVIT Housing Fund)
Annual Vacation (Vacaciones Dignas)12 working days (Year 1) scaling to 32 days + 25% Prima Vacacional bonus
REPSE Subcontracting ReformStrict prohibition of general labor outsourcing (Specialized Services registration)

The United Mexican States (Mexico) is the second-largest economy in Latin America, a G20 and OECD member (~$1.8+ trillion USD GDP), and the undisputed global leader in manufacturing and technology nearshoring to North America under the USMCA (T-MEC) free trade agreement. Operating across major tech and industrial hubs in Mexico City (CDMX fintech and corporate headquarters), Guadalajara ("Silicon Valley of Mexico" for software, semiconductor design, and electronic engineering), and Monterrey (industrial manufacturing and EV automotive), Mexico offers a vast, highly talented engineering and bilingual professional workforce operating in US Central and Pacific time zones. However, hiring employees in Mexico requires navigating the Mexican Federal Labor Law (*Ley Federal del Trabajo – LFT*), the historic **REPSE Labor Subcontracting Reform (2021)**, the **Vacaciones Dignas Reform (2023)** (12 days leave in year 1), mandatory **Aguinaldo** (15 days' salary paid in December), mandatory **PTU Profit Sharing (10% of net company profits)**, the **Prima Vacacional (25% vacation bonus)**, employer social security with **IMSS** (~25%–30%), and housing fund contributions with **INFONAVIT** (5.0%). Incorporating a local *Sociedad Anónima de Capital Variable (S.A. de C.V.)* or *S. de R.L.* involves public notaries, the Foreign Investment Registry (RNIE), SAT RFC tax registration, and corporate bank account setup taking 6 to 12+ weeks. A Global Employer of Record (EOR) enables international companies to hire Mexican software engineers and nearshore operations teams legally, quickly, and in full compliance with the strict REPSE labor reform without establishing a local company. The EOR acts as the legal employer, managing LFT-compliant Spanish contracts, IMSS and INFONAVIT remittances, Aguinaldo and PTU disbursements, and compliant MXN/USD payroll.

Economic Overview, USMCA Nearshoring Superpower & Guadalajara Tech

Mexico is the #1 trading partner of the United States, driving massive global nearshoring in software engineering, automotive EVs, and electronics.

Key Economic Clusters

  • Guadalajara ("Silicon Valley of Mexico"): Premier hub for embedded software, semiconductor design (Intel, Continental), and cloud development.
  • Mexico City (CDMX): Financial and tech startup capital, driving fintech unicorns, SaaS, and venture capital.
  • Monterrey & Northern Border Corridor: Industrial manufacturing powerhouse for electric vehicles, aerospace, and advanced robotics.

Employment Contracts, Federal Labor Law (LFT) & REPSE Reform

Regulated by the Ley Federal del Trabajo (LFT).

  • REPSE Subcontracting Compliance: Under the 2021 reform, third-party labor supply is strictly prohibited unless providing specialized services registered with the Ministry of Labor (STPS) on the REPSE registry.
  • Mandatory Written Contracts: Must be in Spanish detailing job specifications, working hours, and salary breakdown.
  • Probation Period: Maximum 30 days for general workers, and up to 180 days (6 months) for managerial, technical, and executive positions.

Working Hours, Overtime Multipliers & Shift Types

  • Day Shift (*Jornada Diurna*): 48 hours per week (8 hours/day).
  • Night Shift (*Jornada Nocturna*): 42 hours per week (7 hours/day between 20:00 and 06:00).
  • Mixed Shift (*Jornada Mixta*): 45 hours per week (7.5 hours/day).
  • Overtime Surcharges: 200% (double time) for the first 9 hours of overtime per week; 300% (triple time) for overtime exceeding 9 hours/week or work on mandatory rest days/public holidays.

Vacaciones Dignas System, Prima Vacacional & Maternity

Vacaciones Dignas Annual Leave Scale

Under the landmark *Vacaciones Dignas* law, paid vacation starts at 12 working days in year 1 and scales progressively:

  • Year 1: 12 working days
  • Year 2: 14 working days
  • Year 3: 16 working days
  • Year 4: 18 working days
  • Year 5: 20 working days
  • Years 6–10: 22 working days (scaling up to 32 days maximum)
  • Vacation Premium (*Prima Vacacional*): Mandatory bonus of at least **25% on top of normal wages** during the vacation period.

Maternity & Paternity Leave

  • Maternity Leave: 12 weeks (84 calendar days) (6 weeks prenatal + 6 weeks postnatal) paid at 100% via IMSS social security.
  • Paternity Leave: 5 paid working days upon childbirth.

Social Security (IMSS), INFONAVIT (5%), PTU & Aguinaldo

Mandatory Aguinaldo & Profit Sharing (PTU)

  • Aguinaldo (13th Month): Mandatory bonus of at least 15 days' salary paid before 20 December each year.
  • PTU Profit Sharing (*Participación de los Trabajadores en las Utilidades*): Mandatory distribution of **10% of the company's annual fiscal pre-tax profit** to employees in May (capped at 3 months of salary or average of last 3 years' PTU).

Social Security (IMSS & INFONAVIT) Breakdown

Institution / Fund Employer Share Employee Share Coverage
Social Security (IMSS) ~20.0%–28.0% ~2.5%–3.0% Health, maternity, disability, retirement (SAR) & occupational risk
Housing Fund (INFONAVIT) 5.00% 0.00% National worker housing loan fund
State Payroll Tax (*Impuesto Sobre Nómina - ISN*) 2.0%–3.0% 0.00% State-level payroll tax (e.g. 3.0% in CDMX)
Total Statutory Contributions ~27.0%–36.0% ~2.5%–3.0% Calculated on Base Contribution Salary (SBC)

Personal Income Tax (ISR): Progressive brackets from 1.92% up to 35% on taxable income, withheld monthly and remitted to SAT.

Termination, Justified Cause (Article 47) & 3-Month Severance (*Indemnización Constitucional*)

Constitutional Severance (*Indemnización Constitucional*)

Under Article 123 of the Mexican Constitution and the LFT, dismissing an employee without statutory just cause under Article 47 entitles the employee to mandatory statutory severance:

  • Constitutional Indemnity: 3 months (90 days) of integrated daily salary (SDI).
  • Seniority Premium (*Prima de Antigüedad*): 12 days' salary per year of service (capped at 2× minimum wage).
  • 20 Days' Salary per Year: Additional 20 days per year if reinstatement is rejected.

Why Use an Employer of Record (EOR) in Mexico

  • REPSE Compliance & Zero Subcontracting Risk: Complete legal compliance with Mexico's strict labor subcontracting legislation.
  • IMSS, INFONAVIT & Aguinaldo Administration: Flawless management of social security, housing funds, and December bonuses.
  • Nearshore US Time Zone Tech Teams: Onboard software engineers in Guadalajara, CDMX, or Monterrey in days.

Hiring in Mexico? Key Resources

Whether you are evaluating entity setup vs. using an Employer of Record, or looking for the best international payroll solution, our guides give you transparent benchmarks:

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