If you’re hiring remote team members in Mexico, you need to be aware of the benefits you’re required to provide by law.
The country’s robust federal labor laws set out a wide range of statutory benefits for employees, and you’ll have to adhere to these laws when hiring employees in Mexico, regardless of where your company is located.
Failure to comply with Mexico’s employment laws could spell serious trouble for your business, so let’s dive into the mandatory employee benefits you’ll need to provide. Then, we’ll explore optional benefits you can offer to position yourself as a more attractive employer for top talent in Mexico.
Key takeaways:
- Mexico requires employers to provide a wide range of statutory benefits, including minimum wage, overtime pay, and Social Security contributions.
- The required annual bonus, known as the “aguinaldo,” must be paid before December 20 and is typically equivalent to at least 15 days of wages.
- Many companies offer Mexican employees supplementary benefits like private health insurance, savings funds, and food vouchers to attract and retain top talent.
Who is Entitled to Benefits in Mexico?
All full-time employees are entitled to statutory benefits, while part-time and temporary workers may have reduced entitlements based on their employment contracts.
The benefits an employee receives may also depend on other factors, including industry regulations and collective bargaining agreements.
Do Independent Contractors Receive Benefits in Mexico?
Independent contractors don’t typically qualify for the same mandatory benefits as employees.
Mandatory Employee Benefits in Mexico
Minimum Wage and Overtime Pay
Mexico has two minimum wages: One for workers in the Northern Border area and one for workers in the rest of the country. As of January 2025, minimum wage is as follows:
- Northern Border: MXN 374.89 to MXN 419.88 per day
- General: MXN 248.93 to MXN 278.80 per day
Standard working hours in Mexico are set at 48 hours Monday to Saturday, and overtime must be paid for any hours worked beyond this. But overtime can’t exceed three hours per day and nine hours per week.
For overtime worked on weekdays, employees receive at least a 50% premium of their regular hourly wage, while overtime worked on weekends or public holidays is paid at a 100% premium.
Depending on the employment agreement, employees can choose to receive overtime pay or take the equivalent time off.
Learn more about payroll in Mexico.
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Employees in Mexico also receive a bonus, which must be 25% of the employee’s salary. Their employer can pay this bonus when the employee takes their PTO or as a lump sum at the end of the year.
Profit Sharing
PTU requires employers to pay 10% of their profit to employees. The amount shared is divided in two:
- The first half is distributed among employees according to their days worked throughout the year. It’s capped at three months’ worth of an employee’s salary and prorated for employees who have been at the company for less than a year.
- The second part is applied in proportion to the employee’s income level.
PTU doesn’t apply to companies less than a year old. Also, executives and other high-ranking employees such as CEOs, CFOs, general managers, administration, and finance directors aren’t eligible to receive PTU.
Annual Bonus
Employers in Mexico are required to give their employees an “aguinaldo,” which is a yearly bonus. This bonus typically equals 15 days’ pay, though some employers give their employees 20 or 30 days’ pay.
Companies must distribute the Christmas bonus before December 20 so that employees can use the funds for the holidays. Employees who have been with their company for less than a year are entitled to a prorated portion of their bonus.
Social Security
Mexican businesses and any business with employees in Mexico must contribute to the Mexican Social Security Institute (IMSS) on behalf of their employees.
The combined total of employer and employee Social Security contributions typically ranges from 26% to 30% of the employees’ salary; however, it depends on several factors, including salary level and classification of the work.
The IMSS provides a number of benefits to employees, including public healthcare coverage, disability insurance, and retirement benefits.
Severance Pay
When you terminate an employee’s contract in Mexico, you’re required to give them severance pay. The type of severance pay the employee receives will depend on the individual circumstances, as follows:
- Employees who quit are entitled to a small severance package that includes proportional payments of the annual bonus and unused PTO.
- Employees who are fired with cause receive 12 days’ worth of their salary for each year worked at the company.
- Employees terminated without cause are entitled to substantial severance packages, typically including at least three months’ salary, plus additional compensation — often around 20 days’ pay for each year of service.
Leave Entitlements in Mexico
Paid Time Off (PTO)
Full-time employees receive 12 paid days off after a year of service with the same employer. The amount of PTO granted to an employee increases by two days for every subsequent year of service, up to five years, which breaks down like this:
- One year: 12 days
- Two years: 14 days
- Three years: 16 days
- Four years: 18 days
- Five years: 20 days
After this, the number of vacation days they’re entitled to will increase by two days for every five years of service.
PTO in Mexico doesn’t just apply to full-time employees though — discontinuous and seasonal employees are also entitled to annual time off proportional to the number of their working days in a year.
Statutory Holidays
Employees are also entitled to statutory or national holidays, including New Year’s Day, Independence Day, Revolution Day, and Christmas Day. Depending on local electoral laws, employees may also receive a paid day off for Election Day. These mandatory holidays are set out in Article 74 of the Mexican Federal Labor Law.
While companies can require their employees to work on a mandatory holiday, in such cases, employees will receive triple their regular salary.
Sick Leave
Employees can receive up to 52 weeks of paid sick leave. They must obtain an incapacity order from IMSS, which states the number of sick days they’ll receive.
Parental Leave
Mothers receive six weeks of maternity leave before the due date and six weeks after the birth as paid leave, while fathers receive five days of paternity leave after the birth of a child.
Read more: Take a look at maternity leave around the world.
Supplemental Benefits Frequently Offered in Mexico
Because the mandatory employee benefits in Mexico are so robust, many companies choose not to provide any additional benefits.
However, if you want to attract top talent from Mexico, you might want to consider going beyond the statutory benefits. Here are some suggestions for elective employee benefits to add to your package.
Private Health Insurance
You can choose to provide your employees with private medical insurance. This can be a valuable benefit, as it provides access to better clinics and shorter wait times and the Mexican public healthcare system is not always reliable.
Read more: Give your global employees the health insurance they deserve.
Life Insurance
Life insurance is an optional benefit that can provide peace of mind for employees and their families in the event of an employee’s death.
Private Pension Plan
Private pension plans can help employees save for their retirement and reach their financial goals.
Savings Funds
You can set aside a portion of an employee’s salary each month to deposit into a company-owned savings account.
The amount withheld may never exceed 13% of the employee’s monthly salary, the company matches the employee’s contribution, and the employee receives the full dividends payout once a year.
Training and Professional Development
Upskilling your employees by paying for ongoing training and professional development can help them advance their careers and strengthen your organization. Companies with a strong learning culture have 30-50% higher employee retention, according to Deloitte.
Food Vouchers
It’s not uncommon for companies to provide food vouchers to employees, which allow workers to purchase groceries and medicine.
Companies can deduct the cost of the vouchers up to 53% and pay less income tax.
Other Perks and Benefits
Employers in Mexico often provide other perks and bonuses, such as WiFi, transportation stipends, and productivity bonuses.
Offer Competitive Benefits to Employees in Mexico
Offering competitive benefits in Mexico is more than just meeting legal obligations — it’s about building a reputation as a top employer. While the country’s federal labor laws require a comprehensive set of mandatory benefits, providing additional benefits can help you attract and retain the best talent.
However, navigating the complexities of compliance, payroll, and local employment regulations can be a major challenge, especially if you’re hiring remotely.
But an Employer of Record (EOR) like RemoFirst can help. RemoFirst handles the administrative burden of hiring in 185+ countries, from ensuring legal compliance to managing benefits and payroll.
Book a demo to see how we can simplify international hiring and help you stay competitive in the Mexican job market.
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