There are many benefits for employers choosing to recruit remote workers from Mexico. It does, however, come with added costs and other challenges that you may not be used to when hiring domestically.
You’re probably wondering, how much exactly does it cost to hire a Mexican employee? If you are an employer that is considering hiring workers from Mexico, you’re probably looking for a simple answer to this question. However, hiring and managing international workers from any country is not black and white and requires a thorough understanding of Mexico’s complex labor and tax laws.
In this article, we help answer this question by going over what hiring an employee from Mexico entails and what you can expect from a financial perspective.
How Much Do Employers Need to Pay Mexican Workers?
Mexican labor laws are complex and have many requirements for employers. There are many things to consider, such as wages, overtime, benefits, and mandatory bonuses..
Minimum Wage in Mexico
The norm in many countries isto pay employees a minimum hourly wage. However, in Mexico, employees are paid a general minimum daily wage. This means that no matter the hourly wage, a worker must be paid a certain amount for an entire day’s work. As of 2023, this amount is MXN207.44 pesos per day, which is equivalent to USD $11.10.
Overtime
Along with mandating a daily minimum wage, Mexico has restrictions on overtime work. While Mexico does allow employees to work overtime, this is limited to no more than three extra working hours per day. Employees cannot work overtime more than three times a week. If they do work overtime, employers are required to pay them double their usual wage.
Mandatory Rest Days
In Mexico, the average work week is between 40 and 48 hours. All employees are entitled to take one full day of rest for every six-day working period, during which they will be paid their usual wage. If an employee does work on their day of rest, they must get a 25% pay increase for that day.
Mandatory Bonuses
There are three mandatory bonuses that employers must pay to their Mexican Employees:
- Christmas Bonus: Any employee that has worked for a company for the entire year must be paid a year-end bonus that amounts to at least 15 days of pay, but is often increased to 30 days by many employers. The latest this bonus can be given to staff is December 20th. This is also known as the 13th salary.
- Bonuses Based on Industry: Employers who employ workers in specialized areas with high employment rates are required to pay bonuses based on certain factors. This includes work ethic, punctuality, and productivity.
- First Year End Bonus: After its first year in operation, an employer must take 10% of its net income for that year and divide it amongst its Mexican employees.
What About Taxes and Benefits?
In Mexico, employers must pay a Payroll Tax, which ranges between 1% and 3% of total salaries paid.
Vacation Pay
All Mexican workers are entitled to paid vacation along with a 25% vacation premium.
This amounts to:
- Six days of paid vacation after the employee’s first year with the company
- Two additional paid vacation days every subsequent year until the employee has been employed for four years.
- Two days additional paid vacation days every five years
As for paid holidays, in Mexico, employers must give employees paid days off for seven different holidays each year, which includes the following:
- January 1: New Year's Day
- February 1: Constitution Day
- March 15: Benito Juarez Day
- May 1: International Labor Day
- September 16: Independence Day
- The third Monday in November: Revolution Day
- December 25: Christmas Day
Other Financial Factors to Consider
Along with the many factors that go into paying Mexican employees that have been listed above, there are also many other financial considerations when hiring staff from Mexico.
Here are some of the main things you will need to take note of:
Payments Must Be Made in Mexico
Any company that is paying employees based in Mexico must make all salary payments from a Mexican bank account. The employee being paid must also be made a registered beneficiary.
You Must Have an Office in Mexico or Work With an Employer of Record
If your business is looking to hire employees in Mexico, you must either set up an office there or work with an Employer of Record.An Employer of Record acts as a proxy for your business and will act as the official employer of your staff in Mexico. This is often the more desirable option as it means you can avoid setting up and running an office in Mexico which can be incredibly costly and stressful due to the intricate laws in place.
Contract Negotiations
In Mexico, contract negotiations are required by law. Every year, an employee’s salary must be re-negotiated, and collective bargaining agreements must be updated every two years.
How Borderless Can Help You Manage and Pay Your Mexican Employees Stress-Free
Looking to hire employees in Mexico but have concerns about the complexities of paying and managing your team? Borderless can help.Borderless is an online platform and Employer of Record designed to help employers hire, manage, and pay contractors anywhere in the world with ease, including Mexico.We help facilitate payments, draw up employment contracts, provide Compliant tax documents, and ensure your business complies with all of Mexico’s complicated labor and tax laws.
Our platform is set up to handle anything and everything you may need when managing a team of staff in Mexico, so you can focus on running your company and connecting with employees.
Contact us today to learn more about Borderless or to book a demo.
Disclaimer
Borderless does not provide legal services or legal advice to anyone. This includes customers, contractors, employees, partners, and the general public. We are not lawyers or paralegals. Please read our full disclaimer here.
