Employer of Record Services for Mexico

Employing in Mexico

Famed for its sunshine, luxury beach resorts and, of course, tequila, Mexico is also an emerging economic powerhouse. Already the second-largest economy in Latin America and the fifteenth largest in the world, Mexico has a market size as large as Western Europe and numerous free trade agreements covering almost 50 countries — presenting excellent business opportunities for those looking to expand globally.

The country is also home to Mexico City, the largest Spanish-speaking city in the world, and occupies a strategic global position that serves as a bridge between Latin America and the United States and Canada.

Mexico is the third-largest trading partner of the US and has demonstrated stable economic growth in recent years. There’s enormous untapped potential here, with analysts predicting that Mexico will boast a higher GDP per capita than all but three European countries by 2050, making it the world’s eighth-largest economy!

Our Expertise

Managing a global workforce in Mexico

In Mexico, managing a global workforce involves adherence to the Federal Labour Law and compliance with social security contributions. Employers must ensure proper reporting to the Mexican Internal Revenue Service and other legal authorities. TopSource Worldwide offers expert support in this area, helping companies ensure compliance with Mexico's employment laws, thus facilitating seamless business operations in Mexico.

Extensive expertise

Our team of experienced, knowledgeable staff collectively provide up-to-date employment information across 180 countries, so you can always get accurate advice.

Entity-free employment

Feel free to hire employees from all over the world without being weighed down by setting up entities, running complex payroll or recruiting a hiring team.

Payroll without hassle

Have the confidence that your staff will always be paid accurately and on time, so that you can focus on your core business activities and work towards your success.

Always-on support

Access helpful, relevant, personalised advice whenever you need it, along with expert-led recruitment policies and tried-and-tested HR best practices.

"With TopSource we were able to have employees hired or maintained in Nutreco without having to establish an entity in these countries for only 1-2 employees. I think most countries are covered by TopSource, so they can help us with almost all cases. Good advice on conditions and direct contact with employees. Invoicing done directly to the company. An easy process compared to hiring employees by ourselves."

Annette van Duijnhoven

Nutreco

See our customer stories

”We searched the market for a local payroll vendor in 2014 and we chose TopSource as our partner. We were looking for error-free and timely payroll processing and TopSource Worldwide delivers this, saving us time and money. We have worked together for 8 years now and would recommend them to anyone."

Praveen Lihinar

Sungard

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”TopSource Worldwide has a detailed and methodical onboarding process that made it easy for us to get set up and running with our UK employees. They were able to take the worry out of trying to comply with all local laws and regulations. Because they have this knowledge we do not have to research on our own and hope we are in compliance. This has saved us hours of time and gives both the company and employees a sense of security."

Supervisor

Client based in Ft Worth, Texas, USA

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GLOBAL EXPANSION STRATEGY

Personalised Employer of Record services in Mexico

TopSource Worldwide offers personalised Employer of Record (EOR) services tailored to meet the specific needs of your business in Mexico. This includes handling employee onboarding, payroll processing, tax compliance, employee benefits management, and HR support. Our EOR services ensure that your business meets all legal and regulatory requirements, providing a hassle-free solution to manage your Mexico-based employees.

End-to-end Mexico payroll services

Looking to expand into Mexico? Our unparalleled expertise in global payroll services ensures that your business can seamlessly navigate the complexities of payroll on a global scale, supporting your Mexico expansion initiatives.

Global entity management

Venturing into the Mexican market can be both exciting and challenging. With distinct business regulations, cultural nuances, and economic landscapes, it's essential to have a clear roadmap for your business establishment journey.

Accounting

Whether your goal is to process your purchase-to-pay transactions with minimum errors or manage your expense claim procedure, our team of experts can handle your accounting responsibilities, allowing you to focus on your core business and save time and money.

Global EOR services

Managing a diverse global workforce can be complex. This is where TopSource steps in as an invaluable employer of record services partner for companies seeking to expand their global reach while ensuring compliance with local employment laws and regulations.

Global Expansion Simplified

How to do business in Mexico

Entering the Mexican market presents a mix of excitement and challenges. Given unique business regulations, cultural intricacies, and economic dynamics, a well-defined roadmap is crucial for a successful business establishment.

TopSource Worldwide is with you at every stage. Whether it's navigating local regulations or facilitating seamless operational transitions, our expertise ensures a swift and efficient process for establishing your business in Mexico.

Start your Mexico expansion

Mexico Insights

Key insights into Mexico's landscape

VAT rates: Mexico has a standard Value Added Tax (VAT) rate of 16%, with reduced rates of 8% and 0% for specific goods and services.

Ease of Doing Business rank: Mexico ranks 60th in the World Bank's Ease of Doing Business Index, showing a moderately favourable business environment.

Consumer Confidence Index: As of 2022, Mexico's Consumer Confidence Index was 43.2, reflecting cautious economic sentiment.

Employee maternity/paternity leave: Maternity leave is 12 weeks, with 100% salary coverage; paternity leave is 5 days, supporting work-life balance for new parents.

Employee termination period: Standard notice for termination varies but is typically 15 to 30 days, depending on employment contract terms and length.

Employee salary pay date: Wages are typically paid bi-weekly or monthly, with specific pay dates stipulated in employment contracts and subject to labour laws.

Bank holidays: Mexico observes national holidays, including New Year's Day, Independence Day, and Christmas, with a total of around 10 public holidays in a year.

Statutory benefits

Annual Christmas bonus (Aguinaldo)

Employees are entitled to a yearly bonus known as an ‘Aguinaldo’ (or a 13th salary). The minimum Aguinaldo each year is equal to 15 days of salary and may be pro-rated if an employee starts part way through the year. This is invoiced monthly and accrued to be paid out to the employee.

It’s possible to pay higher than this required minimum with many employers choosing to pay four weeks’ pay or up to six weeks in some larger companies. The Aguinaldo should be paid by 20 December, although companies which pay six weeks usually pay four weeks in December and two weeks in summer.

Vacation bonus

In addition to vacation entitlement, most employees are entitled to a vacation bonus of no less than 25% of their salary during the vacation period. The actual percentage is granted based on the annual leave entitlement days and paid on the anniversary of the employee with the company. This is invoiced monthly and accrued to be paid out to the employee.

Average total employer costs payable in Mexico are 15%.

Vacation bonus information

Benefit

Spanish name

Covers

Approximate employer cost

Social security

IMSS (Instituto Mexicano del Seguro Social)

Medical services, accident & sickness compensation, pregnancy benefits and disability pensions

3.9%

Retirement savings system

Sistema de Ahorro para el Retiro (SAR)

Provides benefits when employees retire

2.98%

Institute for the National Employees Housing Fund (INFONAVIT)

Instituto del Fondo Nacional de la Vivienda para los Trabajadores

Provides subsidised housing and loans to employees

2.9%

Other provisions

Working hours

The standard is 48 hours per week, five days per week with a 60-minute rest/meal break in the middle of each workday. The employer is allowed to modify the workday in accordance with Article 59 of the Federal Labor Law as long as labour principles are respected.

Food/meal vouchers

While this isn’t a mandatory requirement, it’s common to provide these in Mexico. Usually, employees are provided with grocery coupons for personal use which usually come in the form of a pre-paid card which can be used at the supermarket.

Holiday entitlement

Additional leave

After the first full year of employment – 6 additional days
For every year the employee continues to work for the employer – An additional two vacation days are granted
After four years – Employees’ vacation period will increase only two days for each additional five years they work for the employer

Note, this is the legal minimum entitlement; however, it’s customary to provide increased vacation days based on seniority or role. It would not be unusual to offer 12 to 18 days of vacation for higher earning senior professionals.

Additional notes

In addition to the rest, election days designated by federal and local electoral laws are also statutory

If a statutory holiday falls on a Saturday, the Friday before will be declared a day off for employees. Conversely, if the public holiday falls on a Sunday, Monday will be a day off for employees.

Employ and pay anywhere

Specialising in multi-country payroll solutions

TopSource Worldwide offers comprehensive payroll outsourcing services, ensuring seamless and accurate management of your organisation's payroll functions. With cutting-edge technology and a team of experienced professionals, we handle payroll processing, tax compliance, and regulatory requirements with precision.

Discover our payroll benefits

Calculate Your Employer of Record Taxes in Seconds

Employment Cost Calculator in Mexico

Our Employment Cost Calculator simplifies complex tax calculations for global businesses. Accurately assess tax obligations, ensuring compliance with local regulations. Streamline payroll management effortlessly with our user-friendly tool, providing transparency and efficiency in international workforce taxation.

In addition to calculating your EOR taxes, our calculator can also help you:

Understand the different types of EOR taxes
Stay up-to-date on the latest changes to EOR tax regulations
Avoid penalties for non-compliance

Speak to our team

Our author

Mark Robbins

Global Sales Director

Mark is the Sales Director at Topsource Worldwide. He has been a pioneering figure in the global expansion space since 2013. He is the first salesperson to sell EOR services in Europe, a feat he accomplished in 2013.

Published 2023-11-14 00:00:00

Updated 2023-11-15 00:00:00

Reviewed by:

Adrian Cooney

Fact checked by:

Adrian Cooney

Employer of Record FAQ

Frequently Asked Questions about Mexican employment solutions

What is an Employer of Record in Mexico?

An Employer of Record (EOR) is a professional services provider that assumes the responsibility of being the legal employer for a company's workforce in Mexico. This entails managing tasks such as payroll processing, tax withholding, benefits administration, and ensuring compliance with local labour laws and regulations.

How do global employment services work?

Global employment services operate as a comprehensive solution for businesses seeking to expand their workforce across borders. These services, often provided by Employer of Record (EOR) companies like TopSource Worldwide, streamline the complexities of international employment.

What are the benefits of working with an Employer of Record in Mexico?

Employer of Record companies assume the legal responsibilities associated with employment, alleviating the burden of compliance, payroll, and HR management in Mexico. This allows companies to expand globally without the complexities of establishing legal entities in each location.

What is the difference between EOR & PEO?

An EOR acts as the legal employer, handling tasks like payroll, tax compliance, and benefits administration. This allows companies to expand internationally without establishing legal entities. On the other hand, a PEO shares employer responsibilities with the client company, often co-employing workers.

How are employer payroll taxes calculated in Mexico?

Calculating employer payroll taxes involves understanding the various taxes associated with employing workers and complying with tax regulations in Mexico. Key components include federal and state income taxes, Social Security, Medicare, and unemployment taxes.

What global employment solutions does TopSource offer?

TopSource Worldwide facilitates hassle-free global expansion by acting as the legal employer, handling payroll, tax obligations, and HR responsibilities. With expertise in global entity management, TopSource assists businesses in navigating the intricacies of legal structures across borders.