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!
An employer of record, sometimes known as an international PEO can help you quickly hire and onboard workers in Mexico – often with just two weeks’ notice. Establishing your own local entity without risk and saving costs, this type of service makes an EOR in Mexico worth checking out!
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.
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
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.
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.
- 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.
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.
Frequently Asked Questions
An aguinaldo is a legally mandated annual Christmas bonus paid by businesses in Mexico to their employees.
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. The Aguinaldo should be paid by 20 December, although companies that pay six weeks usually pay four weeks in December and two weeks in summer. 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.
Keen to engage an EOR in Mexico?
At TopSource Worldwide, we work with local experts to help you navigate the various admin and cost obstacles you may come across along your expansion journey
To find out how we can help your business with our employment solutions, contact us today.