Mexico

Contract Types

In Mexico contracts can be indefinite, for trial (limited to 6 months) or fixed term. The latter are restricted to temporary replacements and when justified by the nature of the work (eg if the work is seasonal).  

Probation          

Probation is commonly 1 month but can be up to 6 months for managers.

Working Hours

Normal working hours are 48 hours per week for a 6 day week or 40 hours for a 5 day week.

Overtime

Any hours over the mandated hours are counted as overtime. The first 9 hours per week are paid at 200% and thereafter each hour is paid at 300%. Managers can be exempt from overtime rules.

Other

Non-compete clauses are not enforceable in Mexico.

Other Financial

10% of profits must be distributed between employees, so long as they have worked for a minimum of 60 days in the preceding year. This is paid out in May of the following year. The amount paid is capped at 3 months’ salary and is pro rated for part years. 50% of the available amount is distributed between all employees (though some categories do not qualify such as directors and domestic workers) and the remaining 50% is distributed based on salary excluding commission.

Salaries are paid twice monthly, usually on the 15th and the last day of the month. A 13th month salary (Aguinaldo) is paid by the 20th December which comprises a minimum of 15 working days’ salary. This is accrued from the first day of employment and is paid pro rata. Legislation is currently being debated to increase this payment to a minimum of 30 days’ salary, which many companies currently give.

Tax rates valid for 2025

Corporation Tax

30%      

Consumption Tax           

16%      

Employers’ Social Security          

24 – 38%

Up to 3% State Payroll tax           

Employees’ Contributions           

10 – 30%

1.125% Retirement fund              

Dependent on factors such as age, industry etc

Income Tax Rates

Up to 8,952.40: 1.92%

8,592.50 to 75,984.55: 6.4%

75,984.56 to 133,536.07:10.88%

133,536.08 to 155,229.82: 16%

155,229.82 to 185,852.57: 17.92%

185,852.58 to 374,837.88: 21.36%

374,837.89 to 590,795.99: 23.52%

590,796 to 1,127,926.84: 30%

1,127,926.85 to 1,503,902.46: 32%

1,503,902.47 to 4,511,707.37: 34%

Over 4,511,707.38: 35%

Employees can only be dismissed for a limited number of reasons amounting to gross misconduct. The burden of proof is high and the employee should be notified within 30 days of the offence.

Most terminations in Mexico are without cause and employees have to be paid full severance. This consists of 3 months’ salary, plus 20 days’ salary for each year of service, plus an additional “seniority premium” of 12 days’ salary for each year of service (capped at twice the minimum wage) plus accrued salary and vacation, vacation bonus and Christmas bonus. For severance purposes salary includes all elements including any additional bonus and any benefits given. It is usual to give 2 weeks’ notice unless the contract provides for more.

During Probation            

Employees can be dismissed during probation without a reason but will be entitled to severance.

 Annual Leave 2025

Paid Public Holidays: 8

New Year’s Day – 1st January

Day Given in Lieu: No

Constitution Day – 3rd February

Day Given in Lieu: No

Benito Juarez Birthday – 17th March

Day Given in Lieu: No

Labour Day – 1st May    

Day Given in Lieu: No

Independence Day – 16th September

Day Given in Lieu: No

Revolution Day – 17th November

Day Given in Lieu: No

Christmas Day – 25th December

Day Given in Lieu: No

Comment: * During an election year only.

Whilst employees are not entitled to a day off in lieu when a holiday falls on the weekend, many employers will give an additional day off.

In Mexico the basic leave entitlement is 12 working days which employees are not technically entitled to until they have completed 1 year of service. This rises by 2 days for each year of service, up to 22 days for 6 years’ service. Thereafter 2 additional days are given for every 5 years of service, capped at 32 days. A premium of 25% must be paid whilst the employee is on leave.

Carry over permitted     

Carry over is not a legal requirement in Mexico.

Payment in lieu allowed              

Unused leave should be paid out on termination unless the employee is dismissed for gross misconduct.

Holiday Allowance         

A premium of 25% is paid whilst employees are on leave.

Sick       

Sick pay extends for up to 52 weeks paid at 60% of salary by Social Security.

Maternity

New mothers in Mexico are entitled to 12 weeks of maternity leave. 6 weeks must be taken before the birth and 6 weeks thereafter. 6 weeks is available to adopting mothers. The leave is paid by Social Security at full pay, though the amount is capped. Pregnant women have protection of employment.

Paternity            

In Mexico new fathers are entitled to 5 days’ paid leave.

Parental             

There is no parental leave in Mexico.

Bereavement    

There is no legal entitlement to bereavement leave though some employers will allow paid time off.

Medical

It is very common for medical insurance to be offered in Mexico. Typical policies have high deductibles and co-payments.

Life Insurance   

Life insurance is often offered as a benefit. Usually, it will cover a lump sum rather than a multiple of salary. Underwriting can be onerous for larger sums.

Other   

Other common benefits are internet and phone allowance, typically 1,500 MXN per month each, meal vouchers of 2,600MXN per month and computer allowance if appropriate.