Mindfacturing | Operations

Mindfacturing® Models

Mindfacturing allows you to hire employees in Mexico through different modalities.

KICK-START

Employer of Record

Expense Management

HR Department

Payroll Administration

Hire Remote Employees in Mexico

TALENT

All of Kick-Start

Market Benchmark Analysis

Training Program Manager

Build Agile Teams throughout Mexico

SUITE

All of Talent

Customized Policies

Office Space Administration

Dedicated Legal Entity

Develop and Run a Talent Center in Mexico

A SET OF BENEFITS ARE REQUIRED BY LAW IN MEXICO

In Mexico, employers have to pay minimum benefits requirements by law, including 15 days of Christmas bonus, 12 days of paid time off plus 25% of paid vacation bonus for time used.

Among many sectors such as manufacturing and technology, market competitiveness drives higher benefits. Mindfacturing provides a solution aimed at attracting and retaining top talent in these sectors, among others.

MEXICANS WORK SIMILAR SCHEDULES, WITH MANY OVERLAPPING HOLIDAYS.

The legal work week in Mexico consists of 48 hours of work. These hours are usually divided over 6 labor days, 8 hours each. In office jobs, these hours are often divided between 5 labor days, Monday to Friday. Regardless of the schedule, each day of the week is paid, whether the employee works or not. At least 1 rest day is given per week. Negotiated salaries are expressed in pesos per month.

The Mexican Federal Labor Law establishes 9 mandatory holidays for employees. If employees are required to work on a mandatory holiday, they are entitled to 200% premium in addition to their regular payment.

THERE IS NO EMPLOYMENT AT WILL IN MEXICO.

There are two main types of employment contracts for employees in Mexico: indefinite contracts or definite contracts.

Indefinite Contracts - these employment contracts are characterized by stability without an end-date for employment. The contract continues as long as both parties uphold their bargains.
Definite Contracts - also called temporary employment contracts, are characterized by a defined or specific period of time. They are agreed upon when required by the nature of the work provided. This may also encompass trial periods for employment.

IN MOST CASES, SEVERANCE IS REQUIRED TO BE PAID TO THE EMPLOYEE.

The termination of an indefinite employment contract requires an employer-paid severance, including:

3 months of base salary, plus
Seniority Premium of 12 days of base salary for each year of service (capped at two times the minimum daily salary) for employees with more than 15 years of seniority, plus
Seniority severance, if applicable, of 20 days of base salary for each year of service
Due benefits and other payment reimbursement

The Mexican Federal Labor Law outlines a number of justified causes for the dismissal of an employees, including falsification, harassment, sabotage, disclosure of trade secrets, insubordination, incarceration, violence in the workplace, etc. The burden of proof lies on the employer, and requires sufficient documentation prepared for the labor conciliation. In these cases, legal severance may not be required.

NEW IN 2021, ACCOMMODATIONS ARE REQUIRED.

In January 2021, the Mexican federal government defined a new labor concept in response to the global pandemic and its subsequent trend in home office work schemes. Telework is the performance of paid activities in a place other than the employers workplace on a regular basis, at least 40% of the time. There are some small obligations of the employer to support the infrastructure for the home office of the employee.

Explore Mexican Labor Laws

Minimum Benefits

Working Schedules

Employment Contracts

Employment Termination

Recent Reforms

Certain benefits are required by law.

Competitive compensation depends on the industry, location and skill set. Minimum wage is Mexico is not sufficient to attract and retain workers in most industries.

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Christmas Bonus

Christmas Bonus 15 days of base salary, paid in December

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Paid Time Off

Paid Time Off During the first year, employees earn 12 days of paid vacation, scaling up with seniority

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Vacation Bonus

Vacation Bonus 25% of daily base salary of vacation days, paid as a bonus

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Profit-Sharing

Profit-Sharing 10% of previous years' profits shared among employees

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Sunday Bonus

Sunday Bonus A 25% premium is paid to employees that work on Sunday

Similar schedules with many overlapping holidays.

Legal Work Week Consists of 48 hours of work, usually divided over 5-6 labor days a week, 8 hours each. Some professions are accustomed to work a half day on Saturday.

Pay Schedule Employees are paid for 7 days a week, whether they work or not. At least 1 rest day is given per week.

Payments Salaries are defined in pesos per month, with many payroll concepts utilizing a daily pay for calculations. Hourly pay is uncommon.

Holidays The federal labor law defines 9 mandatory holidays. If employees are required to work on those days, they are entitled to 200% premium in addition to their regular payment.

There is no employment-at-will in Mexico.

There are two main types of employment contracts in Mexico.

INDEFINITE

Employment Stability

Severance Required

These employment contracts are characterized by stability without an end-date for employment. The contract continues as long as both parties uphold their bargains.

DEFINITE

Employment Trial Period

Temporary Employment Needs

Also known as temporary employment contracts. These are characterized by a defined and specific period of time. They are agreed upon by the nature of the work provided, like to cover maternity leave. These contracts may also cover trial periods for new employees.

In most cases, severance is required.

The termination of an indefinite employees contract requires an employer-paid severance. The Mexican Federal Labor Law outlines a number of justified causes for dismissal of an employees. The burden of proof lies on the employer, and requires sufficient documentation prepared for the labor conciliation.

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3 Months of Salary

3 Months of Salary 3 Months of base salary paid to the employees

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Seniority Premium

Seniority Premium 12 days of base salary for each year of service for employees with more than 15 years of seniority

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Seniority Severance

Seniority Severance If applicable, 20 days of base salary for each year of service

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Due Benefits

Due Benefits Any other due benefits or other payment reimbursements

The previous federal administration passed several labor reforms.

2019 Labor Reform

Considered the most profound change to Mexico's labor legislation in decades, the reform transformed the labor justice system. It created labor conciliation centers to attend disputes. The reform also strengthened the freedom of association and collective bargaining, marking a new stage in both trade union life and dynamics.

Teleworking

In 2021, the federal government defined a new labor concept in response to the global pandemic. Employees working at least 40% of their time in a location other than the workplace are considered teleworkers. There are contractual requirements, support for equipment and supplies, the right to disconnect, and reporting of evidences.

Outsourcing Reform

The Mexican government implemented a significant labor reform in 2021 that effectively restricted outsourcing for certain activities within companies. Activities unrelated to the core business can be outsourced, but by newly registered (REPSE) companies that provide specialized services. This reform aimed to address concerns about worker exploitation and unfair labor practices associated with some outsourcing arrangements.

Pension & Vacations

Employers will be required to gradually increase their contribution toward their employees' retirement funds. Required paid vacation mandates were increased from 6 to 12 days in the first year or work.

Explore Mexican Labor Costs

Payroll Concepts

Taxes in Mexico

Fringe Benefits

Unions & CBA

Remote Working

Labor costs in Mexico are commonly broken down by:

Base Salary

Negotiated in pesos per month in the labor contract, payments are calculated with a daily wage.

Payroll Tax

State tax rate between 2 and 3%

Benefits-by-Law

The required benefits package includes Christmas bonus, paid vacation days, vacation premium, Sunday premium and profit-sharing.

Fringe Benefits

These vary according to industry, location and employee level. They can encompass additional cash benefits, company services and different kinds of perks. The benefits package in Mexico typically represents a higher percentage of the total compensation compared to the United States.

Social Security

Mexico has a robust social security system that provides comprehensive benefits to the workforce and their families. Both employers and employees contribute to the Social Security fund.

Medical services including medical and surgical care, pharmaceutical and hospital needs for the employee and the family
Work risk insurance to protect against accidents and disease for which they are exposed in relation to their labor
Maternity and paternity leave
Disability and life insurance for the employee
Retirement insurance, unemployment insurance and pensions
Social and childcare services
INFONAVIT is a low-APR loan option to allow employees to acquire, build, expand, remodel or pay mortgage for a home

There are several types of applicable taxes.

Mexico's tax system includes:

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Income Tax

Income Tax Federal tax payable at a flat 30% rate for corporations

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Value-Added

Value-Added Federal tax payable at a general rate of 16% on sales of goods and services

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Payroll Tax

Payroll Tax State tax paid on personnel, rates range from 2-3%

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Interests & Royalties

Interests & Royalties Interest, royalties, and technical assistance fees paid abroad from Mexico are subject to varying withholding taxes

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Property & Real Estate

Property & Real Estate Tax on purchase, ranging from 2-4% of the property value plus annual fractions

Competitive compensation includes varied benefits and perks.

These benefits vary by industry and region, but may include:

Compensation

Savings Fund - a matched savings fund, capped by law and paid annually
Food Coupons - cash benefit for buying food items, capped by law and paid monthly
Bonuses - for concepts like performance, productivity or attendance
Insurance - private medical and life insurance is a fairly common practice

Transportation

In several industries, car allowance or lease is a common benefit. Many companies provide gas or bus vouchers in addition to private transportation services for large-scale manufacturers.

Workplace Services

Cafeteria services are subsidized by many large-scale manufacturers. Other companies provide premium amenities in their offices. Medical services are required for large companies. Uniforms and Personal Protection Equipment are also common. Large-scale companies may also provide daycare services and/or private security.

Scholarships It is a common practice to provide scholar support to workers' families. Training programs are required, and some companies provide educational opportunities with local institutes.

Unions have undergone recent reforms.

Types of Unions

Trade unions including employees of the same profession, skill or specialty. There are also employers unions and also national associations, comprising of employers in several states.

Unions typically represent only hourly employees. Strictly speaking, no one is forced to join a union, but if workers wish to join a union, the company would be required to sign a collective agreement following a labor procedure.

Union Fees

Typical union agreements include some combination of an annual fee or deposit from the company plus employee quotas, generally around 2-5% of salary.

Labor Union Powers

Review annual tax declarations, initiate a collective dispute, sign collective agreements on behalf of employees, supervise profit-sharing, oversee training system, negotiate salary increases, co-draft work rules, deal with occupational health & safety. A labor union must represent the majority of the workforce, evidenced by elections. They are governed by their own statutes. Outside of labor unions, employees form coalitions on other workplace operations.

Recent Union Reforms

Reforms in 2019 aligned with the USMCA negotiations, including: new labor justice system and labor conciliation; guarantees to the freedom of associations; among others.

Working from home requires employer support.

In January 2021, the Mexican federal government defined a new labor concept in response to the global pandemic and its subsequent trend in home office work schemes. Telework is the performance of activities in a place other than the employer's workplace on a regular basis, at least 40% of the time.

The employer requirements include small obligations to the employees to support the infrastructure of the remote office, and to file a report with the labor authorities that include evidences.