Employer of Record in Mexico

Discover how partnering with a Mexico Employer of Record can simplify the hiring process and help you save on employment costs.

From $199/month per employee

Mexico is a country experiencing accelerated economic growth. With a GDP at $1.69 trillion in 2025, Mexico is almost ten times the size it was 40 years ago, making this the 12th-largest economy in the world. This large economy is driving development in the country, and while it is an upper-middle-income country, it’s growing closer to becoming a high-income country.

Growth and development make Mexico a highly attractive country for foreign investors, and hiring Mexican workers through an Employer of Record (EOR) solution is one of the most popular ways many enter the local market.

Here we explain how Mexico Employer of Record solutions work and how they might benefit your business.

Table of Contents show

How to Hire Employees In Mexico

Mexico’s labor force reached 62.09 million workers in late 2025. Here we set out the different methods you can use to add Mexican employee to your payroll.

Setting Up a Local Entity

If you want to enter the Mexican market directly and be able to hire and directly control the work of your Mexican employees, registering an entity in the country is a possible option for you. Most foreign investors choose to register limited liability companies (LLCs) or sociedades de responsabilidad limitada, stock corporations or sociedades anonimas (SAs), or branch offices in the country. According to the World Bank, it can be moderately difficult to register a company in Mexico. For example, it requires eight procedures and takes at least 8.5 days to register a stock corporation in the country.

Once your company is registered, you still have a lot of challenges ahead, however. You’ll need to work with recruiters, legal experts, and accountants to hire employees and manage them in line with local regulations. You’ll also need skilled HR workers to keep track of your workers’ needs, manage their payroll, and administer their benefits long-term.

Working with an Employer of Record (EOR)

Another option for hiring workers in Mexico is to hire them through an Employer of Record (EOR), such as Remote People. A Mexico EOR is a professional HR service provider that becomes the legal employer of Mexico employees, on behalf of international employees.

In this article we look in depth at how EORs work, what services they offer, and how the process of hiring workers through them works in Mexico.

Hiring Independent Contractors

If registering a business in Mexico is beyond your means or something you’d rather avoid, another option is working exclusively with independent contractors. Also known as freelancers, these self-employed workers can offer you a wide range of skills, knowledge, and experience, and you can work with them on short or long projects. They take care of their own tax payments and contributions to social security programs, which means that you have a much lighter administrative burden than with permanent employees.

There are also serious limitations to consider when working with contractors, however. Contractors make their own hours and produce their work in the manner that they prefer. As their client, you don’t have the right to require them to work according to your schedule, and you can’t tell them how to do their work. If you try to impose these controls, you’re treating them like employees and can run the risk of being penalized for misclassifying them as contractors.

Ready to get started with a Mexico EOR?

Let us handle the complexities of hiring, compliance, and payroll in Mexico while you focus on growing your team.

Hire Employees in Mexico Without a Local Entity
Transparent Pricing – Starting at Just USD 199 per Employee
Talent Sourcing Available – We help you find and onboard top Mexican talent

👉 Get Your Customized Mexico EOR Proposal Today!

What Is an Employer of Record in Mexico?

A Mexico Employer of Record (EOR) is a third party HR provider that becomes the legal employer of Mexican workers on behalf of international companies. Rather than hiring employees directly, you’ll partner with an EOR that already owns an entity in Mexico. This entity will become the legal employer of your workers in Mexico, entering into contracts with them on your behalf. You become the worksite employer and manage their schedules and daily tasks. The EOR will do the rest, focusing especially on these main responsibilities:

What Does a Mexico Employer of Record Do?

A Mexico EOR company usually takes care of the following matters:

Payroll and Deductions. All modern EORs use online cloud-based platforms to manage employee administration, and when you hire new workers, profiles are made for them, and they’re added to your payroll. Each employee will be set up with an automatic calculation based on their salary and tax obligations. When you provide time and attendance data, often clocked directly through your EOR provider’s platform, it’s shared directly with payroll. Automatic calculations are run, and the EOR will determine how much net salary to pay employees, how much tax to withhold and remit, and how much needs to be deducted for benefits.
Benefits administration. Mexican employees are entitled to certain benefits that include paid time off (PTO) and overtime pay. Your EOR will manage these benefits on your behalf, often also providing employees access to their profiles so they can keep track of their entitlements. You can also offer supplementary benefits like private health insurance or pensions through most EORs. They often connect you to benefits providers and charge additional fees to administer additional benefits.
Contracts. Contracts are another important responsibility of EORs, especially because they’re the party that will enter into them with your employees. Your EOR will use its knowledge of local employment statutes to create compliant contracts for all of your workers. It will also help to advise you on the compensation bands that are appropriate for your employees in Mexico.
Terminations. Because it’s the legal employer of your workers, the EOR plays an important role in terminating workers when that needs to happen. While you’ll choose when and why to terminate contracts, the EOR will consider your reasons and offer employees notice and severance pay if necessary.
Compliance .Mexico has extensive labor and tax laws that can be very challenging for foreign investors to learn and maintain compliance with. In an EOR relationship, however, compliance is managed for you. The EOR stands between you and the myriad regulations that control employment, helping to protect you from risk while treating your employees correctly and compliantly.
Additional Services .While some EORs don’t offer any help with recruitment, many do, and this can come in the form of active recruitment services or recruitment self-service tools. Other EORS offer platform tools like applicant tracking systems (ATS), access to talent pools, and connections to job boards to help you manage this function on your own. It is also common for EORs in Mexico to support international companies with work visas and company set up.

Employment Laws in Mexico

Mexico has a long legal history largely inherited from the Spanish tradition but also including local traditions and 20th-century labor laws. It has strong protections for both workers and employers as enshrined in legal instruments such as the Constitution of Mexico, Federal Labor Law, and Social Security Act. While your EOR partner will possess expert knowledge of these statutes and work to maintain compliance with them, it’s also useful to have a basic understanding of what your workers will be entitled to.

Employment Contract Requirements

Employment contracts in Mexico can be oral or written, but all workers must receive written particulars for their reference. All contracts in Mexico must include the following details:

Identification of both parties
Duration (for fixed-term contracts)
Probationary periods (if applicable)
Service to be provided
Place of work
Daily hours of work
Salary
Place and date of payments
Benefits entitlements

Mexico allows fixed-term contracts for certain types of work including temporary or seasonal work, replacement of an employee on leave, a specific project with a defined end.

Working Hours

Daytime workers in Mexico work eight regular hours a day and 48 hours per week. Nighttime workers only work seven hours a day and 42 hours per week. Mixed shift workers can work 7.5 hours a day and 45 hours a week of regular hours. Workers are entitled to at least a 30-minute break during a day’s shift, and this is extended to one hour for young workers. All workers must receive a period of 24 hours of rest every week.

It should be noted that there is a process being implemented to gradually reduce the maximum work week to 40 hours per week, reducing 2 hour per week from Jan 1 2027 to Jan 1 2030. Read more in our guide to Mexico employee benefits.

Overtime

When employees work more than their regular hours, they need to be provided with overtime compensation. Workers are normally not allowed to work more than three hours a day of overtime three times a week, for a total of nine hours a week. They must be paid double for these hours or 200% of their normal wages. Any employees that exceed those 9 hours per week, must be paid at triple their hourly rate.

Note, as of early 2026, there are plans in place to alter the overtime rules. The following is proposed:

Double overtime: A constitutional limit of 12 hours per week, which may be distributed up to 4 hours per day, not exceeding four times in a week, with compensation at 100% above the regular hourly wage.
Triple overtime: if additional overtime beyond the established limit is required, the employer must pay 200% above the regular hourly wage.

Businesses should double check whether this new rule has come into effect before acting on this information.

Probation Periods

Probation periods are allowed in Mexico but are not mandatory. For all contracts lasting longer than six months, probation periods of up to 30 days are normally practiced for regular workers. For those holding supervisory and managerial positions, probation can last up to 180 days. During probation, workers receive full protections under employment law. However, employers may dismiss workers with unsatisfactory performance at the end of their probation without any legal obligation.

Payroll and Employment Taxes in Mexico

Fiscal Year

The Mexican government and tax authorities follow the calendar year. This fiscal year starts January 1 and ends on December 31, and most businesses also choose to follow this structure.

Payroll Cycles

Manual laborers and farm workers have a mandated payroll cycle of seven days. For other workers, the maximum pay period is 15 days. This means that most Mexican workers are paid weekly or bi-weekly, normally on the 15th and 30th of each month. Employers are required to provide paper or electronic payslips to their workers along with their pay.

Bonus Payments

In Mexico, a 13th-month bonus called an Aguinaldo or Christmas bonus is compulsory. However, it must be equal to at least 15 days of salary, not a full month, though some employers offer this. It must be paid by December 20 to all employees who’ve worked at least 12 months or are prorated.

Minimum Wage

Mexico has a federally mandated minimum wage set annually by the National Minimum Wage Commission (CONASAMI). The system consists of a general minimum wage, which applies to most workers nationwide, and higher professional minimum wages for certain listed occupations.

The general minimum wage is set on a daily basis and varies by geographic zone, with a higher rate applying in the Northern Border Free Zone. Professional minimum wages apply only where they exceed the general minimum wage and are limited to specific occupations defined by regulation.

Employers must always pay the higher of the applicable general or professional minimum wage.

Employer Tax Contributions

Employers in Mexico are subject to both state-level payroll taxes and mandatory social security contributions.

Each Mexican state levies a payroll tax (Impuesto Sobre Nóminas) on gross payroll, payable by the employer. Rates vary by state and generally range from approximately 2% to 4.25%, with 3% being the most common.

Employers must also make social security contributions to the Mexican Social Security Institute (IMSS), alongside employee contributions. Employer IMSS contributions cover work risk insurance, sickness and maternity benefits, disability and life insurance, retirement and old-age benefits, nursery and social benefits, as well as mandatory housing contributions through INFONAVIT.

In aggregate, employer social security contributions typically amount to approximately 24%–38% of gross salary, depending on the employee’s wage level, the employer’s risk classification, and applicable contribution caps tied to the UMA. Contribution limits apply on a component-by-component basis rather than as a single annual cap.

Employee Payroll Contributions

Employees in Mexico are required to contribute to the Mexican Social Security Institute (IMSS) through payroll deductions calculated on the employee’s Salario Base de Cotización. These deductions fund sickness and maternity benefits, disability and life insurance, retirement and old-age benefits, and social services.

Employee IMSS contributions are relatively limited and typically amount to approximately 2%–4% of salary, depending on the employee’s income level and the applicable contribution bases. Contribution caps apply on a component-by-component basis using UMA multiples, rather than through a single annual maximum.

Individual Income Tax Contributions

Mexican workers are subject to personal income tax (Impuesto Sobre la Renta – ISR), which is levied on a progressive basis. Employers are required to calculate and withhold income tax from employee wages and remit the amounts to the Servicio de Administración Tributaria (SAT).

Income tax rates are defined by law using progressive brackets that apply on an annual basis, with marginal rates increasing as income rises. The annual ISR brackets are shown below for reference. In practice, payroll withholding is calculated using SAT-issued tables specific to the employee’s pay period (e.g. monthly or biweekly), with annual reconciliation performed separately where applicable.

Tax on Income (MXN)	Excess Income Range (MXN)	Tax Rate for Excess	Fixed Amount (MXN)
0	0 – 0.01	0.00%	0
0	0.01 – 8,952.49	1.92%	0
171.88	8,952.49 – 75,984.55	6.40%	171.88
4,461.94	75,984.55 – 133,536.07	10.88%	4,461.94
10,723.55	133,536.07 – 155,229.80	16.00%	10,723.55
14,194.54	155,229.80 – 185,852.57	17.92%	14,194.54
19,682.13	185,852.57 – 374,837.88	21.36%	19,682.13
60,049.40	374,837.88 – 590,795.99	23.52%	60,049.40
110,842.74	590,795.99 – 1,127,926.84	30.00%	110,842.74
271,981.99	1,127,926.84 – 1,503,902.46	32.00%	271,981.99
392,294.17	1,503,902.46 – 4,511,707.37	34.00%	392,294.17
1,414,947.85	Over 4,511,707.37	35.00%	1,414,947.85

Time Off and Leave in Mexico

Mandatory Leave Entitlements

Mexican employees are entitled to paid annual vacation under the Federal Labor Law. As of 2026, employees receive 12 days of paid vacation after completing their first year of service. Vacation entitlement then increases by two additional days per year up to the fifth year of employment, reaching 20 days. After the fifth year, vacation entitlement increases by two days for every additional five years of service.

Vacation leave must be paid at the employee’s normal salary rate. In addition, employers are required to pay a vacation premium (prima vacacional) of at least 25% of the employee’s vacation pay.

Public Holidays

Under Mexican labour law, employees are entitled to seven mandatory public holidays each year. These days are paid days off. If an employee is required to work on a mandatory public holiday, they must be paid their normal daily wage plus double pay for the work performed, resulting in triple pay for that day.

The mandatory public holidays in Mexico are:

New Year’s Day – January 1
Constitution Day – first Monday in February
Benito Juárez Day – third Monday in March
Labour Day – May 1
Independence Day – September 16
Revolution Day – third Monday in November
Christmas Day – December 25

In addition, certain days are commonly observed by employers but are not mandatory under federal law. These include:

Cinco de Mayo (Battle of Puebla) – May 5
Mother’s Day – May 10
Virgin of Guadalupe Day – December 12

Sick Leave

Employees in Mexico who meet the applicable social security contribution requirements are entitled to sickness benefits through the Mexican Social Security Institute (IMSS). For non-work-related illness, IMSS generally pays a cash benefit equal to 60% of the employee’s Salario Base de Cotización, starting from the fourth day of certified incapacity.

Sickness benefits may be paid for up to 52 weeks, with the possibility of an extension of up to 26 additional weeks where recovery is expected. During an IMSS-certified period of incapacity, the employment relationship is suspended, the employee’s position is protected, and the employer is generally not required to pay salary during the covered period.

Parental Leave

In Mexico, expectant mothers are entitled to 12 weeks of maternity leave, generally taken as six weeks before and six weeks after childbirth. Maternity leave is paid by the Mexican Social Security Institute (IMSS) at 100% of the employee’s Salario Base de Cotización. With medical authorisation, up to four weeks of prenatal leave may be transferred to the postnatal period.

Maternity leave may be extended by up to two additional weeks if the child is born with a disability or requires hospitalisation. In cases of adoption, mothers are entitled to six weeks of paid leave following placement.

Fathers are entitled to five working days of fully paid paternity leave upon the birth or adoption of a child.

Mexico does not provide any additional statutory paid or unpaid parental leave beyond maternity and paternity leave. Upon returning to work, mothers are entitled to two 30-minute breastfeeding breaks per day until the child reaches six months of age. Where the employer does not provide a suitable and hygienic breastfeeding space, the employee may instead reduce her working day by one hour.

Bereavement Leave

There is no mandate to provide bereavement leave in Mexico. It may be offered on an ad hoc basis or included as a benefit in contracts by some employers.

Terminations and Severance in Mexico

Termination

Under Mexican labour law, employees may not be terminated for discriminatory reasons, including pregnancy or childbirth. Any dismissal of a pregnant employee is presumed discriminatory unless the employer can prove a justified cause and full legal compliance.

Employees may be dismissed without severance only for justified causes expressly listed in the Federal Labor Law, such as dishonesty, violence, threats, or serious negligence. To be valid, a justified dismissal must be supported by evidence and communicated to the employee in writing, specifying the conduct and date of occurrence. There is no statutory notice period for termination in Mexico.

Termination due to downsizing or economic reasons is permitted only in limited circumstances and generally requires prior authorisation through a formal collective procedure before the labour courts. Outside these procedures, economic dismissals are typically treated as unjustified and trigger statutory severance obligations.

Notice Periods

No notice periods are mandated in Mexican law.

Severance Pay

When an employee is dismissed for gross misconduct or another just cause expressly recognised under Mexican labour law, and the employer follows the required legal procedure, no statutory severance is payable. The employee remains entitled only to accrued benefits.

In cases of unjustified dismissal, severance applies. For employees on indefinite contracts, this generally consists of three months’ integrated salary, together with a seniority premium where applicable (12 days salary, per year, capped at 2x minimum wage). An additional payment of 20 days’ salary per year of service may be payable in certain circumstances, such as where the employee elects reinstatement and the employer refuses.

For fixed-term contracts that are terminated early without just cause, the employee is entitled to payment of wages for the remaining term of the contract or three months’ salary, whichever is greater, along with accrued benefits.

Why Hire in Mexico with an EOR?

There are a number of great reasons to hire Mexican workers and plenty of reasons to engage an EOR to do so, including:

Low cost. Mexico is a highly affordable place to run a business, and workers cost far less than they do in the larger economies of North America. Even with the significant social security contributions employers need to make, average salaries in Mexico are much lower than in many other countries.
Professional HR Support. EORs working in Mexico have experience delivering HR services to local workers. They can provide your workers with support and the benefits they’re entitled to, much more effectively than you can if you have no experience managing Mexican workers.
Managed compliance. When you hire Mexican employees through an EOR, it takes on the responsibility of complying with all local tax and employment laws. This reduces the risk of penalties that you could face for non-compliance if you choose to hire employees or contractors on your own.

How to Choose an EOR in Mexico

There are lots of EORs working in Mexico, but that doesn’t mean that they’re all created equal. If you’ve decided to engage an EOR, focus on the following criteria to help you make your choice of a service provider:

Price

Set your budget and then look for EORs that don’t exceed it. Make sure, however, that you know what you’re getting for the price offered and check to see if the services you need are included or add-ons.

Services

You may need additional services that range from recruitment to supplementary benefits administration. Look for an EOR partner that provides all the services you require.

Experience

While many EORs claim to work in Mexico, many will have limited experience there. Look for an established provider with great reviews, proving a history of successful hiring in Mexico.

Hire in Mexico with Remote People’s Employer of Record Service

Partnering with a trusted Employer of Record in Mexico is one of the most efficient ways to enter the market without the stress of entity setup or compliance pitfalls. From day one, the EOR assumes full responsibility for employee-related tasks, handling everything from contracts and payroll to tax filings and benefits administration.

Because the EOR acts as the legal employer, your business is protected from local employment risks and free to focus on what matters most: building your team and growing your presence in Mexico – quickly, compliantly, and confidently.

Hire confidently in Mexico with Remote People. Our EOR services handle compliance, payroll, and onboarding—so you can focus on growing your team.