Onboard, pay and manage employees in Mexico with Europortage
Europortage Mexico Employer of Record (EOR) solution makes it easy for you to hire your talent in Mexico.
An employer of record is a third party that act as the legal employer in the country, so you can hire your talent without having to setup a legal entity.
The employer of record (EOR) has extenseive knowledge and local expertise and takes care of all Mexico compliance aspects of employment, including payroll management, taxes, statutory employee benefits, employment contracts, severance pay and more.
Our Mexico Employer of Record (EOR) Responsibilities:
✔️ Drafting locally compliant contracts
✔️Processing payroll accurately and on time
✔️ Providing an excellent employee experience
✔️Seamlessly handling global mobility
✔️ Paying your talent in local currency
Partner with an employer of record (EOR) is quite a game changer and can help you hire globally. The EOR will be the legal employer, which means they will handle employment contracts, onboarding process, compliance, benefits, payroll and more.
MINIMUM WAGE
The minimum salary is reajusted every year in January in Mexico.
From the 1st of January 2025, the minimum wages have been increased for the following:
- General Minimum Wage: MX$278.80 per day (about US$14.70)
- Northern Border Free Zone: MX$419.88 per day (about US$22.10)
Payroll Frequency & Pay day
Employees in Mexico are always paid two times a month, on a bi-weekly basis. Generally, the employer pays its workforce on the 15th and 30th of the month. If it falls on a Saturday, or Sunday, or on a Public Holiday, then the salary must be paid before.
Payroll taxes
The employer cost is generally estimated at 21.30% of the employee salary.
Social security contribution (IMSS)
The acronym IMSS stands for Instituto Mexicano de Seguro Social. Often referred to simply as IMSS, the Instituto Mexicano de Seguro Social is Mexico’s social security system.
The complex social security system comprises various schemes providing a wide range of benefits. This system includes occupational risks (occupational accident or illness), sickness, and maternity; medical care and payment of disability; disability, life (death of the insured); retirement, severance at advanced age and old age (pension based on age and years of contribution); and childcare and social benefits.
| NAME | DESCRIPTION | RATE |
| Illness and maternity | Health insurance to employees and income support for employees on sickness and maternity leave | 20.40% calculated based on one monthly UMA (MXN 3,135.70 in 2023) |
| 1.10% on the difference between Base Listed Salary (BLS) and three monthly UMAs | ||
| 1.75% on the BLS | ||
| Disability and life | A healthcare and life insurance fund for non-work-related injuries and illnesses that result in disability or death | 1.74% capped at MXN 2,593.50 |
| Retirement | The primary state-backed pension fund | 2% capped at MXN 2,593.50 |
| Unemployment and old-age | Supplemental retirement insurance for those unemployed at age 60 or 65 | 3.15% – 11.88% depending on the employee’s income bracket, capped at MXN 2,593.50 |
| Occupational risk | A fund that provides income support and medical coverage for work-related injuries and illnesses | 0.54% – 7.59% depending on the risk category of the employer’s industry, capped at MXN 2,593.50 |
| Nursery and social benefits | A childcare services program for working parents of children aged 43 days to four years | 1% capped at MXN 2,593.50 |
| Housing fund (INFONAVIT) | A fund that guarantees decent housing to Mexican employees | 5% capped at MXN 2,593.50 |
Employer payroll tax (ISN)
The employer payroll tax in Mexico, known as Impuesto Sobre Nómina (ISN), is a state-level obligation that is relatively straightforward to manage. This tax is calculated as a percentage of the total payroll and is exclusively the employer’s responsibility. Rates vary across states, typically ranging between 1% and 3%, depending on where your business operates.
Understanding these rates and how they apply to your business is crucial for maintaining compliance and optimizing payroll processes. For a comprehensive guide to ISN in Mexico, including detailed explanations and best practices, visit our article here: Understanding ISN in Mexico.
State-Specific ISN Rates
| State | Rate | State | Rate |
|---|---|---|---|
| Aguascalientes | 2.0% | Morelos | 2.0% |
| Baja California Norte | 1.8% | Nayarit | 3.0% |
| Baja California Sur | 2.5% | Nuevo León | 3.0% |
| Campeche | 3.0% | Oaxaca | 3.0% |
| Coahuila | 2.0% | Puebla | 3.0% |
| Colima | 2.0% | Querétaro | 3.0% |
| Chiapas | 2.0% | Quintana Roo | 3.0% |
| Chihuahua | 2.0% | — | — |
For more information about ISN compliance, payment schedules, and tips for managing payroll taxes effectively, don’t forget to check out our full article: Understand ISN in Mexico.
Employee taxes
Residents of Mexico and individuals living abroad but earning income in Mexico are subject to tax on a monthly basis. Employees usually spend an average of 20.1 percent of their salaries on taxes and social security contributions.
Social security contribution (IMSS)
Employees in Mexico need to make contributions to social security and retirement insurance.
Contribution item | Contribution rate |
|---|---|
| Social Security contributions | 1.65% |
| Retirement / Old age insurance | 1.125% |
Income tax (IR)
The Income Tax is an annual tax levied on the individuals by the Mexican Government. Any employer which have Mexican employees must withhold and remit income taxes on employee gross earnings on their employees’ behalf.
The amount deducted from the employee’s salary depends on his monthly income according to the following table:
| LOWER LIMIT | HIGHER LIMIT | FIXED FEE | SURPLUS RATE | |
| I | $0.01 | $746.04 | $0.00 | 1.92% |
| II | $746.05 | $6,332.05 | $14.32 | 6.40% |
| III | $6,332.06 | $11,128.01 | $371.83 | 10.88% |
| IV | $11,128.02 | $12,935.82 | $893.63 | 16.00% |
| V | $12,935.83 | $15,487.71 | $1,182.88 | 17.92% |
| VI | $15,487.72 | $31,236.49 | $1,640.18 | 21.36% |
| VII | $31,236.50 | $49,233.00 | $5,004.12 | 23.52% |
| VIII | $49,233.01 | $93,993.90 | $9,236.89 | 30.00% |
| IX | $93,993.91 | $125,325.20 | $22,665.17 | 32.00% |
| X | $125,325.21 | $375,975.61 | $32,691.18 | 34.00% |
| XI | $375,975.62 | Onwards | $117,912.32 | 35.00% |
Working hours
The standard workweek is 48 hours, made up of six days of eight hours and one rest day.
Generally full-time employees work a 6-day work week of 48h from Monday to Saturday. However, the time can be divided so employees work 4 or 5 days per week with the same maximum number of hours per week.
Overtime
The weekly working hours are 48 hours. Hours worked beyond this quota are compulsory paid as overtime. Work shifts may be extended, but must not exceed 3 hours per day, nor 3 times a week, for a maximum of 9 hours per week.
Mandatory benefits
The standard workweek is 48 hours, made up of six days of eight hours and one rest day.
Generally full-time employees work a 6-day work week of 48h from Monday to Saturday. However, the time can be divided so employees work 4 or 5 days per week with the same maximum number of hours per week.
Christmas bonus, or Aguinaldo
Every company in Mexico must provide their employees with a Christmas bonus called Aguinaldo. The Christmas bonus is paid until December 20th but most of companies issue the bonus the second week of December.
The Aguinaldo is normally equal to 15 days of salary. For employees who joined the company during the year, they will receive a proportional part of the Christmas bonus. Absences also have an impact on the Christmas bonus calculation.
Find more info about the Aguinaldo in Mexico
Vacation bonus, or prima
In addition to paid time off, employers in Mexico must grant a vacation bonus to each of their employees so they can enjoy their vacation. The bonus is equal to 25% of the employee monthly salary and must be paid when the employee goes on holidays or in a lump sum at the end of the year.
Profit sharing, or PTU
Businesses with more than 1 year of existence in Mexico must grant their employees with a 10% share of their profits every year. This benefit does not apply to CEO, CFO, general managers and other high -ranking employees.
Companies must distribute profit-sharing payment in May, within 60 days after filling the annual tax return.
Remote allowance
To be considered a remote worker in Mexico, an employee must work at his home or at a place designated by the employer more than 40% of the working day.
In that case, the employer must provide the employee with equipment and pay a remote allowance.
Optional benefits
Employee mandatory benefits and conditions are legal rights. Then employer are not allowed to make change to the employment terms. However, the can add extra common benefits to attract and retain talents.
Note that depending on the company CBA, some non-mandatory benefits can actually be mandatory.
Private Health Insurance
In Mexico, employees benefit from the Mexican public healthcare, the IMSS. However, the service provided is not always up to the same standard as private health insurance.
Medical assistance is one of the benefits most valued by professionals. Then, employer can offer premium quality care through private health insurance to attract and retain talents.
Employer can offer their own plan or provide employees with stipends to subscribe to their own private health plan.
Meal vouchers
Even if meal voucher is not a statutory benefits in Mexico, it is a really common benefits. In general, the benefit is offered as a card with a cash value that can be used in the company’s canteen or in partner restaurants. Also, it enables the employee to buy food in grocery stores and supermarket. Today, food vouchers exist on reloadable chip cards similar to debit cards.
Life insurance
Life insurance is a common benefits in Mexico and many companies choose to provide life insurance for employees.
Savings Fund (Fondo de Ahorro)
The Fondo de Ahorro is an optional benefit. Companies offer it as part of compensation. It uses matching contributions. The employee contributes a portion of salary. The company contributes an equal amount, or more if agreed. A financial institution holds and invests the money for a defined period.
Learn more about 🔗Savings Fund (Fondo de Ahorro)
Learn more about 🔗Benefits in Mexico.
Annual leave & Public holidays
Annual leave policies has been updated in 2023 and employees in Mexico are now entitled to the following annual leave:
- 12 days after the first full year of employment
- 14 days’ vacation after two years of service
- 16 days’ vacation after three years of service
- 18 days’ vacation after four years of service
- 20 day’s vacation after five years of service
After the sixth year of service, an employee’s vacation entitlement will increase by two days for every further five years of service. Only business days are considered when calculating vacation days. Weekly rest days and holidays are not considered.
Check our complete article: 🔗 PTO in Mexico.
Public holidays
When you hire in Mexico, remember that your remote workers are going to have different public holidays in they do not work in the same state.
- New Year’s Day (Jan 1)
- Constitution Day (First Monday in February)
- Benito Juarez Day (Third Monday in March)
- International Labor Day (May 1)
- Independence Day (Sep 16)
- Revolution Day (Third Monday in November)
- Presidential Inauguration Day (every six years – December 1)
- Christmas Day (Dec 25)
Check our complete article: 🔗 Public holidays in Mexico.
Sickness and disability leave
In Mexico, employees are entitled to a maximum of 52 weeks of sick leave. Beyond this period, employees may qualify for total or partial permanent disability benefits, depending on their condition.
For general illnesses, employees receive up to 60% of their salary, starting from the fourth day of their illness and continuing for up to one year, provided they meet the eligibility requirements. However, if the illness or injury is work-related, employers are required by federal labor law to pay the employee’s full regular wage from the first day of absence.
To learn more about navigating sick leave in Mexico, including specific processes, requirements, and employer responsibilities, visit our comprehensive guide: 🔗 Navigating Sick Leave in Mexico.
Paternity and maternity leave
Female pregnant employee are entitled to a minimum of six weeks befire and after the birth of the child. During that time, they receive their regular wage.
Male employees are entitled to enjoy a paid paternity leave of five days when the child is born.
Learn more about 🔗 parental leave in Mexico.
Termination Requirements
Mexico is not a at-will employment country exept for employee who wishes to terminate their own employment. Employers cannot terminate Mexican workers without cause unless they pay severance packages, which can be extremely substantial.
Termination notice period
There is no minimum required notice period in Mexico.
Severance
Employees hired for an indefinite term who are dismissed without just cause are strongly protected under Mexican labor law.Severance includes salary plus regular benefits (e.g., bonuses, private health insurance).
The package generally includes:
- 90 days of daily wage (Constitutional Indemnification)
- 12 days of daily wage per year of service (Seniority Bonus, capped at 2× minimum wage)
- Accrued salaries and pro-rata benefits (vacation + premium, Christmas bonus, other benefits)
20 days of daily wage per year of service (in lieu of reinstatement)
Check our complete guide on end of employment in Mexico.
Remote work policy
Since the 2021 reform of the Federal Labor Law, remote work (teletrabajo) is formally regulated in Mexico. Employers must provide the necessary equipment, cover proportional internet and electricity costs, and ensure employees’ right to disconnect outside working hours. A written agreement is mandatory, specifying working hours, tools provided, and supervision terms.
Frequently Asked Questions (FAQ)
What are my options to hire workers in Mexico?
Companies expanding to Mexico usually have four hiring options:
1. Hire and pay from HQ: The worker stays in Mexico but is paid directly by the parent company.
👉 Cons: This may seem easy, but it’s not compliant long-term. Payroll and taxes can’t be managed correctly if the worker isn’t a tax resident of the HQ country.
2. Engage independent contractors: Workers register locally as freelancers and invoice your company.
👉 Cons: This is not compliant for full-time or exclusive work. Misclassification can trigger audits, fines, and back payments.
3. Create a local entity: You establish a subsidiary or branch in Mexico, register with tax authorities, and manage payroll internally.
👉 Cons: Complex, expensive, and slow. You’ll need legal representation, accounting support, and continuous regulatory updates.
4. Partner with an Employer of Record (EOR) in Mexico: An EOR like Europortage legally employs your workers on your behalf. We handle payroll, taxes, and HR compliance.
👉 Cons: Slightly higher monthly costs than internal payroll—but full compliance and speed make it worthwhile.
How long does it take to set up a company in Mexico?
Setting up a legal entity in Mexico can take 2–3 months or longer. Beyond registration, you must:
Obtain tax IDs and open bank accounts.
Register with IMSS and INFONAVIT.
Set up payroll and benefits.
Stay compliant with frequent labor law changes.
By contrast, Europortage’s EOR in Mexico lets you start hiring in just a few days.
Can I employ people as independent contractors in Mexico?
It’s risky. If a contractor works full-time for your company, Mexican authorities will likely treat them as an employee.
That means you could owe unpaid social security, leave, and severance.
Working through Europortage’s Employer of Record Mexico eliminates this risk. We ensure all workers are classified correctly and protected under Mexican labor law.
What does HR compliance mean in Mexico?
HR compliance means respecting every rule that governs employment in Mexico—contracts, benefits, taxes, and working conditions.
Europortage ensures your company meets all requirements, including:
Minimum wage and working hours.
Paid time off (PTO), sick leave, and holidays.
Maternity, paternity, and severance pay.
Tax filings and social security contributions.
Compliance protects your employees and shields your business from fines or legal exposure
How much does it cost to employ someone in Mexico?
In addition to gross salary, employers must pay:
Social security (IMSS): ~20–23% of salary.
INFONAVIT (housing fund): 5% of salary.
Retirement savings (SAR): 2%.
Payroll tax (local).
Through Europortage, you receive a clear monthly invoice covering all costs—no hidden fees, no administrative hassle.
What does “Employer of Record” mean in Mexico?
An Employer of Record (EOR) is a local partner that becomes the legal employer for your team in Mexico.
Europortage, as your EOR in Mexico, will:
Draft compliant employment contracts.
Manage payroll and issue payslips.
Register employees with IMSS and INFONAVIT.
File taxes and remit social contributions.
Ensure compliance with labor regulations.
Your company still:
Selects and manages your employees’ daily work.
Sets performance goals.
Covers payroll invoices from Europortage.
This model combines compliance and flexibility—ideal for companies testing or expanding in Mexico.
Who pays and files employees’ taxes and social security in Mexico?
Europortage handles all payroll, tax, and social insurance filings as the Employer of Record in Mexico.
We ensure payments are correctly submitted to the Mexican Social Security Institute (IMSS) and other agencies on time, every time.
How does Europortage ensure compliance as an EOR in Mexico?
We work with top labor law specialists and local accountants in Mexico. Together, we ensure:
Contracts meet Mexican labor standards.
Payroll, taxes, and benefits are accurate.
Policies reflect current regulations, including remote work and data protection.
Whenever a sensitive HR issue arises, Europortage consults directly with legal experts to ensure compliance and resolution.
What are my legal responsibilities when using Europortage as EOR?
You remain responsible for managing your team’s daily work and culture.
Europortage manages:
Legal employment.
Payroll and tax filings.
Benefits and employee documentation.
This partnership lets you focus on growth while we take care of compliance and administration.
Do employees get all their rights and benefits under an EOR in Mexico?
Yes. Employees hired through Europortage’s Employer of Record Mexico receive full legal rights and benefits, including:
Paid leave, maternity and paternity benefits.
Severance and notice periods.
Health coverage through IMSS and optional private plans.
Pension, INFONAVIT, and annual bonus (Aguinaldo).
Our mission is to ensure international employees in Mexico are treated fairly, receive every benefit they’re entitled to, and feel supported.
How to hire in Mexico
Employer of record
Partner with a Mexico employer of record (EOR) is quite a game changer and can help you hire globally. The EOR will be the legal employer, which means they will handle employment contracts, onboarding process, compliance, benefits, payroll and more.
Independent contractor
This solution might seem a good fit to reduce the cost of setting up an entity or hiring a full-time employee. Engaging a contractor can be a winning strategy in some cases and will depend of your business strategy and goals. For instance, it is a great solution when you need a talent for a short-term project.
Entity Setup
Establish a legal entity in a specific country will allow your business to operate legally in the country, hire, pay and manage your talents there.
Choose Europortage as your EOR partner in Mexico