Mexico PEO | How to Hire in Mexico

In the age of digital nomads, hire anyone, work anywhere has become a reality. Whether taking a DIY approach or using a third party, check out our how to hire in Mexico guide at CXC today

Mexico has become one of the attractive business destinations in Latin America for investors. It is the second largest economy after Brazil and the third largest trading partner of the US. Mexico currently ranks as the 15th largest economy in the world. With a GDP of $2.412 trillion by the end of 2021, the country has become an integral part of the global supply chain.

 

Additionally, the Mexican government’s reforms in transportation, energy and telecommunications indicates a favorable business environment for investors. Choosing to establish your business in Mexico is a potential opportunity to explore and tap into a new market. Because employees are a company’s asset, hiring local talents, whether in-office or remote, can help kickstart your corporate growth.

 

Partnering with a Professional Employer of Record (PEO) is one of the convenient choices especially if your business will be in another country or territory.  They’ll do the entire recruitment process as your co-employer so you can focus on other matters in your business that also require immediate attention. However, it’s also an advantage for employers to become familiar with Mexico’s labor regulations and the legal process of hiring workers. Here are some of the essential points you need to know:

 

Hiring in Mexico

Employment Contracts

Employment agreements are mandatory in Mexico. Employment contracts should be clear and detailed especially about the job duration– will the worker be employed indefinitely? On a project basis or seasonally? An indefinite job duration means the end date for the job is not set and that employees  are entitled to benefits. Seasonal jobs, on the other hand, are services that aren’t required for all week, month or year. Seasonal work contracts should be in written agreement with the trial and training periods specified  to avoid labor abuses.

 

Work Schedule, Paid Time off and Required Leave

In Mexico, the average workweek is 45.1 hours. Employees working overtime are entitled to overtime pay. They recognize three working shifts:

 

Shift Working hours per day

(Mon – Sat) 

Working hours per day

(Mon – Fri) 

Working hours per week (Mon – Sat) 
Day Shift 8 hours 9.6 hours 48 hours
Night Shift 7 hours 8.4 hours 42 hours
Mixed Shift (Day + Night) 7.5 hours 9 hours 45 hours

 

There are seven national holidays in Mexico that they can take as days off. Employees should have six days paid time off after working in the company for one year. They should also receive a vacation bonus, which is at least 25% of their standard pay.

 

Minimum Wage, Compensation and Benefits

Since January 2022, Mexico’s daily minimum wage has been 141.70 to 172.87 per day. In the Free Zone of the North Border, it is 213.39 to 260.34 pesos per day. Offering additional health coverage for employees and their families can help the company attract top talents. Social security is mandatory, which gives the employee access to retirement savings, daycare for children up to 4 years old, pension in case of disability or death, and support expenses for marriage and funeral.

 

Annual Bonus and Profit-sharing

Mexican employees are entitled to profit sharing. Companies operating in Mexico for one year are required by the government to distribute 10% of taxable profits to employees. In addition, a yearly bonus must be given by employers to their workers. It must be at least 15 days worth of salary, which is known as “Aguinaldo” or 13th salary that is paid out in mid-December.

 

Employee Termination

Mexican law doesn’t state any period of prior notice should the employee decide to leave the company. However, the common practice is for the employee to deliver pending work issues within two weeks. On the other hand, if the employer terminates an employee, the company should verify the cause of termination to avoid legal disputes.

 

Legal requirements to hire employees in Mexico

  • Establish a legal presence in Mexico, with the help of a PEO, by creating a subsidiary or branch of your company.
  • Prepare all legal documents that are notarized and translated in Spanish.
  • Register your business with different government agencies starting with the Ministry of External Affairs for your business name. Necessary permits must be obtained from the local government depending on your business location and industry.

 

Hiring process in Mexico

Hiring new employees in Mexico follows the same HR recruitment standards such as:

  1. Post job ads in different online and print platforms.
  2. Screen or evaluate applications to determine shortlisted candidates.
  3. Schedule the job interview for selected applicants via remote or onsite. Mexico has four standard time zone designation. Set the appropriate time and date of the interview depending on where the applicant is based.
  4. Once the final candidates have been determined, send a formal job offer. Start creating a detailed job contract as well.
  5. Begin the onboarding process for the new recruits. Employees should undergo training before they can begin work and have a performance evaluation during their probationary period.

 

CXC is a global HR outsourcing organization with 30 years of experience in workforce management. Our innovative and cost-effective solutions help companies gain a competitive advantage by improving efficiency while reducing risks. 

Contact CXC today to start enabling your future workforce.

 

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