What do you need to know to hire in Mexico?
Mexico requires no advance notice on dismissal, but every unjustified termination triggers a mandatory three-month indemnity plus 20 days per year of service from day one. Annual leave starts at 12 days and the work week is dropping from 48 hours today to 40 hours by 2030. Each guide below takes one layer.
· Mexico guide
How does Teamed handle Mexico hiring for you?
Teamed becomes your legal employer of record in Mexico for from $599 per employee per month, with zero FX mark-up in any currency.
Payroll, benefits, and the full Mexican employment law stack run on one platform.
Real HR and legal experts manage every Mexico hire, from the first offer letter to the final finiquito. An actual person, not a chatbot or a pooled queue, handles your Mexico team alongside EOR, contractor onboarding, and entity payroll on one platform. There is no setup fee and no exit fee. Employer cost passes through at cost, itemised on every invoice.
A Mexico contractor who converts keeps their record, and that same employee can graduate from EOR to your own Mexican entity without re-onboarding. Run the Crossover Calculator to see the month the model flips. EOR is the right model for a first Mexico hire, until it isn't.
- Mexico has no advance notice requirement on dismissal. Termination is effective immediately. The employer delivers written notice on the day, stating just cause and the date of the conduct. What replaces notice is a mandatory indemnity for unjustified dismissal. The termination guide covers the full three-part payment.
- The aguinaldo (Christmas bonus) is a statutory obligation, not a courtesy. Every employee must receive at least 15 days of salary before 20 December each year. New hires receive a proportional amount. Failure to pay is a labour law violation, not just a cultural misstep.
- Mexico's work week is shrinking by law. A constitutional reform published in 2026 begins reducing the maximum from 48 hours to 40 hours by 2030, in two-hour annual steps from January 2027. Contracts and shift schedules signed today will need to be updated.
Hiring in Mexico adds 30 to 40 percent of gross salary in employer IMSS and INFONAVIT contributions. The exact rate depends on your industry risk class and payroll level.
Three mandatory benefits sit on top of salary: the aguinaldo (15 days minimum, paid before 20 December), the prima vacacional (a 25 percent vacation premium), and IMSS-funded maternity pay.
Payroll runs twice a month on the quincenal calendar. Employers must remit ISR withholding to SAT by the 17th of the following month.
This page is the map. Each guide below is the detail.
Zero FX. No setup fees. 48-hour onboarding. The price your finance team can forecast against without an asterisk.
How much does it cost to hire an employee in Mexico in 2026?
A Mexico hire costs 130 to 140 percent of gross salary once IMSS, INFONAVIT, and mandatory benefits are added.
The total employer contribution to IMSS and INFONAVIT runs 30 to 40 percent of salary. The exact rate varies by industry risk class and payroll level.
Mexico's IMSS employer contributions cover health, disability, life insurance, childcare, retirement, and housing (INFONAVIT). The combined rate is not a single fixed percentage: it depends on your occupational risk class, the salary band, and the phased CEAV (pension) tranche rising annually through 2030. The minimum wage is MX$ 9,577.22/month for the general zone in 2026.
Three mandatory benefits add further cost. The aguinaldo (15 days of salary minimum, due before 20 December) is required by law. The prima vacacional adds 25 percent on top of each day's vacation pay. IMSS pays maternity leave directly, but employers must bridge the cost where the employee does not have the required contribution history.
Teamed's Mexico price is a starting rate, with zero FX in any currency pairing. No setup fees. No exit fees. Salaries, taxes, and benefits passed through at cost on every invoice. The full breakdown, with worked examples, is in the cost guide.
Do you need a Mexican entity to hire employees in Mexico?
No. An Employer of Record runs Mexican payroll and contracts from day one.
Your own Mexican entity becomes cheaper than EOR somewhere around 5 to 8 employees, depending on salary.
Forming a Sociedad Anonima de Capital Variable (SA de CV) in Mexico requires notarisation, SAT registration, and IMSS enrollment. Setup takes six to ten weeks and carries ongoing accounting, payroll, and IMSS filing obligations. An Employer of Record is faster and cheaper at low headcount. Teamed runs Mexican payroll, contracts, and IMSS compliance from the day you sign.
The crossover point depends on Mexican salary levels and your accounting costs. For most tech roles it lands around 5 to 8 employees. The EOR vs entity guide runs those numbers.
Most EOR providers will not tell you when you have crossed it. We do, and we help you move. You progress from contractor to EOR to your own entity on one platform under Teamed's Graduation Model, with tenure preserved.
What changed in Mexican employment law in 2026?
A constitutional reform published in 2026 begins reducing the maximum work week from 48 hours to 40 hours by 2030.
The reduction starts in January 2027 with a drop to 46 hours, then two hours per year through 2030. Employers must implement electronic time-tracking now.
The constitutional reform and the secondary LFT reform (effective 1 May 2026) are the most significant changes to Mexican labour law in a generation. The phased work week reduction applies to all employees: 48 hours through December 2026, 46 hours from January 2027, 44 hours from January 2028, 42 hours from January 2029, and 40 hours from January 2030. Overtime caps tighten at the same time: no more than 4 hours per day over no more than 4 days per week.
Electronic time-tracking is now a legal obligation, not a best practice. Employers without a compliant system face inspection exposure from the Secretaria del Trabajo y Prevision Social (STPS). Payroll schedules, shift agreements, and collective bargaining provisions written before 2026 will need updating ahead of each January step. The compliance and hiring guides cover each obligation in detail.
What benefits must you provide Mexican employees in 2026?
The statutory floor includes 12 days of paid annual leave after year one, a 25 percent vacation premium, 15 days of aguinaldo, and IMSS-funded sick pay from day four.
Maternity leave runs 84 days. Paternity leave is 5 days, funded by the employer.
Annual leave starts at 12 days after the first year of service and rises by 2 days per year through year five, reaching 20 days. Employees must take their leave within 6 months of their service anniversary and cannot waive it or accept cash in lieu. On top of leave days, the prima vacacional adds 25 percent to each day's vacation pay.
The aguinaldo (Christmas bonus) is the most visible mandatory benefit. Every employee must receive at least 15 days of salary before 20 December. IMSS pays maternity leave at 100 percent of the registered salary for 84 days, provided the employee has 30 weeks of IMSS contributions in the prior 12 months. Paternity leave is 5 days, paid in full by the employer. There are 7 mandatory rest days under the LFT. The benefits guide covers each entitlement and the employer obligations in full.
Read the full Mexico benefits guide
What are payroll taxes in Mexico in 2026?
Mexico runs a biweekly payroll (quincenal). Employers must remit ISR withholding to SAT by the 17th of each month.
Employee ISR is deducted on a progressive scale from 1.92% to 35% across 11 brackets.
Payroll runs 24 times per year under LFT Art. 88: payments on the 15th and last day of each month for salaried workers. Employers withhold ISR (impuesto sobre la renta) from each payslip and remit the monthly total to SAT no later than the 17 daysth of the following month. The first ISR bracket starts at 1.92%. The top rate of 35% applies to annual earnings above approximately MXN 5.1 million.
On the employer side, IMSS and INFONAVIT contributions cover social insurance across five branches: health, disability, life, childcare, and housing. The employee fixed IMSS deduction is 2.625% of their registered base contribution salary (SBC). Employer contributions are higher but variable by risk class and salary level. Mexico does not use a personal allowance zero-rate band; low earners benefit from a subsidio al empleo tax credit instead. The tax and payroll guide sets out every band and threshold.
How do you terminate an employee in Mexico?
Mexico requires no advance notice on dismissal. Termination is effective on the day the written notice is delivered.
Every unjustified dismissal triggers three mandatory payments: 90 days of integrated salary, 20 days per year of service, and the seniority premium.
Termination in Mexico is immediate. The employer delivers written notice on the final day, setting out the just cause and the date of the conduct (which must fall within the prior 30 days). If the employee is not present, the notice must be filed with the Labour Board within 5 working days. There is no garden leave concept in Mexican law.
For unjustified dismissals, the full constitutional indemnity applies from day one of service. It has three parts: a fixed 3 months of integrated daily salary, plus 0.667 months of salary per year served (the 20-day component), plus the seniority premium (12 days per year, with the daily rate capped). All three are due on the last working day. An employee who considers the dismissal unjustified must file a claim within 8 weeks of separation. The termination guide runs the full process.
What should you know before hiring in Mexico?
Two things catch US buyers out. The first is that unfair dismissal protection applies from day one.
The second is the biweekly payroll obligation: monthly payroll is not permitted under Mexican law.
There is no qualifying period for dismissal protection. Unlike UK or German law, Mexico's constitutional protection against unjustified dismissal applies from the first day of employment. A dismissed employee may file a claim within 8 weeks of separation. The three-part indemnity does not scale down for short tenure: the 90-day fixed payment is the same whether the employee worked one month or ten years.
Monthly payroll is illegal. LFT Art. 88 caps the payment interval at 15 days for non-manual workers. Employers who switch from their home-country monthly cycle without adjustment are immediately non-compliant. The quincenal (twice-monthly) calendar is the standard. Most tech-company employees in Mexico also receive the aguinaldo, the prima vacacional, and profit sharing (PTU), all of which have their own annual deadlines. The hiring guide covers the full annual obligations calendar.
Frequently asked questions
How much does it cost to hire an employee in Mexico?
Plan on 130 to 140 percent of gross salary once IMSS and INFONAVIT contributions are added. The employer contribution rate varies by occupational risk class and salary level, running 30 to 40 percent in total. Add the mandatory aguinaldo (15 days salary by 20 December) and the prima vacacional (25 percent vacation premium). Teamed's Mexico fee is one flat number per employee per month, with zero FX mark-up in any currency pairing. The cost breakdown guide has worked examples.
Can a US company hire in Mexico without an entity?
Yes. An Employer of Record like Teamed runs Mexican payroll, IMSS registration, and labour contracts through its own registered entity. You direct the work. Teamed becomes the legal employer of record. Setup takes 48 hours once terms are confirmed. Forming your own SA de CV takes six to ten weeks and requires notarisation and SAT registration.
What is the notice period for terminating an employee in Mexico?
Mexico has no statutory advance notice requirement for employers. Termination is effective on the day written notice is delivered. The notice must state the just cause and the date of the conduct. For unjustified dismissals, the mandatory indemnity includes 3 months of integrated salary plus 0.667 months per year of service. The termination guide covers the full process.
What is the Mexican minimum wage in 2026?
The general zone minimum wage is MX$ 39.38/hour (MX$ 9,577.22/month), effective from 1 January 2026. The northern border free zone (ZLFN) carries a higher rate. The minimum was set by CONASAMI under the Ley Federal del Trabajo. It applies to all employees including part-time workers.
What is the statutory annual leave in Mexico?
Statutory minimum paid annual leave is 12 days after the first year of service under LFT Art. 76 (Vacaciones Dignas reform). It rises by 2 days per year through year five, reaching 20 days. There are 7 mandatory rest days. Leave must be taken within 6 months of the service anniversary and cannot be replaced with cash. A 25 percent vacation premium (prima vacacional) is also required on top of the leave pay.
What is the aguinaldo and when must it be paid?
The aguinaldo is a mandatory Christmas bonus of at least 15 days of salary. It must be paid before 20 December each year under LFT Art. 87. Employees with less than one year of service receive a proportional amount. It cannot be waived or deferred. Many employers voluntarily pay more than the minimum, but the legal floor is 15 days.
Mexico looks like a lower-cost hire than Germany or France. The IMSS number surprises most US buyers: the employer contribution runs 30 to 40 percent once you factor in the risk class, the CEAV phase-up, and INFONAVIT. Add the aguinaldo, the prima vacacional, and a dismissal indemnity that applies from day one, and you need to model the full cost before the first offer letter goes out.
Mexico has a clear statutory structure. Biweekly payroll. Aguinaldo by 20 December. A dismissal indemnity from day one.
The work-week reform is already in motion. Contracts written today will need updating from January 2027.
Read the right Mexico guide before the first hire, not after the first labour board claim.
