Recruit and Manage Human Resources in Mexico

The work culture in Mexico is more personal than in Germany. Therefore, time should be planned for personal conversations; in general, trust and relationships are more important than skills.

In principle, qualified workers are available, but it is important to develop a recruitment strategy to attract the talent. This can include different channels, which can also vary by region. One of the most common channels is social media, where many Mexicans find out about jobs. Other options include online job boards or even traditional media.

What are the Labour Laws in Mexico?

The legal basis is regulated in the Federal Labour Law (Ley Federal de Trabajo) and the Social Law (Ley del Seguro Social) and includes regulations on employee leasing, probationary periods, equality and anti-discrimination. Labour regulations are strict and favour workers and trade unions.

In Mexico, an employment contract in Spanish is compulsory, specifying benefits, remuneration and also termination requirements. Employment contracts are usually concluded for an indefinite period, but there are also project-related or seasonal contracts. A probationary period is only allowed for permanent contracts or contracts of at least 180 days, the duration depending on the position.

Remuneration can be agreed according to time spent, work units or other bases and is paid on the 15th of the month and at the end of the month, in the case of physical work also on a weekly basis.

Since 1 January 2022, the daily minimum wage in Mexico is 172.87 Mexican pesos, the equivalent of about eight euros. A working week consists of six days and eight-hour shifts in the daytime; workers are entitled to one day off per week.

In addition, every worker is subject to social security obligations and must be registered with the Mexican Social Security Institute (Instituto Mexicano del Seguro Social – IMSS, contribution approx. 1.5-3% of gross salary) and the Institute for Social Housing (Instituto Nacional del Fondo de la Vivienda – INFONAVIT, contribution 5% of gross salary).

In the first year there is no legal entitlement to leave, in the second full year this is six days of leave. After that, the holiday entitlement is based on the length of service. There is no statutory notice period, a period of two weeks is usual. Notice can be given for reasons of conduct, personal reasons or operational reasons; in some cases the hurdles are high due to employee friendliness and the shifting of the burden of proof to the employer.

Another instrument to ensure legal certainty in the company is company guidelines, which are often introduced by about 50 employees. Topics such as working hours, bonuses or a code of conduct are defined there. These guidelines are checked and filed by the competent labour law authority.

What Must be Considered for Foreign Employees in Mexico?

If a company wants to employ foreign workers, it must obtain permission from the migration authority. In addition, the percentage of foreign employees must not exceed 10% and must be justified.

The Migration Law provides for the following types of immigration status for foreign nationals in Mexico: Persons with non-permanent intent to stay, Persons with permanent intent to stay and Immigrants.

Payroll in Mexico

An understanding of local tax, reporting, employment and compensation regulations is necessary to conduct accurate and compliant payroll in Mexico. Late payment of tax can result in a penalty of up to 50% of the amount owed. More information on labour laws and contracts can be found here.

In Mexico, both the employer and the employee contribute to social security. Benefits covered include pensions, death benefits, paid maternity leave, compensation for disability, work-related accidents and illnesses, and non-work-related illnesses. The contributions are not subject to income tax.

The employer contributes to social security, the housing fund andthe pension fund. These contributions are deducted from workers’ salaries and amount to about 25% of the salary. Workers pay social security and pension contributions of about 5% (with a cap).

In addition, it is common, but not compulsory, to have a supplementary pension scheme. Here, both employers and employees pay a higher contribution than required by law to increase the pension fund.

There are at least seven paid holidays per year, plus six other unofficial or local days that are widely observed. These are: