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    Mexico 2022
    Day Date Holiday Notes
    Saturday Jan-1 New Year's Day
    Monday Feb-7 Constituition Day
    Monday Mar-21 Benito Juarez
    Friday Apr-8 Holy Thursday Not an official day off but many companies will give this as holiday
    Saturday Apr-9 Holy Friday Not an official day off but many companies will give this as holiday
    Sunday May-1 Labor Day
    Thursday May-5 Anniversary of the Battle of Puebla
    Friday Sep-16 Independence Day
    Tuesday Nov-1 Day of the Dead Not an official day off but many companies will give this as holiday
    Wednesday Nov-2 Day of the Dead Not an official day off but many companies will give this as holiday
    Monday Nov-21 Mexican Revolution
    Thursday Dec-1 Change of Government: Every 6 years
    Sunday Dec-25 Christmas Day
    Countrypedia

    Mexico
    Payroll and Benefits Guide

    Last updated: Apr 19, 2022
    Currency
    Mexican Peso (MXN)
    Payroll Frequency
    Bi-Monthly/Monthly
    Employer Taxes
    36.69 – 43.72%

    Papaya Offers Complete Payroll, PEO and Contractor Management Services For Mexico

    Download PDF Version

    Overview

    Capital
    Mexico City
    Currency
    Mexican Peso (MXN)
    Date Format
    dd/mm/yyyy
    Public holidays calendar

    Contributions

    Employer

    Employer Payroll Contributions

    26.54% - 33.58%
    Social Security contributions (IMSS) (Maximum annual contribution 166,174 MXN)
    5.15%
    Retirement
    5.00%
    National Housing Fund (INFONAVIT)
    36.69 – 43.72% Total Employment Cost

    Employee

    Employee Payroll Contributions

    1.65%
    Social Security contributions (IMSS) (Maximum annual contribution 23,804 MXN)
    1.125%
    Retirement/Old age insurance
    2.775% Total Employee Cost

    Employee Income Tax

    1.92%
    Up to 7,735.00
    6.40%
    7,735.00 - 65,651.07
    10.88%
    65,651.07 - 115,375.90
    16.00%
    115,375.90 - 134,119.41
    17.92%
    134,119.41 - 160,577.65
    21.36%
    160,577.65 -323,862.00
    23.52%
    323,862.00 - 510,451.00
    30.00%
    510,451.00 - 974,535.03
    32.00%
    974,535.03 - 1,299,380.04
    34.00%
    1,299,380.04 - 3,898,140.12
    35.00%
    Over 3,898,140.12
    * Most Mexican states levy a relatively low tax on salaries and other income earned by employees, which is payable by the employer, for example, Mexico City imposes a 3% payroll tax.
    Employer Taxes
    3 HIGHEST
    3 LOWEST
    Mexico
    Russia
    South Korea
    Mexico
    Georgia
    Lithuania
    Macedonia
    43.72%
    38.5%
    34.84%
    43.72%
    2%
    1.77%
    0%
    Employee taxes
    3 HIGHEST
    3 LOWEST
    Romania
    Germany
    Netherlands
    Mexico
    Belarus
    Ukraine
    Cambodia
    35%
    31.05%
    30.35%
    2.775%
    1%
    0.6%
    0%

    Minimum Wage

    General

    The National minimum wage in Mexico is 172.87 MXN per day; however, this can differ by job role and category.

    The Northern Border Zone has a different minimum wage, set at 260.34 MXN per day. The border zone is a defined set of Mexican state municipalities bordering the USA.

    Minimum wage (per month)
    $4000
    $2663
    $2518
    $877.16
    $36.80
    $17.24
    $2.33
    Geneva
    Luxembourg
    Australia
    Mexico
    Angola
    Tanzania
    Venezuela
    3 HIGHEST
    3 LOWEST

    Payroll

    Payroll Cycle

    The payroll cycle is bi-weekly, and employees are generally paid on the 15th and the last day of each month.

    13th Salary

    A 13th-month salary payment is mandatory in Mexico; it is a bonus payment paid by December 20th (Aguinaldo). The Aguinaldo is calculated as 15 working days of salary, plus an allowance, based on a 365-day year.

    Working Hours

    General

    The standard working hours within Mexico are 48 hours per week, 8 hours per day. However, there are three work shifts stated in Mexico federal labor law:

    • Day shifts comprise 48 hours per week (between 6 am to 8 pm)
    • Night shifts comprise 42 hours per week (between 8 pm to 6 am)
    • Mixed shifts comprise 45 hours per week

    The maximum weekly and daily working hours can differ as stipulated in employment contract /collective bargaining agreements.

    Overtime

    All work above the standard mandated shift is paid as overtime and regulated by the employment contract/collective agreements.

    The payment of overtime is based on two considerations which determine whether overtime hours need to be paid at double or triple paid hours. These considerations are the total number of overtime hours worked during the working week and the number of hours worked during a single day after a regular shift.

    The first nine overtime hours during the week are to be paid at 200.00% of the regular salary rate; every hour after that is to be paid at 300.00% of the regular salary rate. The first three hours after a normal shift are considered double hours; every hour after that is deemed to be triple regardless of the number of overtime hours worked during the week.

    Leave

    Paid Time Off

    Paid leave in Mexico is outlined in the employment contract as a minimum of 6 days paid holiday per year, plus an additional two days per year of service, following completion of 1-year service.  Following the completion of 4 years of service, two additional days are added every five years.

    Vacation days
    Public holidays
    3 HIGHEST
    3 LOWEST
    Azerbaijan
    Brazil
    Kazakhstan
    Mexico
    Mexico
    Malaysia
    Federal
    21
    24
    45
    30
    13
    43
    24
    19
    43
    6
    8
    14
    6
    8
    14
    8
    6
    14
    10
    10

    Public Holidays

    8 public holidays.

    Sick Days

    Eligible employees are entitled to up to 52 weeks of paid sick leave at 60.00% of the regular salary when verified by IMSS affiliated medical authorities.  If it is a work-related injury, the employee is entitled to 100.00% of the regular salary.

    Maternity Leave

    All female employees are entitled to 12 weeks of paid maternity leave, which the employee must take six weeks before the birth and six weeks after that.  The maternity pay is calculated at full pay, where the IMSS contributes 60.00% of the cost and the employer 40.00%.  The application for maternity leave must be supported by a medical certification issued by an IMSS approved clinic or a private medical institution.

    Female employees are also entitled to six weeks of paid adoption leave after the child (a minor) is handed to them.

    PAID MATERNITY LEAVE (DAYS)
    413
    410
    365
    84
    40
    30
    0
    Norway
    Bulgaria
    Serbia
    Mexico
    Malawi
    Tunisia
    Federal
    3 HIGHEST
    3 LOWEST

    Paternity Leave

    The father is entitled to mandatory paid paternity leave of 5 days.

    Parental Leave

    There is no additional Parental leave in Mexico.

    Other Leave

    There is no statutory additional leave in Mexico.

    Termination

    Termination Process

    At-will employment does not exist in Mexico, and termination at-will clauses are only applicable to the employee. Therefore, employers may not terminate employment relationships without just cause. The Mexican Federal Labor Law stipulates a closed list of reasons and sets the procedure to terminate an employee at any time without incurring liability. The list of reasons can be found below:

    • False statements about work qualifications.
    • Breach to the disobedience or honesty principles.
    • Vandalism.
    • Sexual harassment.
    • Alcoholism in the workplace.
    • Revealing company secrets.
    • Refusing to comply with safety procedures and
    • four unexcused absences in 30 days.

    Notice Period

    There are no statutory minimum notice periods in Mexico; however, Federal Labour Law states that should the circumstance dictate, the company must provide the employee with notice in writing within 30 days of knowing about the misconduct. The written notice must explain the grounds for dismissal, or the Labor Board must issue a termination notice.

    Severance Pay

    In Mexico, terminating an employee without reasonable cause requires severance. The severance payment should comprise three times the regular monthly salary figure plus for those employees with more than 15 years’ service an additional 20 days’ pay for every year of service thereafter.

    Probation Period

    The probation period in Mexico for permanent employees is generally 90 days.

    VISA

    VISA

    Any foreigners coming to work in   Mexico will need to apply for a work permit and resident visa.

    The National Institute of Immigration oversees all immigration in Mexico and issues work visas.

    Mexico has a temporary and permanent visa; the employee should apply for both jointly with the prospective employer.  A temporary resident visa is for foreign nationals who want to live in Mexico for more than 180 days. In addition to the Mexico work permit, people with a temporary resident visa can live and work in the country for up to four years with a Mexico work visa.

    After completing four years’ service (with the same company), a foreigner may apply for a permanent resident visa.

    VAT

    General

    The standard rate of VAT in Mexico is 16.00%.

    Papaya Global offers full Mexico PEO services for companies not wishing to open a local entity

    Version History

    April 19, 2022
    Minimum wage rose to 172.87 MXN per day and to 260.34 MXN in the Free Economic Zone of the Northern Border
    January 1, 2021
    Minimum wage rose to 141.70 MXN per day and to 213.39 MXN in the Free Economic Zone of the Northern Border
    Employee income tax rates were adjusted.

      Stay up to date on payroll & employment law changes

      Questions & Answers

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      Ben B.
      Ben B.
      1 year ago

      If a new mother wants to extend maternity leave beyond 3 months, does the government continue to pay her salary?

      Alex Margolin
      Admin
      1 year ago
      Reply to  Ben B.

      If a mother extends her maternity leave, the government will continue to pay at a rate of 50% for an additional 60 days.

      Peter Winn
      Peter Winn
      1 year ago

      Is it standard practice to grant a vacation bonus to employees? If so, what is the standard amount.

      Alex Margolin
      Admin
      1 year ago
      Reply to  Peter Winn

      Hi Peter,

      It is a common practice and a very strong expectation in Mexico that employees will receive a 25% bonus for at least 6 days of their vacation.

      Matt Teumer
      Matt Teumer
      1 year ago

      Can payroll payments to employees be made by a payment service provider on behalf of the employer?

      Emily Kuhnert
      Admin
      1 year ago
      Reply to  Matt Teumer

      Hi Matt, thank you for your question. In large, yes, it is possible.

      Patricia
      Patricia
      1 year ago

      Hi, We have a travel related business in Mexico and we have be shut down by the government due to unpaid Social Security for employees. We have been closed/struggling for 1 year due to Covid and no tourism and no income, but we have continued paying our employees with loans and credit cards. However, we owe 1 year of employee Social Security payments to the government. I was told that if we can not pay the past Social Security debt and ‘release’ our employees, that the employees will lose ALL their pension they’ve earned for the last 22 years they have worked for us. They will have no retirement monthly pension coming in from what we have paid toward their retirement. This doesn’t seem right. Is this false information?

      Emily Kuhnert
      Admin
      1 year ago
      Reply to  Patricia

      Hi Patricia, this is out of the scope of things that we cover and do not offer legal advice. We recommend that you seek legal counsel in Mexico to understand how you as a company are liable.

      VilCap, Inc
      VilCap, Inc
      1 year ago

      Are employers required to provide health insurance in Mexico? Our company currently provides health insurance stipends to staff to purchase private health insurance plans. Is this common and/or allowed? If allowed, how is it taxed?

      Emily Kuhnert
      Admin
      1 year ago
      Reply to  VilCap, Inc

      Hi, employers are not required to provide health insurance. If this is offered as an allowance, then it is treated as a salary component and is taxed as such with the regular payroll.

      VilCap, Inc.
      VilCap, Inc.
      1 year ago

      If employees incur business expenses on behalf of the company, can the employees receive reimbursement via the payroll company as a non-taxable element of their paycheck?

      Alex Margolin
      Admin
      1 year ago
      Reply to  VilCap, Inc.

      Employees can be reimbursed for expenses tax-free in Mexico as long as they provide a detailed electronic invoice (not a paper invoice) in the name of the company (not the employee) and the total is under a certain limit, usually 2,0000 MXN. It must be invoiced as an expense for the company, not a form of income for the employee. The electronic invoice should include the company’s name and tax ID number, the amount of the expense, the payment method, and date of the expense, and should in either PDF and XML format. The expense should be made by credit card or e-transfer.

      joaquin
      1 month ago

      In case of a dispute with the termination fee, who is responsible for covering it, me as a customer or Papaya? is there any kind of deposit? Thank you!

      Erez Greenberg
      Admin
      1 month ago
      Reply to  joaquin

      The customer/client is responsible for any termination cost and there is no deposit.

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