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The minimum wage in Mexico depends on the location of the employee:

• Free Zone of the Northern Frontier (NBFZ): MXN 419.88 per day
• Rest of the country: MXN 278.8 per day

The individual income tax ranges from 1% to 35%. Income tax is calculated according to progressive rates.

The employer cost is generally estimated at 21.30% of the employee salary. 

Monthly Costs

• Social Security IMSS - MXN 643.71
• Local Tax - 4.00%
• Surplus Fee (extra social security cost for special salaries) - 1.10%*
• Occupational risk - 0.50%*
• Retirement and old age - 4.241%*
• Retirement - 2.0%*
• Benefit for disabilities - 0.70%*
• Disablement and Life Insurance - 1.75%*
• Nursery and Social Benefits - 1.0%*
• Medical Expenses - 1.05%*
• Infonavit (mortgage fund) - 5.0%*

• Work From Home Allowance: MXN 1000 per month

  One-Time Ergonomic Chair Allowance: MXN 900

  One-Time Work Equipment Allowance: MXN 6,000 - opt out permitted in some circumstances

Annual Costs

• Vacation Bonus accrued monthly - 25% of the value obtained by multiplying the employee's daily salary by their number of vacation days.
• Year End bonus/Christmas Bonus accrued monthly - 15 working days of wages for employees with one year of service, pro-rated for employees with less than 1 year of service
• Profit Sharing - 10% of the company's profit in the fiscal year distributed among eligible employees

*These costs are calculated on the employee’s contribution base salary (SBC). The contribution base salary is indicated during the registration of the employee in the Mexican Social Security Institute (IMSS). The contribution base salary is made up of the payments made for the daily quota, bonuses, perceptions, food, housing, bonuses, commissions, benefits in kind, and any other amount granted to the employee for their services.To determine the social security contributions for both the employer and the employee, the days worked or not worked by the employee and the base contribution salary in each period (fortnightly, monthly, or bimonthly) are considered.

These costs are provided as estimates and are intended solely for general informational purposes. To fully comprehend all associated costs and fees related to the terms of any employment agreement for this country, please contact our Sales team for a quote.

• 200% of the hourly rate, the first eight hours of overtime during a week
• 300% of the hourly rate, overtime hours above the first eight hours

Terminations must respect complex rules and the rules of an employee’s employment country. The off-boarding is always handled by the Employer with the primary stakeholders. It may include ad-hoc fees as well as required or recommended steps on specific termination cases.

Terminations in Mexico can be complex. There is no at-will termination for employers, and if the termination is without cause, a mutual agreement must be agreed upon. Compliant terminations include:

• Voluntarily by the employee
• By mutual agreement: end of year bonus, holidays, and severance must be paid
• By the expiration of the contract
• Unilaterally by the employer based on:
  • probation period
  • disciplinary dismissal according to the Labor Code (Article 47 LFT)

The employee should not be notified when termination is by mutual agreement until the employer has set up the termination process (calculated severance payment, written the termination letter, and informed HR). A termination must be done within 24 hours, including paying the employee. 

The employer will have to notify the employee and request a wet ink signature of the resignation letter provided by the employee the same day. The employer will have 24 hours to pay the employee severance and benefits accrued.

• 90 days of salary compensation, including payment of employment benefits
• 20 days of salary for each year of services rendered
• A seniority premium, equal to 12 days salary per year worked, including paid vacation, Christmas bonus, and additional accrued benefits

An employee dismissed without just cause has the option to be reinstated to his former job instead of receiving the severance payment.

To protect you from unforeseen financial risks arising from terminations, Deel applies a Severance Accrual to all employment agreements in this country.  Deel has extensive expertise in managing litigation risk globally and our Severance Accrual calculation is based on the prevailing common-law or statutory entitlements and local best practices. In the event your employee resigns or is not entitled to severance, all unused amounts will be returned to you.

Full-time employees who work for five days per week are entitled to a minimum of 12 days of paid time off (PTO). This entitlement increases annually at a rate of 2 days per year for the first five years up to 20 days; and then 2 days every five years thereafter up to a maximum of 32 days.

Mexico celebrates seven national and one regional holidays based on the employee's location. 

National public holidays include: 

1. New Year's Day
2. Constitution Day
3. Benito Juárez's Day
4. Labor Day
5. Independence Day
6. Revolution Day
7. Christmas Day

• Name
• Start date
• Length of the employment
• Job description
• Termination conditions
• Christmas Bonus
• Beneficiaries, according to article 25 of the Federal Labor Law.