General Overview

Mexico, located in North America, has a dynamic and diversified economy driven by manufacturing, services, and agriculture. As a key trading partner in the region, Mexico continues to grow while maintaining strong labor laws that protect employee rights and provide clear guidelines for employers.

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Employment Contracts

• Measurable Contract: Used when an employee is engaged for a specific, definable deliverable or a set period of time.
• Indefinite-term Contract: The most common type for full-time employment, to be used when the working relationship exceeds 180 days.

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Probation Period

A trial period may be established for up to 30 days, extendable up to 180 days within the contract framework.

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Working Hours

The official maximum working week is 48 hours, typically spread over six days of eight-hour shifts. Many companies condense these hours into five days to provide two days off. Overtime is paid at double the normal wage for the first nine overtime hours per week, and triple for any additional hours.

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Vacation Days

Employees with one year of service are entitled to a minimum of 6 paid vacation days in their first year. An additional 2 working days are added annually through the fourth year. After five years, employers must add 2 extra vacation days every five years.

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Sick Leave

Federal subsidies cover sick leave for up to 52 weeks. During sick leave, employees receive 60% of their salary, except in cases of work-related illness, which are compensated at 100%.

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Wages and Salary Payment

• The payroll cycle is bi-weekly, with payments made on the 15th day and the last day of each month.
• The minimum wage is $141.70 Mexican pesos per day (effective January 1, 2021).

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Public Holidays

Mexico observes 7 public holidays each year, plus an extra holiday on December 1 every six years (to mark the presidential inauguration). Key holidays include:

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• January 1: New Year’s Day
• First Monday in February: Constitution Day
• March 16 (or the third Monday in March): Benito Juárez’s Birthday
• May 1: Labor Day
• September 16: Independence Day
• November 20 (observed on the third Monday): Revolution Day
• December 1: Inauguration Day (every six years)
• December 25: Christmas

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Employees working on these holidays receive 300% of their normal wage, or 325% if the day falls on a Sunday.

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Employer Taxes

Employers contribute to social security with a maximum annual contribution of MXN 138,479 (this may be higher if occupational risk premiums apply). These contributions apply to employees earning more than MXN 817,782 per year.

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Employee Taxes

• Personal income tax rates are progressive as defined for the calendar year 2021 (refer to the detailed tax brackets for exact figures).
• Employees also contribute to social security, with a maximum annual contribution of MXN 22,243.

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Notice Period

There is no obligation to serve a notice period in advance upon dismissal; notice is provided at the moment of dismissal or within 5 days. The notice must include the just causes for dismissal and the date of occurrence. Failure to deliver proper notice is deemed a dismissal without just cause.

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Termination and Severance Pay

If an employee is dismissed without reinstatement, they are entitled to:

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• Three months’ salary
• 20 days’ salary per year of service
• An additional 12 days’ salary per year for service beyond 15 years
• Prorated holiday pay, a 13th-month bonus, and profit-sharing dividend

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If the employer cites a justified cause as defined by law, only the prorated holiday pay, 13th-month bonus, and profit-sharing dividend are payable.