Mexico Compensation/Benefits

Compensation and benefits are two critical parts of Mexico’s employment laws. You must
make sure every employee gets paid a fair wage and receives every benefit they are entitled
to.

Mexico Compensation Laws

Mexico’s minimum wage is 141.70 (as of 2021) Mexican pesos per day according to Mexico
compensation laws. This is true for all states except those at the Northern Border. Northern
Border states (Baja California, Sonora, Chihuahua, Coahuila, Nuevo Leon, and Tamaulipas)
have a minimum wage of $213.39 pesos per day. You can pay employees weekly, biweekly,
or monthly depending on what you’ve outlined in your employment contract. The net pay,
which includes salary, cash benefits in kind, and hardship allowances, must be received in
official Mexican banks and paid in pesos.

Your employees are also entitled to an aguinaldo — a yearly bonus. The aguinaldo typically
equals 15 days of salary and amounts to about four weeks of pay. Larger companies may
give up to six weeks. Sales employees often get large sales commissions or quota bonuses
that replace the Aguinaldo.

What Benefits Are Guaranteed in Mexico?

Every employee is guaranteed certain benefits in addition to the compensation laws listed
above. For example, workers earn an annual vacation entitlement of six days after their first
full year of employment as part of Mexico benefit management. They receive an additional
two vacation days for each year that they continue to work for you.

Employees in most states also are guaranteed a vacation bonus, which is at minimum 25%
and goes to whatever the company determines. This percentage is granted based on the
annual leave entitlement days and paid on the anniversary of the employee with the
company.

Many states also offer profit sharing, in which employees are entitled to receive at the latest

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on May 30 each year, and they receive up to 10% of net profit of the company. The profit that
will be shared is divided into two parts: the first part will be split in equal parts amongst all
employees, taking into consideration the number of worked days for each employee during
the previous year; and the second part will be distributed in proportion to the amount of the
salaries earned during the year.

All employees get public health care coverage through the Mexican Social Security Institute.
However, many employers offer their workers supplementary health insurance options.

Mexico Benefit Management

If you opt for private medical insurance, you’ll either need to find insurance for your
employees yourself or work with a global PEO. Globalization Partners uses our Global
Employer of Record, accessible through our industry-leading technology, to arrange private
insurance coverage after hiring your employees. You can also provide a monthly allowance
for employees to choose their own private plan.

Mexico benefit management includes optional features that enhance your employee’s work
life. Many companies offer flexible work hours or job sharing and telecommuting. Some
employers also opt for additional contributions to retirement savings, life insurance, and
more.

Benefits and Compensation Restrictions

Mexico benefit management includes understanding their festivals, civic holidays, and
statutory holidays. The country’s eight national public holidays include:

New Year’s Day

Constitution Day
Benito Juarez’s Birthday
Labor Day/May Day
Independence Day
Revolution Day

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Christmas Day

Every employee is entitled to overtime pay, which is 100% of their regular pay, or 200% for
Sundays or bank holidays.

There are also specific compensation rules regarding employee sick leave. If an employee
has an illness not related to work that keeps them out for more than three days, they will
receive 60% of their salary. The 60% of their salary is paid by the Social Security Institute,
and the remaining 40% of the salary is paid to the employer. If the sickness or accident is
related to the job or commute, the employee gets 100% of their salary. For both the 60%
salary compensation and 100% salary compensation, the employee will need to go to the
Institute to file for sick days and get approval.

For more information about Mexico’s compensation laws, turn to Globalization Partners. We
handle everything from hiring employees on your behalf to taking the risk off your shoulders
and putting it on ours. Contact us today to learn more.

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