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 102.68 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 $176.72 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 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 Platform 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
- Christmas Day
Every employee is entitled to overtime pay, which is 150% 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.