Hiring contractors based in Mexico can give your company access to professionals with expertise in your field. Whatever projects you might need the contractor for, you’ll want to ensure you’re following labor laws and supporting your organization.
Hiring independent contractors in Mexico
With a large labor force and growing economy, Mexico has much to offer international companies looking to hire contractors.
Differences between an employee and an independent contractor
Before you hire independent contractors, it’s important to understand what differentiates them from employees. Employees are part of a company and are subordinate to employer mandates. Independent contractors function as their own commercial entities that provide services to another company. They have more freedom regarding how they complete their services, but they are not entitled to the benefits of an employee.
While employee-employer relationships are regulated by the Mexican Federal Labour Law (Ley Federal del Trabajo), independent contractors are subject to commercial codes and individual contracts.
Penalties for contractor or employee misclassification
Ensure you correctly classify your employees and contractors. According to the national Federal Income Statute, misclassification could subject your company to lawsuits or require you to build a permanent establishment in Mexico. An employee who was misclassified as a contractor could be entitled to accrued benefits and social security contributions.
How to hire independent contractors for your company
Creating a strategic approach to hiring contractors can help you meet your company’s goals and find the best workers for your needs. Follow these primary principles.
1. Implement the right hiring strategy
Remember that you’re building a business-to-business relationship with contractors. You’ll want to look for project-specific experience and focus on applicants with the specific skill sets you need for your unique operational requirements.
2. Agree to terms of service
While not legally required, a written contract is optimal to establish clear expectations of services for your company and your contractors. Be sure to outline terms such as:
- Termination or extension of service terms
- Daily or hourly pay rates
- Scope of services to be provided
- Duration of contract
- Nondisclosure agreements (NDAs), if needed
3. Offer training and orientation resources
Ensure independent contractors have all the resources they need to navigate your unique operations. HR personnel can walk contractors through key workflows, the layout of the on-site facility, and any software or equipment they will use from day to day. Cover essential information upfront and make sure contractors have a point of contact for any questions that arise.
How to pay independent contractors in Mexico
Because contractors are not on your payroll, you’ll likely need to have another system in place to track and deliver payments for their services.
Keep in mind that you’ll need to find a secure option to deliver payments internationally while staying on schedule. Be sure to account for country-specific bank holidays and differences in time zone, if any.
Termination or extension terms for Mexico independent contractors
Contractors generally work for a set duration or on a project-by-project basis, making termination fairly straightforward. Still, it’s best to establish extension and termination terms in your agreement in case you want to extend the contractor’s service term or end the contract early.
Independent contractors are not subject to Mexican employment laws regarding termination, so you have the freedom to set terms that work best for you and your hired contractor.
Hire contractors in Mexico with Globalization Partners
As an extension of Globalization Partners’ Global Employment Platform™, G-P Contractor allows companies to hire anyone, anywhere. Whether you’re hiring employees or contractors, we streamline the process with a single solution for your global workforce. Contact us to learn more.