Hiring independent 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 in compliance with applicable laws.
Working with independent contractors in Mexico
With a large labor force and growing economy, Mexico has much to offer international companies looking to
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 and instructions. Independent contractors function as their own commercial entity that provide services to another company. Independent contractors have freedom regarding how they complete their services, and are not entitled to the benefits of an employee.
While employee-employer relationships are regulated by the Federal Labor Law, or 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, and the Social Security Law misclassification could subject your company to lawsuits and order it to pay taxes and social contributions, along with surcharges and fines, or require you to build a permanent establishment in Mexico. Employees misclassified as a contractors are entitled to accrued benefits, social security contributions, and all employment-related benefits.
How to contract independent contractors for your company
Creating a strategic approach to enrolling contractors can help you meet your company’s goals. Follow these primary principles.
1. Implement the right 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 independent contractors 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.
- Monthly fixed-fees or hourly pay rates.
- Scope of services to be provided.
- Duration of contract.
- Nondisclosure agreements (NDAs), if needed.
3. Know how to work with independent contractors.
An important step in engaging the services of independent contractors is understanding how to work with them. Independent contractors should not receive the level of control or supervision that employees do – they are generally free to perform the work according to their own schedule and methods.
Pay independent contractors in Mexico
Because contractors are not on 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.
Terminating or extending terms for independent contractors in Mexico
Independent 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 the agreement in case you want to extend the contractor’s service term or end the contract early.
Independent contractors are not subject to Mexico’s employment laws regarding termination, so you have the freedom to set terms that work best for you and your contractor.
Turn to G-P when hiring independent contractors in Mexico.
As a part of our #1 suite of global employment products, G-P Meridian Contractor™ allows companies to hire and pay global contractors faster, with self-service workflows and a wide set of flexible payment options. Whether you’re hiring employees or contractors, our platform streamlines the process with a single solution for your global workforce.
Contact us to learn more.