The complete guide to offering employee benefits in Mexico

When hiring employees in Mexico, the benefits plan you offer can be one of the most important parts of the deal. Mexico has robust labor laws that grant employees a wide range of statutory benefits. No matter where your company is based, if you're going to hire a worker in Mexico, you'll want to know the legal requirements so you can offer a benefits package that's compliant with Mexican laws.

Here's everything you need to know to offer benefits that meet statutory requirements under Mexican labor laws—plus extra benefits you can offer to go above and beyond for your employees in Mexico.

What employee benefits are mandatory in Mexico?

Employers who hire workers in Mexico are governed by several labor laws that require them to offer certain benefits. If you employ a Mexican worker and you don't offer the right statutory benefits, you could face fines and other punishments from the Mexican government.

Note that the benefits outlined below are statutory minimums, and employers can always offer more than these mandatory benefits. Also, note that these benefits are mandatory for employees—independent contractors in Mexico aren't entitled to any benefits.

Social security

Mexican social security, called Instituto Mexicano del Seguro Social or IMSS, covers medical and social needs for all Mexican workers.

Employers typically contribute 25-35% on top of their employees' salaries to IMSS, which covers:

• Healthcare
• Pension plans
• Employment insurance
• Work risk insurance
• Life insurance
• Disability pay
• Sick leave
• Parental leave (both maternity leave and paternity leave)
• Childcare
• Social housing

Many of the benefits that Mexican employees are accustomed to receiving are statutory, but not supplied directly by their employer—paid sick leave, for example, is something all Mexican workers are entitled to that is covered by the IMSS rather than their employer.

Profit sharing

The Mexican Constitution dictates that all companies must share 10% of their annual profits with their employees. Companies must distribute profit-sharing payments within 60 days of filing their annual tax return.

Severance pay

Under Mexican labor laws, there are no required notice periods for terminating an employee. Instead, severance pay is required. The amount of the severance varies depending on the reason for the termination:

Vacation time and vacation premium

Any Mexican employee who has been with their employer for at least one year of working days is entitled to paid vacation. The exact amount depends on seniority:

Mexican employees are also entitled to a vacation premium, which is equal to at least 25% of their salary—meaning that during vacation leave, they receive 125% of their usual pay. 25% is the statutory minimum for vacation premiums, but this is one benefit that employers often increase to attract and retain top talent.

Statutory holidays

Statutory holidays in Mexico can vary by region, but some are observed nationwide.

Here are the statutory holidays for all Mexican employees, regardless of region:

New Year’s Day (Jan 1)

Constitution Day (First Monday in February)

Benito Juarez' Birthday (Third Monday in March)

Labor Day (May 1)

Independence Day (Sept 16)

Revolution Day (Third Monday in November)

When there's a change of president (Dec 1 every six years)

Christmas (Dec 25)

The following holidays are not statutory but are commonly observed by Mexican employers: Holy Thursday (Thursday before Easter), Good Friday (Friday before Easter), Puebla's Battle (May 5), Day of the Races (Oct 12), Day of the Dead (Nov 2), Guadalupe's Virgin Day (Dec 12).

Weekly rest day and Sunday premium

Mexican federal labor law dictates that employees are entitled to one day of rest for every six days worked, and that, as often as possible, that day of rest should fall on Sunday. If employees work on Sunday, they're entitled to a premium of 25% on top of their normal salary.

13th month salary/Christmas bonus

Employees in Mexico are entitled to a mandatory 13th month salary, also called a Christmas bonus or aguinaldo. This is typically equal to 15-30 days of the employee's normal salary, paid before Dec. 20. Employees who have been with their employer for less than one year receive a prorated portion of their Christmas bonus.

What employee benefits are optional in Mexico?

Because Mexico's statutory benefits are so robust, supplementary benefits plans aren't all that common. In many cases, employers will offer more than the minimum statutory benefits to attract top talent—for example, higher vacation premiums, more paid holidays, or larger Christmas bonuses.

But there are some supplementary benefits that Mexican employers might consider if they want to be as competitive as possible. Some of these are below.

Private health insurance plans

All Mexican residents receive healthcare paid for by the IMSS. Mexican social healthcare is considered to be fairly high quality, and in most industries, additional private health benefits aren't offered. However, in some industries, it's more common for employers to offer premium quality care through private health insurance to attract workers.

Savings funds

Savings funds are another supplemental benefit, which allow employees in Mexico to have their employer withhold a portion of their salary to put into a dedicated savings account (often for retirement, but can be for education, real estate, etc.). In many cases, employers will not only withhold these deductions for their employees but will also match their contributions up to a maximum percentage of their earnings.

Food vouchers

A common (but not required) benefit in Mexico is food vouchers, which got their name because they used to be physical books of coupons employees could take to the grocery store to exchange for groceries, medications, and other household needs. Today, food vouchers exist on reloadable chip cards similar to debit cards. Even though these benefits aren't statutory, they're often offered by companies in Mexico because they can be deducted from the company's taxes as a business expense.

Productivity bonus

Employers in Mexico can attract and retain top talent by offering productivity bonuses, or bonuses that are issued if certain goals or milestones are achieved. These bonuses are particularly appealing to employees because they aren't included in income tax calculations—they're considered tax-free, additional income.

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