TL;DR, Hiring in Mexico
- Fully-loaded employer cost: ~30–35% on top of gross salary
- Setup via EOR: 5–10 business days; own entity: 3–4 months
- 13th-month aguinaldo (15 days minimum) is mandatory by 20 December
- Profit-sharing (PTU) of 10% of pre-tax profits, capped at 3 months' salary
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Statutory employer costs in Mexico
In Mexico, employers pay roughly 25–35% on top of gross salary in mandatory contributions: ~20.4% IMSS social security (health, disability, retirement), ~5% INFONAVIT housing fund, ~2% retirement (SAR), plus state payroll tax of 1–3% — blended ~25–28% for professional roles. Add the mandatory 13th-month aguinaldo and statutory PTU profit-sharing and total employer cost typically reaches 32–35% above gross.
| Contribution | Employer rate | Notes |
|---|---|---|
| IMSS (social security, health, disability) | ~20.4% | Employer share; varies slightly by salary band |
| INFONAVIT (housing fund) | 5.0% | Flat employer contribution on integrated salary |
| SAR (retirement) | 2.0% | Flat employer contribution |
| State payroll tax (ISN) | 1.0–3.0% | Varies by state, CDMX 3%, Nuevo León 3%, Jalisco 2.5% |
| Workers' comp (Riesgo de Trabajo) | 0.5–7.6% | Risk class-dependent; office workers ~0.5% |
Mandatory employee benefits
Beyond statutory contributions, Mexico law requires the following benefits the employer must fund.
- Aguinaldo (13th month)
- Minimum 15 days of salary, paid by 20 December each year.
- Vacation premium
- 25% premium on top of vacation pay; minimum 12 vacation days from year 1 (2023 reform).
- PTU (profit sharing)
- 10% of pre-tax profits distributed to employees, capped at 3 months' salary or the average PTU of last 3 years.
- Vales de despensa
- Food vouchers, not mandatory but common; tax-advantaged up to ~40% of UMA.
Termination, notice and severance
Probation
Probationary period limited to 30 days (180 for managers/specialists).
Notice period
No statutory notice period, termination is immediate, but unjustified dismissal triggers severance.
Severance
Unjustified termination: 3 months' integrated salary + 20 days per year of service + 12 days per year seniority premium (capped at 2× minimum wage) + accrued benefits. This is among the most expensive severance regimes in Latin America.
Common compliance pitfalls
- PTU (profit sharing) often missed by foreign employers, it's not optional and is calculated on the Mexican entity's profits, including EOR provider profits attributable to your hire.
- Integrated salary (SBC), IMSS contributions are calculated on cash + aguinaldo + vacation premium + bonuses, not just base salary. Underestimating SBC understates true cost by 5–8%.
- Subcontracting reform (2021) bans labor outsourcing for core business activities. Confirm your EOR is REPSE-registered for specialized services.
- Severance is calculated on integrated daily salary, not just base, a $5K/mo hire's severance for 2 years is typically $35K+, not the $10K naive math suggests.
Frequently asked questions
Sources
Statutory rates and rules verified against the following authorities. We update this page when rates change.