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
- Aguinaldo of at least 15 days' pay is mandatory by 20 December (LFT art. 87); we cost the statutory 15 days, not a full month
- Profit-sharing (PTU) of 10% of pre-tax profits, capped at 3 months' salary
Last reviewed:
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
EOR platform fees for Mexico range from $199–$699 per employee per month across compared providers. On top of platform fees, employer-side statutory contributions add ~30–35% to gross salary, plus the mandatory 13th-month aguinaldo and profit-sharing (PTU).
Most EOR providers can onboard a Mexican hire within 5–10 business days once the candidate's documents (CURP, RFC, NSS, bank details, proof of address) are collected. Setting up your own Mexican entity takes 3–4 months by comparison.
Yes. PTU is calculated on the legal employer's profits (the EOR), and a portion is allocated to your hire based on days worked and salary. The 2021 reform capped PTU at 3 months' salary or the 3-year average, whichever is higher, but it cannot be waived.
Salario Base de Cotización (SBC) is the daily salary IMSS uses to calculate contributions. It includes base salary plus prorated aguinaldo, vacation premium, and any fixed bonuses. SBC is typically 1.05–1.10× cash salary, so employer-cost calculations using cash salary alone underestimate the true contribution base.
Yes, through an EOR. The EOR holds the Mexican labor contract, runs payroll, withholds taxes, files IMSS contributions, and handles compliance. You retain day-to-day management. This is the standard play for hiring 1–10 Mexican employees without registering a Mexican subsidiary (SAPI/SA de CV).
Sources
Statutory rates and rules verified against the following authorities. We update this page when rates change.