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Employment Law In Mexico

Mexico is one of the fastest-growing countries in Latin America. In recent years, Mexico has shown considerable growth in GDP, reaching $1.27 trillion in 2019. The easy availability of a young & high-skilled workforce attracts global companies seeking to expand their operations and scout for new talents. Further, a good understanding of local employment laws will help benefit international employers in the long term. 

Multiple national authorities have established rules and regulations contributing to Mexican labor law. Any global firm looking to hire professionals from Mexico may abide by these employment laws in Mexico. Violating these regulations may leave employers vulnerable to consequences like fines or even suspension of license. 

This employment law in Mexico guide assists global firms and independent employers in navigating the employment rules in Mexico and highlights the critical points concerned with hiring and managing employees from Mexico. 

Who is Covered by the Mexican Employment Act?

Article 123 of the Federal Constitution of Mexico balances the employer-employee relationship and establishes the employee’s general rights. The Federal Labor Law (FLL) of Mexico protects workers’ rights. Apart from the FLL, the Social Security Law and the National Worker’s Housing Law also looks after the employees’ rights. 

All these laws together form the Mexican labor law. 

The labor act rules in Mexico do not differentiate between blue-collar and white-collar employees. However, the Latin American country categorizes employee types as follows:

  • Employees in positions of trust, otherwise empleados de confianza: These are employees in the role of general management, inspection, supervision, and overseeing tasks. Such employees are subject to individual and collective obligations. 
  • Specific categories of employees: These employees function in particular sectors of the economy. They can be women, minors, farmers, miners, artists, transportation crews,  and professionals like doctors and teachers.
  • Employees of any nationality performing tasks for a Mexican country remotely. 

As per the labor codes in Mexico, any employee, whether Mexican or foreign, has the same rights in the workplace, regardless of nationality. Employers are required to hire and manage employees as per the labor regulations in Mexico. 

Employment Contract

According to the labor code in Mexico, an employer must have written contracts for every employee. 

The labor law dictates that the employee’s constitutional rights are valid even if an employee-employer relationship exists without a written agreement. Even if a written agreement omits the mention of their constitutional rights, the rights are unaffected. 

Every employee must enter into an individual agreement with the employer. Article 24 of the FLL states that employers must mention the working conditions in writing, and the employer and employee must both have a copy of the employment contract. 

Article 25 of the FLL mentions that all employment agreements must have the following in writing: 

  • Employer and employee’s name, nationality, age, sex, civil status, tax id number, and domicile
  • The specific job or term of the employment, and if applicable, initial training period, probationary period 
  • The service to be provided by the employee
  • The job location or locations where the employee will work 
  • Work schedule with information like the number of working hours, rest days, etc. 
  • Amount of salary and other benefits 
  • Where and when the compensation is paid 
  • The number of vacation days and other conditions as applicable

The labor law of Mexico provides the formation of the following employment relationships:

  • The employment relationship for an indefinite period: According to the FLL, if an agreement does not state how long the employment relationship exists, then by default, it considers an indefinite period. 
  • Employment relationship for a fixed term 
  • An employment relationship is established for the accomplishment of a specific task 
  • An employment relationship that is established on a seasonal basis

Key Provisions of the Act

The Mexican employment rules are formed by including the Federal Labor Law, the Mexican constitution, the Social Security Law, and the National Worker’s Housing Law. Critical elements of the law include the working conditions like working hours, holidays, leaves, minimum wages, and other mandatory rules that an employer has to follow. 

These rules ensure that an employee’s rights are upheld in the workplace. An employer can provide better working conditions by providing additional employee benefits and compensation. However, they are legally bound not to go below the given limitations. 

Here are some of the crucial provisions of the labor code in Mexico:

Working hours 

  • The labor act rules in Mexico state that weekly working hours can be a maximum of 48 hours. 
  • The Mexican working hours imply that every employer has to give a fully-paid rest day after working six days a week. 
  • Article 123 of the Mexican constitution states that if an employee is going to be working overtime, it cannot be for more than 3 hours per day and not more than three consecutive days. Also, the overtime should not exceed 9 hours a week. 
  • The three shifts that are accepted and recognized by the labor law of Mexico are:
  • The day shift: The day shift can be of 8 hours and is scheduled between 6 am and 8 pm. 
  • The night shift: The night shift can be of a maximum of 7 hours and can be scheduled between 8 pm to 6 am. 
  • The mixed shift: It is a seven-and-a-half-hour shift that is scheduled between the day and night shifts. Employers cannot extend mixed shifts to more than three and a half hours into the night shift. 
  • An employer must also give a mandatory rest period of half an hour every working day.   

Holiday entitlements

An employer has to give some mandatory leaves to employees according to the labor code of Mexico. 

  • A company has to give the following nine statutory holidays to its employees:
    1. 1st January
    2. First Monday of February
    3. Third Monday of March
    4. 1st May
    5. 16 September
    6. Third Monday of November
    7. First day of December every six-year, the Federal Executive Power changes on or after this day. 
    8. 25th December
    9. Election days are determined by Federal & Local electoral law.
  • Apart from the statutory holidays, an employee working with an employer for more than one year is entitled to 6 fully paid vacation days. 
  • Employers must pay a vacation premium of 25% of the daily salary during the vacation regardless of whether the employee takes a vacation. Employers can either pay them when employees take a holiday or as a lump sum at the end of the financial year.
  • The vacation days will keep increasing gradually over the years and is to be decided by the employer in prior consultation with the employee.  
  • Any employee in Mexico also has rights to a Christmas bonus, popularly known as aguinaldo in Spanish.

Leave schemes

Here are some other situational leaves that an employer may grant their employees. 

  • In Mexico, there is a fully paid maternity leave of 12 weeks. 
  • Female employees can take six weeks of leave before giving birth and six weeks after giving birth. 
  • If the baby requires medical attention, female employees are entitled to an additional two weeks of maternity leave, making it a total of eight weeks of paid maternity leave in Mexico for post-natal care.  
  • The maternity leave can extend even more if the mother is impeded from returning to work by a doctor to recover from the pregnancy and birth. 
  • Any eligible employee, including same-sex parents, can take maternity leave/ shared paternity leave in Mexico.
  • Fathers are entitled to five days after the birth of their child. The employer has to pay the employee during this period fully. 

Minimum wage

The minimum salary is defined as the minimum wage that an employer can legally pay their employee. As per the labor code in Mexico, paying below the minimum wage violates the employee’s rights. 

Minimum wages in Mexico are classified based on two types: 

  • According to the type of occupation: general minimum wage and professional minimum wage. 
  • The minimum wage refers to the minimum wage given according to a specific geographical region. 
  • The professional minimum wage refers to the minimum salary according to the various branches of economic activity.  
  • Further, the minimum wage is classified based on specific geographical regions: 
    1. The general area of all municipalities of Mexico, and 
    2. The Northern Border Free Zone 

The minimum wage threshold changes yearly to adjust for inflation. For the year 2022, the minimum age for all the municipalities of Mexico is 172.87 pesos per working day. The minimum wage for the Northern Border Free Zone is 260.34 pesos for each working day. 

Overtime compensation

  • The employer will have to compensate the employee for every hour they worked in overtime by paying 100% more than those fixed for regular working time. 
  • If the overtime exceeds 9 hours, the employer must pay 200% over the regular working hours.
  • Employees asked to work on Sundays are given 25% of their regular salary. 


  • The typical age for retirement to qualify for a pension in Mexico is 65 years. Moreover, the contribution must be of at least 750 weeks, roughly 15 years, in the private sector. 
  • According to the Mexican Labor Law, the retirement income system has three components:
    1. A means-tested age pension called 65+
    2. Mandatory defined contribution system with a guaranteed pension
    3. Different individual and private occupational plans
  • Those above 65 years: An individual who is above 65 years of age gets a monthly beneficiary amount of MXN 1350.
  • Defined contribution:
    1. The total defined contribution is 15%, up from 6.3%, and the increase will be phased starting in 2023.
    2. Employees contribute 1.125%
    3. The employer’s contribution is 13.875%, from previous 5.150%
    4. An employer may add a 5% contribution to an individual housing sub-account; if an employee does not use it, this amount is also added to the retirement account. 
    5. In addition, the government contributes a progressive amount each day to an individual’s account called the cuota social or the social fee. 
  • Minimum contribution:The minimum contribution pension applies to an individual aged 65 years at retirement and has contributed at least 750 weeks (reduced from earlier 1250 weeks) in the private sector.
    1. However, the minimum number of contribution weeks required will increase gradually by 25-week increments to 1,000 weeks (equivalent to 20 years of contributions) in 2031.
    2. Employees are entitled to this minimum contribution if the balance in their account is not adequate to buy an annuity equivalent to the guaranteed pension. 
  • At first, the pension is paid from the individual’s existing bank account, and if that balance is completely used, then the remaining pension is compensated from the federal budget. 
  • The minimum guaranteed pension for December 2020 was MXN 39,471.96 annually.
    1. The pension may increase about 32% on average, depending on the annual inflation, the amount of qualifying salary, the number of total contribution weeks, and the age at retirement.   

Payroll tax and employer registration

  • An employer must be aware of the following Mexican tax authorities:
  • Ministry of Finance and Public Credit
  • Tax Administration Service
  • Mexican Institute of Social Security
  • Worker’s National Housing Funds Institute
  • The employers are responsible for the following as per the Mexican Labor Law:
    1. Federal income tax withholding and remittances
    2. Social security withholding and contribution
    3. State payroll tax payments
  • The Federal income tax rates vary from 1.92% to 35% for Mexican residents, and 0% to 30% for non-residents. Most states require employers to file taxes with the authorities monthly or quarterly. 
  • Most Mexican states have a relatively lower payroll tax rate. For example, Mexico city levies a payroll tax of 3%. This payroll tax is payable by the employer and constitutes a tax-deductible expense.
  • The labor code of Mexico states that an employer must be registered if they want to process payroll for their employees in Mexico. Here are the requirements for the employment registration, after which an employer can give salaries to their employee: 
  • Registration of the public deed that contains the company’s establishment at the Public Registry of Property. 
  • Registration with the National Foreign Investment Bureau. 
  • Obtaining the Tax ID. 
  • Obtaining an Advanced Electronic Signature for filing tax returns. 
  • Employer registration at the Mexican Social Security Institute. 
  • Registration for the local payroll tax

The procedure for registration takes up to 90 days and must be completed before an employer starts paying their employee. 


  • In Mexico, employers must generate an electronic payslip per the employment rules. This electronic payslip must be submitted, validated, and e-signed by the SAT (Mexican Tax Authority). 
  • To complete this procedure for employers, there is an intermediary called PAC, i.e., the authorized certification provider. 
  • The employer has to submit the payslip to the PAC, and then PAC will get back to the employer with an e-signed electronic payslip. 
  • The labor code of Mexico states that the payslip must contain: the personal and job information of the employer and employees, wage paid, type of wage, taxes withheld, other deductions, and the net pay that is paid.  

Trial period

  • The labor law of Mexico states that, as a general rule, there can be a 30-day or 60-day training period for executive levels. During this period, an employee provides their service, and the employer can impart the necessary knowledge so that the employee is skilled to do the job employers have hired them to do. 
  • Employment contracts for indefinite terms or more than 180 days may have a probationary period of 3 months or six months for executive positions.
  • The Mexican labor law states that if there is going to be a training period or probationary period for a job position, it needs to be in a written agreement. The written agreement must also state that the employee has all the social benefits. 
  • Once the training or probationary period has elapsed, then the employment relationship is considered to be for an indefinite period. 

 Dismissal rules

  • The FLL does not state any notice period. However, the employer must disclose the cause or causes for the dismissal and the dates when those events occurred. 
  • Article 47 of the FLL lists the types of conduct considered valid causes for dismissal. 
  • According to the Mexican employment law for termination, the employer can hand over the notice to the employee while dismissing them, or they can communicate it to the Conciliation and Arbitration Labor Board, who will then communicate with the employee. The employer also has to provide the employee’s last domicile so the board can contact the employee. 
  • The Mexican labor law says that if no action is taken within one month of the employee’s misconduct, those grounds are not valid for dismissal. 
  • The labor code of Mexico also states that in unilateral termination, employers must make a severance payment to the employee. 
  • The severance payment is calculated differently based on whether the employment contract was for a fixed or indefinite term. 

Data protection and employee privacy

The Federal Law on the Protection of Personal Data held by private parties protects employee data in the workplace. It protects employees’ privacy rights regarding handling, controlling, and processing personal data. An employer must have the written consent of their employees to access and process their personal details.

If an employer violates the Data Privacy Law, they are vulnerable to actions taken by the Federal Public Administration. 


If there is a violation of the Federal Labor Law, then the employer is subject to fines of different amounts imposed by the Social and Welfare Department. 

Compliance Strategies for Employers

Entrepreneurs and global firms follow the below common strategies to comply with the Mexican labor law for hiring and managing employees.

  • Employment contracts based on standard templates:
    1. The labor code of Mexico states all the information employers must include in employment documents like offer letters, employment records, and termination notices.  
    2. Following these standards helps you prepare top-notch employment documents.  
  • Recruiting an HR manager:
    1. Hiring a dedicated HR manager to look after aspects like employee recruitment, development, training, employee benefits, etc. 
    2. The HR manager can also oversee appraisals, reward management, manage payments, and deal with organizational changes and industrial relations. 
    3. An employer can also hire an HR manager to ensure that the Mexican labor law and other local rules and regulations are taken care of while hiring talent from Mexico. 
  • Outsourcing
    1. An employer can hire a third party that provides innovative solutions for maintaining employment relations. 
    2. The third-party solutions can oversee compliance audits and labor documents and protect your company from legal liabilities by complying with the labor code of Mexico. 
    3. The outsourced firm can draft legal employment documents, and look after mandatory benefits, salaries, etc. 

Recent Changes in the Mexican Employment Law

The Federal Official Gazette published two decrees catering to labor and employment matters on April 28, 2022. 

  • Article 132 of the Federal Labor Law consists of 39 sections that list various obligations of employers in Mexico.
  • The addition to the labor code of Mexico in section IX of Article 132 was a special permit for employees to exercise their voting rights in a recall referendum if the vote is taking place during working hours. 
  • Article 512 of the Ninth Title in FLL deals with occupational risks. 
  • The changes in the Mexican labor law recognize the use of new technology and work tools that contribute to creating a safe work environment and protecting employee rights in high-risk workplace situations. 

How Can Multiplier Help?

Mexico made substantial changes to labor laws in recent years. Those looking to hire their first employee in Mexico must take care of these changes and abide by all applicable laws.

Multiplier offers global employment products and solutions compliant with local regulations and Mexican labor law. Working with Multiplier helps employers and international firms align their hiring process and legal documents as per the labor code of Mexico while working with talent in this country. 

Employers can partner with Multiplier to look after payroll management, taxes, social contributions, and more for their internationally hired team of employees. Multiplier’s competent team can help you stay 100% compliant with the local laws and regulations of more than 150 countries.

Frequently Asked Questions

 Employment law in Mexico is overseen by the Secretariat of Labor and Social Welfare. Any foreign national in Mexico is entitled to Mexican employment rights even if they waive off their entitlement to these rights in the employment contract. 

Further, the Federal Labor Law that is generally applicable inside Mexico may govern the employment relationships of Mexican nationals working abroad in cases where Mexican employers hire them. 

It takes up to 90 days to complete the procedure of employer registration in Mexico. So, suppose an employer wants to hire talent from Mexico, they must plan accordingly. The employer will be unable to process payroll and pay their employees without completing the entire process. 

But with Multiplier as your employer of record, global companies of all sizes can hire employees in Mexico with complete confidence and compliance. 

According to the labor code of Mexico, everyone has equal rights and social benefits in the workplace. 

The FLL prohibits discrimination against employees based on nationality, gender, race, religion, political views, disability, migratory condition, health, sexual preferences, and social rank.

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