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Mexico PEO - EOR

Why Businesses Need a Mexico PEO

Mexico is an excellent spot to establish a company. It is undoubtedly among the most appealing locations for manufacturing companies. It offers many operational advantages because it is just adjacent to the U.S. The country’s growing economy presents numerous opportunities for organizations willing to set up business in Mexico. Nevertheless, the primary sector—agriculture—plays a significant intermediary role in the Mexican economy. In addition to reducing poverty and generating jobs, the primary sector has aided in fostering economic links with the United States. About 12% of the labor force in the country is employed in agriculture.

Moreover, The Mexican government has devised programs to encourage this cooperation. One such program includes IMMEX, also called maquiladora. This is a fantastic incentive manufacturer where foreign companies can operate under a low-tax structure while enjoying the benefits of lower labor costs. As a result, Mexico has produced a highly competent workforce. Particularly in the automotive, aircraft, medical product, and electronics sectors. 

You can engage with a Mexico PEO if you want to take advantage of Mexico’s top player efforts and launch a business here. Orientation and training and maintaining personnel in Mexico, including full-time and freelancing, can be handled by a reputable international PEO, like Multiplier.

Why Use a Mexico PEO? 

Professional PEO services assist businesses in hiring staff in Mexico without the need to form a formal corporation. While fresh recruits and headquarters teams concentrate on their organizational objectives, the International PEO manages all employee human capital, perks, payroll, and tax requirements.

Setting up a branch or local office in Mexico to hire staff isn’t always the ideal option, as it’s time-consuming and costly. Employing through a Mexico PEO or EOR is more efficient and effective, particularly when launching a business in a new nation.

Multiplier PEO services recruit personnel on your account, legally licensing them via our affiliate in Mexico. Consequently, we bear the responsibility for compliance, and personnel can start working for your firm in a couple of days. PEOs/EORs offer a more efficient way to hire people, conduct market surveys, and adapt to changing business demands in Mexico. You may take control without incurring legal business responsibilities, contractor concerns, or compromising talent or time to market using Multiplier PEO Services.

Mexico PEO Costs 

PEOs usually use one of two price models: fixed or variable. According to the fixed pricing scheme, a certified PEO will charge around $500 and $1,500 per employee annually. The final sum is, however, determined by several circumstances. A PEO may cost a per-employee fixed fee or a portion of your yearly payroll.

However, at Multiplier, employee-based charging is used. Our simple and transparent PEO price for full-time workers begins at $300 per month per employee. The final amount may depend significantly on the employee’s region and employment rights. It covers international payroll, leave management, and additional benefits. For freelancers, the charge is $40 per month, which includes onboarding and paying freelancers across the globe. 

Our simple and suitable Mexico EOR solutions are intended to make payroll and perks for your overseas employees as straightforward as possible. Multiplier is a sophisticated and adaptable PEO technology that makes global HRM a breeze.

How to Hire in Mexico? 

Profits and revenues can be increased by utilizing Mexico’s skilled labor force. Mexico has labor legislation and requirements to protect employees’ rights like any other country. Organizations must consider these rules and regulations while hiring in Mexico.

However, cooperating with a Mexico EOR like Multiplier may share the bulk of your burden. In Mexico, we offer SaaS-based PEO and EOR solutions that enable you to keep a strategic advantage.

Any company that hires employees in Mexico must have a written employment contract outlining all job-related data. Companies must consider the employment policies and know about local entities for smooth expansion in Mexico. 

Local entity in Mexico

The first step to establishing a business in Mexico is to decide which business entity is most suitable. There are three most popular entity types in Mexico:

Stock Corporation (Sociedad Anónima de Capital Variable)

  • This is the most famous structure for businesses in Mexico. 
  • Its ‘value’ gets divided into shares if a company sets up a stock company. 
  • Minimum capital required if MXN50,000 or $2,700

Limited Liability Company (Sociedad de Responsabilidad Limitada de Capital Variable)

  • It is beneficial for small and medium companies to go for LLC entities. 
  • The minimum capital requirement is MXN3,000 or $160
  • People involved in LLCs have to pay an individual share of taxes instead of paying collective tax

Simplified Shares Company  (Sociedad por Acciones Simplificada)

  • It is cheaper and faster to set up a simplified shares company.
  • SMEs looking for a simple corporate structure can opt for this entity.

The above three are the most common entities firms go for while setting up business in Mexico. However, there are two more groups:

  • Sociedad Anónima Promotora de Inversión (Stock Corporation for Investment Promotion) 
  • And, Sociedad Financiera de Objeto Múltiple (Multi-purpose Financial Company)

These two entities are better for companies focusing on the Mexican Stock Exchange.  

Mexico Employment contract 

Whether you create a contract or not, a contract develops for you and the person when you recruit a worker. As a result, you should draft a comprehensive employment agreement that contains the individual’s personal information and job specifications. 

The term of the job is among the most crucial elements. Indefinite, project, and seasonal contracts are the three main types of contractual durations. Most contracts are indeterminate, meaning the position has no defined expiration date.

All employees must be given employment agreements by their employers. As there is no unemployment insurance in Mexico, it becomes crucial for an employer to issue an employment contract. Employers can draft these contracts in Spanish or another dialect. However, those written in Spanish are being used in the event of a dispute. Contracts of employment must include the following clauses:

  • The worker’s and employer’s names, nationalities, genders, marital status, and addresses
  • Description of the position
  • In the event of fixed-term contracts, the term of the employment contract.
  • Job location where the employees will work
  • Starting and end dates of the contract 
  • Rest periods, vacations, paid holidays, and other regulations as agreed upon by the employees and the company.
  • Training programs that employees may undertake
  • Work schedule
  • Salary amount along with the additional benefits
  • Date and place where the compensation is paid

Any clauses in your contract that contravene Mexican workers’ entitlements underneath the Mexican Labor Law will be nullified. Because of the absence of unemployment insurance in Mexico, employment contracts are highly significant. Employees benefit from the contractual arrangement between the employer and the employee. 

Working hours

An average Mexican work week includes work from Monday to Friday from 08:00 am to 6:00 pm. As per Mexican labor law, there are three work shifts. 

  • Day Shift: 8 hours of work between 6:00 am and 8:00 pm
  • Night shift: Lasting 7 hours, between 08:00 pm and 06:00 am
  • Mixed shift or swing shift: lasting 7.5 hours. It is divided between day and night shifts. However, less than 3.5 hours are allocated to the night shift. 

Some organizations still provide extra-long meal breaks (or ‘siestas,’ as they are known), although the average is about one hour. 

Moreover, a work week includes 48 hours per week with 6 days. This entitles employees to one full day of rest with full pay. The average work week in Mexico is 45.1 hours.  


Employees who work more than the maximum working hours are entitled to overtime pay. As per Article 123 of the Constitution, the overtime limit in Mexico is 3 hours per day. It may not be performed for more than 3 days consecutively. Overtime must be paid and calculated weekly. Employees under the age of 16 are not eligible for overtime work. Employees who work on Sundays are entitled to their regular wages plus 25% additional pay. Those who work on their rest days earn thrice the wages for that day. 

Minimum pay

On January 1, 2022, Mexico’s basic minimum pay (Salario Minimo) was hiked to 172.87 pesos per working day, up from 141.70 in 2021. The tariff for 2022 all along the ‘Northern Border Zone’ has been hiked to 260.34 pesos each working day, up from 213.39 in 2021.


Mexico has several globally and locally recognized public holidays. Over time money is frequently accessible to employees asked to work on public holidays. Mexico’s public holidays are:

  • New Year’s Day 
  • Constitution Day -1st Monday in February
  • Benito Juarez Day – 3rd Monday in March
  • International Labor Day 
  • Independence Day- September 16.
  • Revolution Day: 3rd Monday in November.
  • Presidential Inauguration Day: every six years on December 1 (2024, 2030, etc.).
  • Christmas Day 

Annual leave 

  • After one year of work, companies must provide employees with six paid yearly leaves. 
  • Each year, the number of vacation days grows by two days until the obligation equals 14 days after the fifth year of employment. 
  • After that, every five years of operation, yearly leave advances by two days every five years of operation. 
  • If employees choose to get paid instead of taking a vacation, they will receive a 25% bonus. 

Maternity leave 

  • Women can avail of maternity benefits for 42 days before the expected date of delivery and another 42 days afterward, at 100% of their regular pay. 
  • If the infant requires hospitalization or has a handicap, the absence after the due date could be increased by two weeks. 
  • Women may shift up to four weeks of leave before their due date to postpartum rest. 
  • Female employees are entitled to six weeks of paid vacation if they adopt a child. 
  • Women employees may take two additional 30-minute rest times daily for child care once they return to work following maternity benefits. 
  • After returning to work, women employees are entitled to reinstatement provided not more than one year has passed since the delivery. 
  • Companies can contribute by shortening their workloads by one hour each day. 
  • The Mexican Social Security Institute pays for the maternity benefit.
  • Male employees in Mexico are also entitled to paternity leave.
  • Male employees are allowed to avail themselves leave of 5 days for the birth of a child or adoption, like paternity leave. They can extend the leave in case of serious illness of the child. 


From a practical perspective, there are several options for foreign corporations and people to establish and grow the company in Mexico. To register as an employer and execute payroll, the corporation must have one of the previous judicial vehicles linked to the specific. 

  • Companies that choose to pay employees themselves have to follow an extensive process. First, they must register the business, set up a subsidiary, and hire staff. This is time-consuming and costly. 
  • You can hire a private payroll outsourcing agency that will look after the process in compliance with the Mexican government’s rules. However, you will still require an Employee of Record and be obliged for all tax and payroll laws. 
  • Alternatively, you can collaborate with global Mexico PEO solutions like Multiplier, making everything simple. Our experts will help you manage payroll while ensuring compliance with Mexico regulations. 

Payroll Tax

Most Mexican states impose a tax on cash wages (and not on total compensation) that the company provides. Mexico City imposes a 3% payroll tax, and because the company pays it, it is a tax-deductible expenditure. A POA for legal counsel for tax records should be issued to the payroll service.

Taxation in Mexico

  • Mexico has a fair tax system, with greater-income employees paying a higher proportion of tax, with a paramount rate of 35%. Non-residents are subject to a 30% surcharge. 
  • In Mexico, the corporate income tax rate is 30%. 
  • Retirement donations are distinctive and difficult to comprehend. The Mexican Administrator of Retirement Funds is responsible for employee pension and residential accounts. Workers can pick whatever they wish to finance first, and companies must pay a portion of their salaries to such records. The proportions vary according to the type of employee, and AFORE accounts will be issued involuntarily by the state if a worker does not choose one after a year of employment. 

However, appointing a Mexico PEO like Mulitplier will assist you in dealing with complex tax regulations easily. 

Termination/Severance in Mexico

Termination pay in Mexico is quite intricate and is composed of several input variables:

  • Wages that have not been paid
  • Holiday bonuses 
  • Unused vacation days 
  • Bonuses for the 13th month 
  • Any other perks or compensation mentioned in the employment contract

Employers have to state the reason for the dismissal of employees. If an employee is found ‘not fit for the job, employers can terminate the employment without repercussions. Employers may be eligible for a severance payout if they are fired without justification. Termination payment includes vacation time, outstanding ages, yearly bonuses, and others. In certain situations, the employee will be given three months’ pay, plus an extra 20 days for each year of service and a 12-day longevity incentive for each year of service (at a limit of 200 percent minimum wage). In actuality, many dismissals will culminate in a severance payout because proving “due reason” to the government is relatively complex. 

Why Multiplier? 

Managing business overseas can be challenging and time-consuming. As a company, you must take care of the payroll, employees, and their benefits in compliance with Mexico regulations. Here, you can consult our experts at Multiplier.

Multiplier’s Mexico PEO solution helps businesses access and operate in global markets with ease. Our HR experts will help you manage new hire orientation, payroll, benefits, costs, as well as other HR tasks. We ensure that all relevant laws, requirements, and legislation are followed to the letter. You may rest confident that we will guide you through the process of developing your company in Mexico. 

Our Mexico PEO Simplifies Your Expansion 

You can count on a fuss-free and streamlined corporate growth procedure when you use Multiplier as your multi-service Mexico PEO:

  • Our Professional Employer Organization acts as a co-employer, assisting your company with orientation, payroll, compensation packages, policy development, and other critical Human Resource services.
  • The Employer of Record Mexico solution from Multiplier acts as the principal employer, allowing you to engage in full-time worker recruitment without needing to set up a business in Mexico.
  • Our global payroll management system incorporates an all-in-one payment system to easily manage all payroll-related difficulties.
  • Our PEO Mexico meets the demands of your workers by assisting you in creating a comprehensive, inclusive, and accessible compensation package. A compensation plan helps retain talents even while hiring new recruits.
  • Our prices are competitive and stable, and there are no additional expenses.
  • If you choose us as your worldwide EOR partner, our experts will assist you in launching your operational processes without the requirement to establish a subsidiary in Mexico. 

If you want more details about our services, contact our PEO Mexico specialists immediately.

Frequently Asked Questions

A PEO, or Professional Employer Organization, is a 3rd company that works with a company on a co-employment basis. The PEO and employer share payroll handling, bonuses, taxes, reimbursements, and other HR duties.

Yes, women can avail maternity benefits for 42 days before the scheduled date of delivery and another 42 days afterward, at 100% of their regular pay. If the infant requires hospitalization or has a handicap, the absence after the due date could be increased by two weeks.

A PEO in Mexico can handle employee enrollment and associated procedures. Payroll management, currency board reimbursements, employment agreement drafting, flexible employee management, and other tasks can be controlled by them.

Need help hiring in Mexico?

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