Employer of Record In MexicoHiring in Mexico with an Employer of Record

PamGro helps you save time and reduce costs by allowing you to hire in Mexico without establishing an entity. Our Employer of Record (EOR) solution handles onboarding, payroll, immigration, and benefits so you can hire your employees faster and grow your business compliantly.

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CapitalMexico City

Currency Mexican peso/MXN

LanguagesSpanish

GDP per Capita3.63 trillion USD

Population129.4 million

Employer of Record in Mexico

What is an Employer of Record in Mexico?

An Employer of Record (EOR) in Mexico is a third-party organization that legally employs your workforce on your behalf. While you manage the employee’s day-to-day responsibilities and performance, the EOR takes on the full legal responsibility of employment. This includes managing:

Employment contracts compliant with Mexican labor law
Payroll processing and salary disbursement in local currency
Social security and statutory benefits
Tax withholdings and filings
Employee onboarding and offboarding
Compliance with federal and state labor laws

Using an EOR allows companies to hire employees in Mexico without setting up a local entity, saving time, money, and risk.

How does an EOR work in Mexico?

The employment relationship involves three parties:

Your Company: Manages the employee’s workload, performance, and deliverables.
The EOR: Acts as the legal employer, handling compliance, payroll, and HR administration.
The Employee: Works directly with your team but is officially employed by the EOR.

Example Workflow:

You identify the talent you want to hire in Mexico.
The EOR drafts a compliant employment contract.
The employee signs the contract and is onboarded.
You manage the employee’s tasks and performance.
The EOR processes payroll, pays taxes, and handles all compliance.

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Hiring in Mexico

Employment Agreements in Mexico

When hiring employees in Mexico—whether directly or through an Employer of Record (EOR)—a written employment agreement is legally mandatory. Mexican labor law is highly protective of employees, and failure to provide a compliant contract can result in legal disputes, fines, or even lawsuits.

Mexican Employment Contract must include the following things:

An EOR in Mexico will draft and execute a legally sound employment agreement that includes all mandatory elements:

Personal Information
Type and Duration of Employment
Probationary Period (If Applicable)
Training and Development
Job Duties and Role Description
Work Location
Working Hours and Schedule
Salary and Payment Frequency
Statutory and Additional Benefits
Additional Terms
Any non-compete clauses, confidentiality obligations, performance bonuses, or severance terms agreed upon by both parties.
Employee’s Beneficiaries in Case of Death

Number of Employees	Length of Employment
Statutory Working Hours	44 Hours per Week or 8 hours per day for a full-time workweek.
Overtime	Overtime is restricted to three hours a day, no more than three times a week. Overtime is to be paid at a rate of 100% for the first nine hours of the week and 200% if the employee has worked overtime for more than nine hours.
Rest Period	For every six working days of the week, there must be one rest day. There must be a break of at least 30 minutes on a typical working day of eight hours.

Employee benefits and paid leave in Mexico

Mexico has well-defined leave entitlements under its Federal Labor Law (Ley Federal del Trabajo), covering vacation, parental leave, sick leave, and national holidays. Employers hiring in Mexico—either directly or through an Employer of Record (EOR)—must provide these minimum leave benefits to remain compliant.

Annual Leave in Mexico

Employees in Mexico are entitled to paid annual leave based on their length of continuous service with the employer. The statutory minimum leave entitlements are:

6 days after 1 year of service
8 days after 2 years
10 days after 3 years
12 days after 4 years
+2 additional days for every 4 years of continued service thereafter

In addition to regular pay, employers must provide a vacation premium of 25% of the employee’s salary during their leave period. For example, if an employee earns MXN 10,000 per month, they are entitled to an extra MXN 625 for 6 days of leave after the first year.

A reliable EOR in Mexico ensures proper accrual, payment, and documentation of vacation leave and vacation premium to avoid non-compliance penalties.

Parental leave in Mexico

Maternity Leave (Article 170):

6 weeks before and 6 weeks after childbirth (fully paid)
Nursing mothers are entitled to two additional rest breaks per day (up to 6 months post-birth) for breastfeeding

Paternity Leave:

5 paid days for new fathers, including cases of adoption

Adoption Leave:

Female employees adopting a child are entitled to 6 weeks of paid leave, starting from the day the child is received.

An EOR helps manage documentation and ensures payroll continuity during maternity/paternity/adoption leave in compliance with IMSS and labor law requirements.

Sick leave in Mexico

Employees are entitled to sick leave for up to 52 weeks, depending on medical necessity.

Illness or injury must be certified by the IMSS (Instituto Mexicano del Seguro Social)
IMSS pays 60% of the employee’s salary starting from the 4th day of absence
The first 3 days are unpaid unless the employer voluntarily provides coverage

Regional and national holidays in Mexico

Mexico observes 7 national public holidays, which are separate from annual leave entitlements:

January 1 – New Year’s Day
First Monday of February – Constitution Day
Third Monday of March – Benito Juárez Day
May 1 – Labor Day
September 16 – Independence Day
Third Monday of November – Revolution Day
December 25 – Christmas Day

Employers must provide these days off with pay. If an employee is required to work on a public holiday, they are entitled to triple pay for that day (regular pay + double for holiday work).

Working hours48/week

Holidays per year 8

Minimum wage per month AUD $3825,46

Annual vacation leave (min)4-6 weeks

Parental Leave18 weeks

Taxes in Mexico

Employer Taxation

Number of Employees	Length of Employment
Corporate Tax	Rate: 30% (flat) Applies to: Profits earned by entities operating in Mexico Note: Corporate tax is separate from employment-related taxes but is important for businesses establishing a local entity.
Payroll Tax	State-level tax levied by individual Mexican states General range: 1% to 3% of the gross payroll Additional levies: In some cases, benefits like grocery coupons, Christmas bonuses (Aguinaldo), and vacation pay may be subject to an additional 30% tax Note: Payroll taxes are not deductible from employee salaries—they are employer obligations
Withholding Tax (for Non-Residents)	For non-resident employees or foreign income flows, additional withholding taxes may apply: Dividends: 10% Interest: 4.9% to 40% Branch remittances: 10% Total employment cost impact: Up to 32.05% in some cases Treaty relief: Tax liabilities may be reduced under double taxation treaties that Mexico holds with other countries
Employer Social Security Contributions	Rate: 7.58% of employee salary Covers multiple programs, including: Retirement Old-age and unemployment insurance Life and disability insurance Maternity insurance Daycare and occupational risk coverage

Employee Taxation

1. Income Tax (ISR – Impuesto Sobre la Renta)

Mexico applies a progressive, slab-based income tax structure for residents. As employee salaries increase, so does the marginal tax rate.

Resident Income Tax Brackets (MXN)

Annual Income Range (MXN)	Tax Rate
$1 – $8,952.49	1.92%
$8,952.49 – $75,984.55	6.40%
$75,984.55 – $133,536.07	10.88%
$133,536.07 – $155,229.80	16.00%
$155,229.80 – $185,852.57	17.92%
$185,852.57 – $374,837.88	21.36%
$374,837.88 – $590,795.99	23.52%
$590,795.99 – $1,127,926.84	30.00%
$1,127,926.84 – $1,503,902.46	32.00%
$1,503,902.46 – $4,511,707.37	34.00%
$4,511,707.37+	35.00%