How to hire employees in Mexico
Whether an employer or consumer, everyone has been affected by the talent shortage.
Across all industries employers are reporting a shortage in the access of employees and an increasingly higher turnover rate. This has caused an increase in the cost to hire and retain talent, and continual disruptions to business as usual. The talent shortage has gone beyond unfilled vacancies causing stagnant growth; organizations of all sizes report productivity stalls, low morale and unfulfilled business contracts.
Discover 8 Reasons to Source
Admin Services in Mexico.
Mexico is positioned to solve the current talent shortage crisis and provide talent sourcing strategies for strong North American organizations. Mexico has sustainable and professional talent, of which the average age is just 29.4 years old. Mexico boasts some of the top universities in Latin America, adding new careers according to market needs. With practical work experience as an integral part of many degrees, students graduate ready to apply their fresh ideas to global settings.
There are many benefits to hiring employees in Mexico. Read the summary below and download the E-Book to have as a reference guide.
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Work week, shifts and overtime in Mexico
?For employees in Mexico, the legal work week consists of 48 hours of work. These hours are usually divided over 6 labor days, 8 hours each. Each day of the week is paid, whether the employee works or not. At least 1 rest day is given per week.
The day shift consists of 48 hours worked per week. The mixed shift is 45 hours worked per week, and night shift works 42 hours. The chart below shows different shift fashions according to legal working shifts, common in continual operations like manufacturing or contact centers in Mexico.
?Generally speaking, time worked in excess of these limits require overtime payment in Mexico. The calculations are shown in the chart below. For the first 9 hours of overtime worked in a week, the employee earns double. Overtime worked in excess of 9 hours in a week as well as over multiple occasions in a work week pays triple.
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Holidays and employee culture in Mexico
The Mexican Federal Labor Law establishes 9 mandatory holidays. If employees are required to work on any of the 9 mandatory holidays, they are entitled to triple pay.
?There are an additional 15+ celebrations common throughout different regions in Mexico. These usually reflect cultural or religious observances by region in Mexico, and many companies celebrate in the workplace or with family.
The Mexican culture is very celebrated and social. Planning and observing additional holidays or events improves employee retention.
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Employment labor agreements
There are two main types of employment contracts for employees in Mexico: indefinite or definite contracts.
The termination of an indefinite contract requires an employer-paid severance, including:
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Labor Reform 2019
?The Mexican Labor Reform published the first of May, 2019 is considered to be the most profound change to Mexico’s labor legislation in recent dates. This is because it transforms the labor justice system and shifts power from the executive to the judiciary branch. It creates labor conciliation centers to attend disputes and lawsuits.?
The second most relevant change is related to the freedom of association and collective bargaining. This marks a new stage in both trade union life and the dynamic through which collective working conditions are carried out in Mexico.
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Read the full article on Labor Law Reform by Alvaro Garcia, VP of Human Resources.
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?Employment costs in Mexico
?Salary employees in Mexico are usually paid every 14 or 15 days. In most industries, hourly employees are paid weekly. Payroll tax is calculated by each Mexican state.
The minimum salary is set annually and becomes effective on January 1st of each year. Very few industries actually pay the minimum wage rate. Labor rates vary by location, industry and skills level. Benefits are an important aspect of an employee compensation plan and commonly range from an additional 30% of base salary to 100% premium packages, considering fringe benefits. There are minimum mandatory benefits that include Christmas bonus, vacation days & premium, paid holidays and employer-paid profit-sharing.
?All employees on a payroll are enrolled in Social Security, a strong social welfare system. It provides fundamental medical care, home loans, childcare, disability insurance and retirement benefits.
In many industries, employee turnover can commonly reach 10% per month. Understanding the factors and practices that promote employee retention can create peace of mind for your Mexico venture. The key to becoming an Employer of Choice in Mexico is to understand the employment culture and adapt the knowledge transfer accordingly.
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Download the PDF version of this
HR E-Book here .
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Many factors lead organizations to explore Mexico- primarily talent shortage and supply chain complications. Those seeking greater access to talent pools can often source engineers, designers, procurement professionals, project management, and more in Mexico. Prodensa has nearly 40 years of experience facilitating projects in Mexico. Our solutions mitigate the risk of operating in a foreign country while leveraging the benefits of Mexican talent in manufacturing as well as mindfacturing .
Understanding the employment environment in Mexico and possessing data is the key to making the right decision regarding corporate resources, timing and budget for your project.
?The Prodensa E-Book provides actionable insights to the Human Resources non-specialist during their market research and investigation stage into the Mexican labor market. Some of the most notable changes to federal labor law in Mexico have occurred since 2019, accompanied by ongoing changes to the socio-political climate. This creates the need for continual compliance support from experts dedicated to the navigation of operations in Mexico.