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How to Hire in Mexico! A Comprehensive Guide

Written by Ongresso - Business Beyond Borders | May 28, 2024
 

Expanding your business to Mexico opens doors to a talented workforce and exciting new markets. But navigating the legalities of hiring employees in a foreign country can be tiring. This comprehensive guide will educate you with the knowledge you need to successfully hire workers in Mexico, ensuring compliance and a smooth experience for both you and your new employees.

The Starting Point: Establishing Your Presence

There are two primary ways to hire employees in Mexico:

  1. Setting Up a Legal Entity: This involves registering a branch office or subsidiary within Mexico. This approach grants you complete control over your operations but requires navigating complex legal and bureaucratic processes.
  2. Partnering with an Employer of Record (EOR): Companies like Ongresso act as the legal employer of your workers in Mexico. They handle payroll, taxes, benefits administration and ensure compliance with local labor laws. This option offers a faster and more streamlined approach, especially for businesses new to the Mexican market.

Understanding Mexican Labor Laws: A Different Landscape

Mexican labor laws generally favor employees more than those in the US. Here are some key points to remember:

  • Contracts: All work contracts are presumed to be indefinite, offering employees benefits and job security. Specify fixed-term contracts in writing beforehand.
  • Work Hours & Overtime: Employees cannot work more than eight hours a day or 48 hours a week without overtime pay. Overtime rates vary depending on the number of hours worked and the time of day.
  • Benefits: Mexican law mandates a robust benefits package, including profit-sharing (10% of taxable profits), a Christmas bonus (at least 15 days' salary), paid time off (minimum of six days, increasing with seniority) and social security contributions.
  • Worker Representation: Labor unions play a significant role in Mexico and have more power than in the US. They can represent workers even if the employee doesn't wish for them to.

The Hiring Process: Finding the Right Talent

Once you've established your presence with either a legal entity or an employer of record (EOR), it's time to start attracting top talent. Popular options include:

  • Job Boards: Utilize Mexican job boards like Indeed Mexico or OCCMundial to reach a wide pool of potential candidates.
  • Recruiting Agencies: Partner with local agencies specializing in your industry to leverage their expertise and networks.
  • Professional Networking: Attend industry events or connect with Mexican professionals on LinkedIn to discover hidden gems.

Work Permits & Visas: Ensuring Legal Employment

All foreign workers in Mexico require a visa, regardless of their nationality. Here's a breakdown of the most common types:

  • Permanent Resident Visa: Necessary for most employees who plan to stay in Mexico long-term.
  • Temporary Resident Visa: Suitable for workers who expect to stay for more than 180 days but not permanently.
  • Tourist Visa: Not for work purposes. Visitors cannot convert tourist visas to work visas.

The employer initiates the visa process with the Mexican Institute of Immigration. Once approved, the employee can apply for the appropriate visa at a consulate or the National Institute of Immigration.

Getting Your Team Onboard: The Work ID Process

A smooth onboarding process is key. Here's how to obtain work ID cards for your Mexican employees:

  1. Employee Eligibility: Ensure your employees meet basic requirements - typically 18 years old and legal immigration status.
  2. CURP Registration: Employees need a CURP (Unique Population Registry Code). This can be obtained online or at local registration offices.
  3. Social Security Registration (IMSS): Register your company and employees with the Mexican Social Security Institute (IMSS) for health benefits and social security contributions.
  4. Work Visa (if applicable): For foreign workers, secure the appropriate work visa through the National Institute of Migration (INM).
  5. Government ID Application: Employees can apply for their work ID (often called "Cédula Profesional") through the Ministry of Labor and Social Welfare (STPS).

By streamlining this process, you'll have your team ready to contribute and benefit from Mexico's attractive employment environment.

Compensation & Taxes: Understanding the System

  • Salary & Payment: Mexican law mandates paying employees in pesos through a Mexican bank account designated by the government.
  • Taxes: Employers withhold income taxes and contribute to social security (IMSS) on behalf of their employees. Workers file their own annual tax returns by April 30th.
  • Congresso (EOR) Advantage: By partnering with Ongresso, you can offload the complexities of payroll, tax withholdings, and social security contributions, ensuring compliance and saving you valuable time and resources.

Employee Benefits & Perks: Attracting and Retaining Talent 

Mexico offers a unique opportunity to optimize your investment through its employee benefits system:

  • Reduced Costs: Strong mandated benefits like healthcare and social security minimize employer burdens.
  • Happy Employees, High Productivity: Invest in a happy workforce with attractive perks like private health insurance and food vouchers, leading to increased productivity and lower turnover.
  • Attract Top Talent: Stand out from the competition with a comprehensive benefits package, making it easier to find and retain skilled employees.

The Advantages of Partnering with Ongresso

  • Reduced Time to Market: Skip the lengthy process of establishing a legal entity in Mexico. Ongresso handles all the legalities, allowing you to focus on finding and onboarding talent quickly.
  • Compliance Expertise: Our team of experts stays up-to-date on ever-changing Mexican labor laws, ensuring your company remains compliant and avoids costly penalties.
  • Simplified Payroll & Tax Administration: Say goodbye to complex payroll calculations and tax filings. Ongresso manages all aspects of payroll processing, tax withholding, and social security contributions.
  • Reduced Risk & Liability: As the legal employer of record, Ongresso takes on the legal and financial risks associated with employment in Mexico, protecting your business.
  • Enhanced Employer Brand: Attract top Mexican talent by offering competitive compensation and benefits packages without the administrative burden. Ongresso helps you design a benefits plan that complies with local regulations.
  • Local Support & Expertise: Our team in Mexico provides on-the-ground support for your employees, addressing any questions or concerns they might have.
  • Scalability & Flexibility: Whether you're hiring a single employee or a large team, Ongresso scales with your needs, allowing you to easily adjust your workforce as your business grows in Mexico.
  • Cost-Effectiveness: While the initial setup cost of establishing a legal entity can be high, partnering with Ongresso is often a more cost-efficient solution, especially for businesses new to the Mexican market. You only pay for the services you need, eliminating the need for additional staff or administrative resources.

Ongresso: Business Beyond Borders in Mexico

By partnering with Ongresso as your EOR, you can gain a competitive edge in the Mexican market, attracting and retaining top talent while ensuring compliance with local regulations. Our comprehensive services free you to focus on what matters most – growing your business in Mexico.

Contact Ongresso Today!

Let our team of experts guide you through the Mexican hiring process. We'll answer your questions, assess your needs, and create a customized solution that empowers you to achieve your goals in Mexico.