Employer of Record in Mexico (EOR in Mexico)

Hire Globally, Pay Locally, Expand Effortlessly

Mexico, a rapidly growing economy with a strategic location, presents significant opportunities for businesses looking to expand their operations in the Americas. However, understanding its complex labor and tax laws is crucial for successful operations. An Employer of Record (EOR) in Mexico can provide the necessary expertise and support.

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Want to Have a Team in Mexico TODAY?

Show me how to grow my business now!

We prefer to let others grow their business.

How an EOR in Mexico Makes Expansion Effortless in 3 Steps

Step 1 – Comprehensive Planning & Assessment

Your engagement with a Mexican EOR, like INS Global, starts with an in-depth consultation to understand your business objectives. This includes evaluating the workforce needed, their roles, and your expansion timeline. The EOR customizes its services to fit your specific needs, ensuring a smooth transition into the Mexican market.

Step 2 – Efficient Setup, Recruitment & Onboarding

Whether you’re forming a new team in Mexico or relocating existing employees, the EOR manages all legal and administrative requirements. This includes handling visas, work permits, payroll, contract administration, and ensuring compliance with Mexican labor laws. Acting as your legal employer in Mexico, the EOR removes the need for establishing a local entity, saving both time and resources.

Step 3 – Continuous HR Management & Compliance

Once your employees are established in Mexico, the EOR oversees ongoing HR and payroll functions. This includes salary processing, managing employee benefits, and ensuring compliance with health insurance and social security obligations. The EOR serves as the HR intermediary between you and your Mexican team, managing administrative tasks and addressing employee concerns, enabling you to focus on business growth confidently.

Benefits of Partnering with a Mexican EOR

Expedited Market Entry

A Mexican EOR allows you to quickly enter the Mexican market without the need to set up a local entity, enabling faster business expansion.

Regulatory Compliance

The EOR ensures your business complies with Mexican labor laws, including those related to employment contracts, taxes, and employee benefits, reducing the risk of legal complications.

Local Talent Acquisition

The EOR aids in recruiting and managing local and foreign staff, ensuring access to the best talent in Mexico while handling all aspects of employment.

Cost Efficiency

Partnering with a Mexican EOR helps you avoid the high costs associated with establishing and maintaining a local entity. The EOR manages all payroll, benefits, and HR tasks, freeing up resources for growth.

Operational Flexibility

A Mexican EOR provides the ability to scale your operations up or down based on market needs, without the complexities of setting up a permanent entity, offering greater flexibility.

Testimonial

Manuel Ramos

TERAO ASIA

Managing Director

We think INS Global is a good solution about starting business in new and complex markets. Understanding the market doesn’t mean you need to set up a company immediately.

 5/5

EOR vs. Company Incorporation in Mexico: Making the Right Choice

While establishing a subsidiary in Mexico is a traditional approach to local expansion, using an EOR offers several distinct benefits:

Speed – With an EOR like INS Global, the setup process in Mexico is significantly accelerated, allowing you to commence operations and hire staff much faster than traditional company incorporation, which can be time-consuming. An EOR can have your team operational within weeks or even days.
Compliance – Both EORs and subsidiaries must comply with Mexican tax laws and labor regulations. EORs have the expertise to navigate these complexities and ensure ongoing compliance, reducing the risk of legal issues.
Cost – For small teams or temporary projects, EOR services are often more cost-effective than establishing a subsidiary, as they avoid the high upfront incorporation expenses and ongoing administrative costs. For larger companies, EORs provide streamlined solutions that integrate new markets into multi-country payroll systems efficiently.
Control – While incorporation gives you full control over HR, finances, and operations, EORs provide similar control over your workforce while alleviating administrative burdens and reducing liability.

Crucial Factors for Choosing the Ideal Employer of Record in Mexico

Selecting the right EOR in Mexico is vital for successful market entry. Consider these essential factors:

Experience and Industry Credibility – Look for a Mexican EOR with a proven track record and strong industry reputation, like INS Global. Client feedback and industry recognition are good indicators of reliability.
Comprehensive Service Offerings – Ensure the EOR provides all necessary services or can customize their offerings to meet your needs, including visa and work permit support, payroll processing, tax compliance, and navigating Mexico’s tax and labor laws.
Scalability – Opt for an EOR that can expand its services as your business grows. Their team should be capable of managing a growing workforce and adapting to evolving business needs.
Transparent Communication and Consistency – Choose an EOR known for its consistent and clear communication. They should keep you well-informed about legal updates, upcoming deadlines, and any issues, providing a single point of contact and digital tools for easy access to critical information.
Competitive and Transparent Costs – Review the pricing models of different EORs. Ensure their fees are clear, competitive, and free of hidden charges. Third-party advice can help you obtain the best value for your EOR in Mexico.

Mexico Labor Law Overview

Contracts – In Mexico, employment contracts are mandatory and must be in writing, as required by the Federal Labor Law (Ley Federal del Trabajo, LFT). These contracts can be for an indefinite period, a specific project, or a fixed term, depending on the nature of the work. Contracts must include essential details such as job duties, salary, working hours, and conditions for termination. Indefinite-term contracts are the most common, providing greater job security for workers. The LFT ensures that all contracts adhere to minimum standards, including compliance with the national minimum wage, which was set at MXN 207.44 per day as of 2023.
Probationary Periods – Mexican labor law allows for probationary periods, which can last up to 30 days for most employees, and up to 180 days for managerial positions or jobs requiring specialized skills. During the probationary period, either party can terminate the employment without the need for severance, provided that the dismissal is justified and not discriminatory. Probationary periods are commonly used in Mexico to assess an employee’s suitability for the role before offering permanent employment. However, the LFT mandates that all employees, even during probation, must receive their full legal benefits, including salary, social security contributions, and paid leave.
Working Hours – In Mexico, the standard workweek is 48 hours, typically divided into 8-hour days, although many companies have adopted a 5-day workweek with longer working days. The LFT allows for overtime, which must be paid at double the regular hourly wage for the first 9 hours per week and triple for any additional hours. However, overtime is capped at 3 hours per day and 3 times per week. Despite these regulations, many workers, particularly in the informal sector, often work longer hours without receiving proper compensation.
Paid Leave – Mexican labor law provides various forms of paid leave, including annual leave, sick leave, and maternity leave. Employees are entitled to 6 days of paid annual leave after a year of service, with this increasing by 2 days for every additional year of service, up to a maximum of 12 days. After the fourth year, employees gain 2 additional days of leave for every 5 years of service. Maternity leave in Mexico consists of 12 weeks at full pay, divided equally before and after childbirth, with the possibility of transferring 4 weeks from the prenatal period to the postnatal period. Paid sick leave is provided through the Mexican Social Security Institute (IMSS), covering up to 60% of the employee’s salary after the third day of illness.
Social Insurance – Mexico’s social insurance system, managed by the Mexican Social Security Institute (IMSS), covers health care, pensions, disability, and work-related injury benefits. Both employers and employees contribute to the system, with employers contributing around 15% of the employee’s salary, and employees contributing approximately 2.75%. The IMSS system covers nearly 60% of the workforce, with the remainder largely in the informal sector.
Severance Pay – Severance pay in Mexico is legally required when an employee is dismissed without just cause. The LFT mandates that employees dismissed without cause receive 3 months’ salary as constitutional compensation, plus 20 days’ salary for each year of service and a proportional amount of other benefits like bonuses and vacation pay. Additionally, employees are entitled to 12 days’ salary for each year of service as a seniority premium, capped at twice the minimum wage. Severance pay is a significant protection for Mexican workers, ensuring financial stability during periods of unemployment, especially given the country’s high turnover rates and economic fluctuations.

Navigating these intricate challenges can be time-consuming and necessitates staying current with legal changes. Partnering with an EOR in Mexico acts as your local legal ally, ensuring your business adheres to labor laws and protects you from possible liabilities.

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Recruitment Agency in Mexico

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FAQs

How does an EOR support market entry in Mexico?

An EOR in Mexico manages all legal, HR, and compliance-related tasks, allowing businesses to swiftly enter the Mexican market without needing to establish a local subsidiary.

What are the financial benefits of using an EOR in Mexico?

Using an EOR in Mexico can be more economical than setting up a local entity, as it avoids the costs of incorporation and reduces ongoing administrative expenses.

Can an EOR handle the visa and work permit processes in Mexico?

Yes, a Mexican EOR manages the visa and work permit application process, ensuring full compliance with local immigration laws.

Which types of businesses benefit most from EOR services in Mexico?

EOR services in Mexico are advantageous for companies of all sizes, particularly those seeking quick market entry, cost reductions, and less administrative burden.

How does an EOR ensure compliance with Mexican labor laws?

EORs in Mexico have local professionals who stay up-to-date on legal changes, managing all compliance tasks to ensure your business operates within Mexican labor law requirements.

What control do I maintain over my employees when using an EOR in Mexico?

Though the Mexican EOR is the legal employer, you retain substantial authority over the day-to-day management and decision-making processes concerning your employees.

Employer of Record in Mexico (EOR in Mexico)

Hire Globally, Pay Locally, Expand Effortlessly

How an EOR in Mexico Makes Expansion Effortless in 3 Steps