Employer of Record in Mexico (EOR in Mexico)

Hire Globally, Pay Locally, Expand Effortlessly

We are your Employer of Record in Mexico. This country, 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.

Employer of Record vs. Company Incorporation in Mexico: Making the Right Choice

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

• Speed – With an Employer of Record 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 Employer of Record can have your team operational within weeks or even days.
• Compliance – BothEmployer of Records and subsidiaries must comply with Mexican tax laws and labor regulations. Employer of Records have the expertise to navigate these complexities and ensure ongoing compliance, reducing the risk of legal issues.
• Cost – For small teams or temporary projects, Employer of Record 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, Employer of Records 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, Employer of Records provide similar control over your workforce while alleviating administrative burdens and reducing liability.

The Differences Between PEOs and Employer Of Record

When considering a partnership with a PEO in Mexico, you will likely also hear the term EOR (Employer of Record). Typically, the two terms are largely interchangeable based on the kind of services they offer. The main difference between the two is the level of liability taken on by the PEO/EOR and the parties involved in the agreement.

• A PEO provides all HR services to employees on behalf of other companies

• A PEO agreement is made between the PEO and the original company to share the responsibilities for the employee

• An EOR in Mexico legally hires the employee on behalf of the original company and provides all HR services
• An EOR agreement is made between the EOR and the employee on behalf of the original company

In Mexico both services are indistinct according to national regulations, but INS Global can offer any elements of both according to your requirements

Labor Law in Mexico

Employment Contracts In Mexico

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.

Types Of Leave

Tax Law

Employers in Mexico are responsible for withholding income tax from their employees according to a progressive bracket system. Residents are taxed progressively depending on income, with rates ranging from 1.92% to 35%. Non-residents are subject to a flat rate of 15% or 30% depending on their income level.

There is also a social security contribution, where employers must contribute 2% of the employee’s salary toward their retirement fund and 3.15% toward unemployment benefits.

Corporate tax in Mexico is 30%.