PEO in Mexico - A New Road to Expansion | INS Global
Countries / Mexico / PEO in Mexico

PEO in Mexico

Hire Globally, Pay Locally, Expand Effortlessly

INS Global provides international HR outsourcing services to companies that want to expand around the world easily and safely. We provide both PEO (Professional Employer Organization) and EOR (Employer of Record) services in over 80 countries worldwide. Our team of experts is fully equipped to help make your transition swift and problem-free.

A PEO, allows you to transfer or hire employees overseas without setting up a seperate presence in your target country. With a PEO or EOR, your HR and payroll will be handled in a way that reduces costs and keeps you from making expensive errors.

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PEO in Mexico - Summary

Five Advantages of Partnering with a Global PEO

Certified Legal Expertise

Instead of trying to familiarize yourself with local labor laws and legislation on your own, a PEO has legal professionals on hand with years of experience. They will smooth over any misunderstandings and complications and make sure that you adhere to local laws without fail

Reduced Setup Time and Costs

Traditional company incorporation is a long process that can take up to a year; with a PEO, you can operate in a new country in just a few days

Concentrate on Company Growth

A PEO can handle all aspects of HR, including recruitment, headhunting, contract management, and payroll outsourcing. This way, you can devote all your time and energy to leading your company to success

Rapid Market Access

Save on overhead costs and potential delays by employing a PEO to make the most of their innovative tools and systems to help you can get started in the target market in a fraction of the time

Streamline Your Company Structure

Increase your efficiency by having just a single point of contact that meets all your HR requirements professionally and securely

The Benefits of a PEO Over Company Incorporation

Establishing yourself in a new market and country is a lengthy process that usually involves a good deal of red tape. Even the smallest mistakes can result in having to pay expensive fines or fees. You can decrease the chance of such risks by partnering with a global PEO or EOR services provider. This way, you can be guaranteed that both your employees and your company are in full legal compliance.

A PEO:
  • Allows for faster setup time
  • Does not require constant management and oversight
  • Lowers company expenses
  • Ensures full legal confidence
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testimonial from Manuel Ramos

Testimonial

Manuel Ramos

TERAO ASIA

Managing Director

We think INS Global is a good solution about starting in a market like China. Understanding the market doesn’t mean you need to set up a company immediately. 

5/5

The Steps to Making the Most of INS Global's PEO in Mexico

  1. We meet with you to discuss your needs and formulate a tailor-made plan for your company.
  2. Our PEO provides the necessary legal structure through which you can bring your employees into Mexico.
  3. Our experienced specialists can handle all your recruitment, hiring, and HR services on a day-to-day basis.
  4. You and your employees can continue operating on schedule to reach your global expansion goals.

PEO and EOR: What's the Difference?

While these two services are often discussed together, they are not identical. It’s good to understand the differences to choose the one that best suits your company and its needs.  

  • A PEO is a third-party company that offers HR services to employees of other companies. An EOR provides this but also legally hires and is responsible for the employees of the other companies.
  • In a PEO agreement, the contract is made between the PEO provider and the company. In an EOR agreement, the contract is directed by the company but officially remains between the provider and the employee.

INS Global offers both PEO and global EOR services in Mexico to provide the most suitable solution to your specific needs.

Employment Contracts in Mexico

Written employment contracts are mandatory in Mexico and should detail the contract duration, compensation, benefits, etc. The contract language should be Spanish, and the salary amount should be in the local currency of the Mexican peso.

Probation periods are typically 30 days and cannot go beyond six months. 

Work Hours and Overtime in Mexico

Mexican labor law dictates that a working day cannot exceed 8 hours, and the total number of weekly work hours cannot be more than 48. Overtime pay is double the regular wage for the first nine hours; any hours beyond that require triple payment. Overtime hours are limited to three hours daily and for three consecutive days.

Employees required to work on Sunday are expected to be paid 25% more than their regular hourly wage.

Holidays and Annual Leave

There are 8 days of public holiday in Mexico. Employees who must work during those days are entitled to 300% of their regular salary.

Employees in Mexico must receive a minimum of 6 vacation days after one year of employment. They will receive 2 additional vacation days for each year of work until the fourth year. After the fourth year, employees should receive 2 extra days for every five years of employment.

Sick Leave in Mexico

Sick leave payments are covered by the government social care system and require medical documents before granting paid leave. As long as the employee has made their social security payments for at least four weeks before asking for sick leave, they will receive 60% of their wages from day 4 to 52 of sick leave. If their illness or injury results from work, they will receive 100% compensation.

Maternity and Paternity Leave in Mexico

Expectant mothers may take six weeks before birth and six weeks after for paid maternity leave, and fathers can take five days. The government covers maternity leave payments.

Tax Law and Social Security Contributions in Mexico

Income tax in Mexico is levied progressively depending on a person’s residency status. Non-residents are taxed either 15% or 30% for amounts over a minimum, while residents are taxed according to a bracket system.

Employers in Mexico are expected to contribute to the social security system with 2% of an employee’s salary amount going toward their retirement fund and 3.15% toward unemployment benefits.

Corporate income tax is 30%. (source)

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FAQs

No, it is necessary to use a local entity abroad to comply with each country labor law.

Foreign companies can either set up a local entity in each country or use the services a local PEO (Professional Employment Organization) to hire the staff on-site directly.

The employer of record is the legal entity liable for the staff employed in a specific country. In practice, a foreign company can either open a subsidiary to become the employer of record of its abroad employees or use a PEO to act as the employer of record.

Liabilities may vary from country to country and include all the staff management responsibilities: labor contract issues, payroll management, and tax compliance, social security management, expenses claim declaration, hiring and termination
procedures, etc.

In general, 1-month is necessary to have an employee based out abroad using an existing PEO as the employe of record. When incorporating a new subsidiary to be the employer of record, the delay varies from 4-12 months.