Compandben’s International Employment Services –

Mexico Payroll and Accounting Partners –

 

A note written by Compandben’s HR, Payroll and Accounting Partners in Mexico

“We know there is a lot of information here, and we know not all customers are looking to be experts in Mexican Labor matters as it might take a lot of time and resources and probably is not worthwhile for a small volume of staff compared to the staff contracted in HQ.
That is why we offer Human Resources Administration services, so our customers can have their operation in Mexico assisted by HR Experts who will work shoulder to shoulder with you to keep your company aligned to Mexican Laws and rules, and leave your staff focused on their real job.”

1. Employment Contracts

Trial or Probationary Period (not longer than 3 months).

Probationary period applies only when an individual has been offered a job with more than 180 days of work. During this period the employee would enjoy salary, social security and other mandatory benefits.
At the end of this period if the employee does not satisfy the requirements and knowledge necessary for the job, the labor relationship may be terminated without responsibility for the Employer.

Fixed length contract (not longer than 1 year).

Can there be a probationary Period within a fixed length contract? For instance if the contract is for 12 months can there still be a probationary period of 3 months?

If employee leaves: Customer doesn’t have any obligation to pay any additional amounts to the employee.
If the Employer terminates the employee before the end of the contract: he must pay 6 months of salary according to Mexican labor laws or the remaining time of the contract as severance: 6 months is the maximum.
When the contract end date is reached: Customer doesn’t have any obligation to pay any additional amounts to the employee.

Fixed length work contract (no longer than 2 years).

Can there be a probationary Period within a fixed length contract? For instance if the contract is for 12 months can there still be a probationary period of 3 months?

If the employee leaves: Customer doesn’t have an obligation to pay additional amounts to the employee.
If the Employer terminates the employee before the end of the contract: he must pay the employee 6 months of salary according to Mexican labor laws or the remaining time of the contract as severance compensation.
When the contract end date is reached: Customer doesn’t have any obligation to pay additional amounts to the employee.

Undefined length contract (No end date established).

If the employee leaves: Customer does not pay anything else.
If the employer terminates the contract: he must give to the employee 3 months of salary according to Mexican labor laws plus 20 days of salary per each year worked as end of service indemnity.

Notice Periods

In Mexico, the Employer is not otherwise obligated to give notice for dismissal; nor is the employee if the employee leaves voluntarily. But the end of service indemnities mentioned above must be paid.

2. Salary Payment

Blue collar staff in Mexico receive payment weekly.
White collar staff receive payment biweekly or every half-month. We make semi-monthly payments.

3. Hours of Work

The normal working week for white collar staff is 5 days and typical schedules would be 0800 to 1600 with half an hour for lunch. (This only comes to 40 hours or 37.5 hours not including lunch.)

Normal time and overtime

Working Week hours: 48 hours per week Morning.
45 hours per week Mixed (Morning-Night).
42 hours per week Night.

Hourly Paid Staff

Mexico approved last year a new labor law which established hourly basis, but unfortunately, Social Security charges are based monthly and there do not exist clear rules to pay on hourly basis yet.
We suggest paying on a monthly basis like a salary for the moment.

Overtime

In Mexico overtime applies for every employee according to Mexican Labor law. Nevertheless, white collar staff are not usually eligible for overtime.
The legally required overtime rates are as follows:
Overtime per week:
• Paid 2 times the normal rate from 01 up to 9 hours overtime in the same week.
• Paid 3 times from 10 hours overtime in the same week.

4. Vacation and Other Time Off

Vacation days:

According to Mexican law vacation days are:

• 6 days first year,
• 8 days second year,
• 10 days third year,
• 12 days fourth year,
• 14 days from fifth to ninth year
• plus 2 days more per each 5 years of service after fifth year.

Some of our customers decide to give more than law requires: It really depends on you.
Some companies provide the legally required benefits and other benefit such as free days; they provide free days to employees as vacations in order they can maximize their Vacation bonus.

Vacation bonus

Vacation bonus is paid each time employee takes vacation or accomplishes one year in the company according to company policy. Firms normally pay vacation bonus (Prima) when the employee accomplishes 1 year or leaves for vacation..
If the employee does not take vacation, then, additional days of salary should be paid according to the number of vacations allowed and not taken.
According to law, Vacation bonus is 25% of salary of the days of vacations.
Example: 6 days per year * .25 = 1.5 days of salary to be paid.
This vacation bonus can be higher according to customer preferences. Some clients go up to 60%.

Christmas Bonus

It is calculated as 15 days of monthly salary and paid before 15th December each year.
In Mexico, Salaries are based Monthly and before Taxes.

Public Holidays:

Mexico has Official days and non-official days.
Official days are mandatory to give as a day off and non-official are not mandatory but most companies give half day or all day as day off or as vacations.

Official days of Holidays:

January 1st, February first Monday, March 3rd Monday, May 1st, September 16th, November 3rd Monday, December 1st president change (each 6 years), December 25th.

Non-official days of Holidays:

April 5th and 6th, May 10th, November 2nd, December 12th, 24th and 31st.

Maternity Leave in Mexico:

According to Mexican Labor Law:
Chapter V. Article 170: Section II:
Résumé:
The mother will enjoy paid maternity leave of 6 weeks before and after the birth.
4 of the weeks before of the birth could be transferred to after birth period (Medical authorization by doctor of Social Security is requested and employer opinion is taken).
In case that child is born with a disability or any illness which requires medical attention, the maternity leave could be until eight weeks prior to the birth -again upon presentation of a medical certification.
In case of adoption, the woman will enjoy 6 weeks of rest with salary after the date of reception of the child.
In lactation period until a maximum of 6 months after the birth, the mother is entitled to have 2 extraordinary rests per day of 30 minutes each to feed their child or, with previous agreement with the employer, 1 hour of the normal working day would be reduced during the lactation period.

Payment during Maternity Leave

The salary of the employee during Maternity leave before and after birth is paid by Social Security.
*Social Security will pay daily until 25 times the Minimum daily salary ($ 64.76 MXN for Mexico City territory), if the employee’s salary is above this amount, the employer should establish on its policies how the company would proceed. (Maximum salary paid per month by the social security is $48,57.00 MXN).
Maternity is paid fully by Social Security (100%)

Paternity Leave in Mexico:

Chapter IV. Article 132: Section XXVI.
Subsection XXVVIIB is:
To give allowance of paternity of 5 labor days with salary for male workers for their child’s birth and, in the same way, in the case of adoption of a child.
The salary of the employee on the rest of paternity is full paid by the Employer.

5. Social Security and Benefits in Mexico

All Mexicans who work should be registered with the Mexican Social Security, which is the government institution in Mexico providing Medical attention to the worker and direct family (children, wife and parents).
Social Security benefits also include: Housing and Retirement benefits.
Medical services are provided by the Social Security.
Housing services are provided by INFONAVIT section.
Retirement benefits are provided by SAR section.

Social Security Costs

The Employer pays social security at a high level for low salaries (40%) but this drops to 12% of salary for say a shop assistant earning $6500MXN per month. It is cheaper to calculate social security over two months.
These amounts are based on Minimum Salary, Minimum Salary in Mexico rises according to the Government official publication.

Social Security Benefits

STD (Short Term Insurance) in Mexico: Provided by Mexican Social Security

Mexican Social Security covers many medical problems; the employees and their families can be treated through the Mexican government Medical facilities of Social Security.
In Mexico, in addition to Mexican Social Security cover, private Medical Insurance exists and is often use by multinational employers. We can assist you to find the best health plan for your organization.

LTD (Long Term Disability Insurance) in Mexico:

LTD (Long Term Disability) is covered by Social Security, Social security provides indemnities according to the illness or injury suffered by the employee whilst in work.
An accident or illness suffered by an employee increases the percentage of Labor Risk of the company, which then produces an increase of the fee of Social Security paid by the employer.

Laws which govern Payroll and Human Resources in Mexico:

Mexican Labor Law (Ley Federal del Trabajo)
Mexican Social Security Law (Ley del Seguro Social)
Mexican Income Tax (Ley del Impuesto Sobre la Renta)

Dependencies which review the development of labor matters in Mexico – Federal:

Mexican Work and Social Provision Department (Secretaria del trabajo y Previsión Social)
Mexican Social Security Institute (Instituto Mexicano del Seguro Social)
Tax Administration Service (Servicio de Administración Tributaria)

6. Background Checks

Companies are available for this but:
Costs for drug screening and testing should be quoted separately.
Our organization has discounts with two of the most known and recognized laboratories in Mexico which specialize in different testing.
The price varies from $ $ 864.50 to $ 2,532.40 MXN according to the specialization of the tests on drugs.

7. Termination of Employees

Nothing special necessary, but the Employer may need to pay severance pay if applicable – as indicated above in the section for Contracts.
There exist some cases when employers can release someone without paying severance, those cases are: cheating the employer, fighting on customer facilities, damage or threat to employees of the company or facilities (with evidence), using or working under effects of illegal substances or alcohol.

Contact Compandben or visit Compandben Main Website – International Payroll HR Services – Mexico

John Tinsley