Mexico · Employment & Visas

Mexican employment is strictly protected by the Federal Labour Law: employees enjoy a year-end bonus (Aguinaldo, no less than one month's salary), profit sharing (PTU, 10% of pre-tax profit) and high severance (up to 90 days' wages plus 20 days' wages per year). Employers must register employees for IMSS social security and INFONAVIT housing fund. Foreign employees require a work visa, and the resident legal representative (Rep Legal) must have local contact and an RFC.

Key points

Mandatory benefits: Aguinaldo year-end bonus (no less than one month's salary), PTU profit sharing (10% of pre-tax profit).
Dismissal protection: high severance (up to 90 days' wages plus 20 days' wages per year of service, with a cap).
Social security: IMSS (medical, retirement, maternity) and INFONAVIT (housing fund), mainly borne by the employer.
Foreign labour: requires a work visa; Rep Legal must be resident and hold an RFC.
Contracts: written employment contract required; probation and dismissal strictly limited.

Procedure

Draft an employment contract compliant with the Federal Labour Law.
Register with IMSS and INFONAVIT and pay employee contributions.
Apply for a work visa for foreign employees.
Set up Aguinaldo and PTU accrual reserves.
Hold annual union or employee meetings (if applicable).

Hard requirements

IMSS and INFONAVIT registration; employment contract; foreign-worker visa; Rep Legal local contact.

Costs

Social security (employer bears about 30%+ of total wages); Aguinaldo and PTU reserves; severance reserves.

⚠ Common risks

Failure to accrue PTU or Aguinaldo is illegal.
Wrong severance calculation may trigger litigation.
Labour-dispute arbitration tends to favour the employee.
Absence of Rep Legal affects compliance.

Handbook

📘 Step-by-Step Handbook (with owner / timeline / cost / penalties)

Applies to：Compliance requirements for hiring local and foreign employees after registering an entity in Mexico, including employment contracts, IMSS, INFONAVIT, ISN, Aguinaldo, PTU, severance and foreign work visas.

Prerequisites

Company registered and RFC activated (prerequisite for hiring and payroll tax).
Genuine office address and resident legal representative (Rep Legal).
Employment structure determined (employee vs independent contractor).
Proposed foreign-employee position and local-recruitment-attempt description (employer duty).

Step	Action	Owner	Timeline	Cost	Official form / system	Notes & penalties
1	Draft employment contract compliant with the Federal Labour Law Sign a written employment contract in Spanish, specifying position, salary, working hours (48-hour weekly cap), probation and dismissal conditions; avoid misclassifying roles that should be employees as independent contractors.	HR / Legal	—	—	Written employment contract	The 2024 labour reform criminalised excessive overtime (200% for first 9 hours, 300% thereafter). Penalty：Illegal clauses void; employee/contractor misclassification fine up to 200% of wages.
2	Register with IMSS (employer) As employer, register with the Mexican Social Security Institute (IMSS) and pay employee social security (medical, retirement, maternity, disability, etc.); employer bears about 25%–30% of wages.	Company	—	Employer bears about 25%–30% of wages	IMSS employer registration / monthly payment	Hiring without registration is illegal; employees cannot get health cover. Penalty：Non-registration or non-payment fined and back-paid
3	Register with INFONAVIT (housing fund 5%) Register with the Institute of the National Housing Fund for Workers (INFONAVIT) and pay the housing fund at 5% of annual employee wages.	Company	—	5% of employee wages	INFONAVIT registration / payment	Handled together with IMSS. Penalty：Non-payment fined.
4	State payroll tax (ISN) registration (1%–4%). Register in the operating state and pay state payroll tax (ISN) monthly; state rates are 1%–4% (e.g. Mexico City 3%, Nuevo León about 2%–3%).	Company	—	Payroll tax rate 1%–4%.	State ISN registration.	Links to the payroll tax in the tax dimension. Penalty：Non-payment fined by the state.
5	Foreign-employee work visa (INM employer registration + work permit). The company must first register as an employer with INM (Constancia de Inscripción de Empleador) and obtain an employer code; apply for a work permit (permiso de trabajo) for the foreign employee, who takes the approval to a Mexican consulate for a temporary-resident visa (Residente Temporal), and within 30 days of entry completes the CANJE at INM to exchange for a temporary-resident card (with work authorisation, tied to the employer).	Company / INM / consulate.	—	INM fee + resident-card fee (by duration, per INM publication).	INM work permit / temporary-resident visa / CANJE.	Must prove local recruitment was attempted; temporary-resident card renewed yearly, convertible to permanent after 4 years. Penalty：Employing without a work permit faces administrative fines up to revocation of employer qualification.
6	Aguinaldo and PTU accrual. Accrue the year-end bonus (Aguinaldo) and profit sharing (PTU) by law: Aguinaldo statutory minimum is 15 days' salary (payable by 20 December); PTU is 10% of pre-tax profit (distributed by 31 May of the following year).	Payroll / Accounting.	—	Aguinaldo no less than 15 days' salary; PTU 10% of pre-tax profit.	Aguinaldo (Christmas bonus) and PTU (profit sharing) calculation and payment	Aguinaldo statutory floor is 15 days (not one month); many companies pay more; PTU has a per-person cap. Penalty：Non-accrual or late payment triggers employee litigation and fines (Aguinaldo late penalty 50 to 5000 times the UMA).
7	Dismissal compliance and severance reserve Mexico has no at-will dismissal; dismissal without just cause requires 3 months' wages plus 20 days' wages per year of service and accrued benefits (Aguinaldo, PTU, vacation). Establish a severance reserve and compliant dismissal process.	HR / Legal	—	3 months' wages + 20 days' wages per year of service + benefits	Severance calculation	Labour-dispute arbitration favours employees; retain compliance evidence. Penalty：Wrong severance calculation triggers litigation and back-payment

✅ Self-check list

⚠ Common pitfalls

Aguinaldo miscomputed at 1-month floor影响：Statutory floor is 15 days' salary; underpayment faces fines and litigation.规避：Use the statutory minimum of no less than 15 days (may pay more), pay by 20 December and retain proof.

No PTU accrual影响：Employee litigation and back payment.规避：Accrue PTU reserve of 10% of pre-tax profit in the annual budget.

Employee/contractor misclassification影响：Fine up to 200% of wages and back-paid social security.规避：Strictly distinguish per the Federal Labour Law, use an EOR if needed.

Foreign employee working without a work permit影响：Administrative fine up to revocation of employer qualification.规避：Complete INM employer registration and work permit first; employee completes CANJE within 30 days of entry.

Wrong severance calculation影响：Litigation and back payment, significant amount.规避：Compute 3 months' wages plus 20 days' wages per year plus accrued benefits, retain just-cause evidence.

2024 reform excessive overtime影响：Unpaid overtime may involve criminal liability.规避：Strictly observe the 48-hour weekly cap; pay overtime at 200%/300%.

📅 Ongoing post-incorporation obligations

Monthly IMSS/INFONAVIT/ISN filing and payment
Annual PTU distribution (by 31 May of following year)
Aguinaldo payment (by 20 December)
Temporary-resident card renewed yearly (permanent after 4 years)
Retain payroll and working-hours records for audit

🔗 Official portals

📎 Source：Mexico Ministry of Labour (STPS); Federal Labour Law; IMSS; INFONAVIT

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