Hiring in Mexico? The peso moves, and so does your cost.

Mexico is Latin America’s second-largest economy and the region’s leading nearshoring destination under USMCA, but getting your employment model wrong still carries real cost in time, money, and compliance. We help you choose the right way to hire, place you with the right partner, and stay alongside you for the life of the relationship.

  • Independent advice
  • Vetted partners
  • On your side at renewal

A great market to hire in. A distinctive severance formula underneath.

Mexico is Latin America’s second-largest economy and its leading nearshoring hub under USMCA, with deep automotive, aerospace, and electronics manufacturing roots and a large skilled workforce, but employer obligations run through the Ley Federal del Trabajo (LFT), IMSS (Instituto Mexicano del Seguro Social), and SAT (Servicio de Administración Tributaria) all at once, and unjustified dismissal triggers one of the largest statutory severance formulas Bradford Jacobs manages anywhere, in ways a company used to a single flat termination cost can easily underestimate.

01

Latin America’s second-largest economy, and its nearshoring anchor

A deep automotive, aerospace, and electronics manufacturing base built on USMCA market access, but Mexico prices and pays in its own currency, the peso (MXN), not the US dollar, so currency movement is a real, ongoing part of your cost planning.

02

IMSS and SAT compliance, side by side

A single national LFT, mandatory contributions administered through IMSS and SAT, a constitutionally mandated 48-to-40-hour workweek phase-in running 2026 to 2030, and a severance formula for unjustified dismissal that stacks three months’ salary, 20 days per year of service, and a seniority premium mean your employment structure has to be chosen with care.

03

Independent expert advice

Not sure whether you need EOR, payroll, or your own S.A. de C.V.? We map your headcount, timeline, and risk profile and give you a clear recommendation, not a product pitch.

Four ways to hire in Mexico. Choose the model your termination costs can live with.

Most businesses arrive having already decided, and often decided too quickly. Here is the honest version of each route. When one fits, the detailed guide is one click away.

Employer of Record

An EOR partner becomes the legal employer of your Mexican staff, handling the contract, payroll, statutory withholdings (income tax, IMSS contributions), and LFT compliance, while you direct the work. Operational in days, no entity needed. Best for testing the market or hiring a small team.

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Global Payroll

For when you already have a Mexican entity, or want to consolidate payroll across several countries. You stay the legal employer; a specialist partner runs the monthly withholding, IMSS and INFONAVIT (Instituto del Fondo Nacional de la Vivienda para los Trabajadores) filings, and SAT remittances correctly.

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Entity Formation (S.A. de C.V. / S. de R.L. de C.V.)

Your own Mexican company, most commonly an S.A. de C.V. (Sociedad Anónima de Capital Variable) or S. de R.L. de C.V. (Sociedad de Responsabilidad Limitada de Capital Variable), formed by notarial deed and Registro Público de Comercio entry. Full control and a local presence, but you carry a notary, registration, and ongoing filings. Right when the headcount and permanence justify it.

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PEO Services

A co-employment model alongside your own Mexican entity. Mexico’s 2021 outsourcing reform tightly restricts personnel-supply subcontracting of your core business activity, so true PEO co-employment sits in a narrower lane here than in the US; for most companies EOR or managed payroll is the better fit. We will tell you honestly which one your situation calls for.

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Mexico at a glance

Currency

Mexican peso (MXN). Salaries are set and paid in MXN; if your budget lives in USD or EUR, exchange movement quietly changes your real cost.

Minimum wage (2026)

Two statutory zones set annually by CONASAMI (Comisión Nacional de los Salarios Mínimos), effective 1 January 2026: MXN 315.04/day (~MXN 9,582/month) in the general zone, and MXN 440.87/day (~MXN 13,410/month) in the Zona Libre de la Frontera Norte (ZLFN), the northern border free zone.

Employer costs

Employers pay roughly 27-31%+ of the salario base de cotización (SBC) across IMSS’s five contribution branches, plus INFONAVIT’s separate employer-only 5% housing-fund contribution; some branches cap at 25 times the UMA (Unidad de Medida y Actualización) daily value (MXN 2,932.75 in 2026).

Leave & Notice

Unjustified dismissal triggers Mexico’s severance formula: three months’ salary plus 20 days per year of service plus a seniority premium (prima de antigüedad), capped at twice the minimum wage for that calculation. Minimum 12 working days’ paid vacation after year one, rising toward a 20-day ceiling, plus a mandatory aguinaldo (Christmas bonus) of at least 15 days’ salary due by 20 December.

Hiring in Mexico: quick answers

The questions we are asked most about hiring in Mexico.

What is the fastest way to hire someone in Mexico?

An Employer of Record. Your hire can start in days, with a compliant Mexican employment contract from day one and no entity to set up. It is the lowest-risk way to test the market or place a small team.

Do I need a Mexican entity to hire?

No. With an EOR you can employ people in Mexico without your own company. You only need to incorporate, most commonly as an S.A. de C.V. or S. de R.L. de C.V., when you are committing to a permanent, larger presence, and we will tell you honestly when that point arrives.

A severance formula for unjustified dismissal that stacks three months’ salary, 20 days per year of service, and a seniority premium; mandatory contributions split between IMSS and INFONAVIT; a two-zone minimum wage across the general and northern border free zones; progressive income tax (ISR, Impuesto Sobre la Renta) that starts withholding above MXN 844.59 a month; and a constitutionally mandated 48-to-40-hour workweek phase-in running 2026 to 2030. None of it is a problem when handled correctly, which is the point of getting the model right at the start.

We are independent: we assess what you actually need, place you with the right vetted partner, secure pricing you will not get going direct, and stay on your side to escalate or renegotiate. You get advice, not a product pitch.

Let’s map your Mexico hire.

Tell us who you want to hire and where you are headed in Mexico. One conversation maps your options, flags the risks, and usually gets you to a better answer, and better pricing, than going direct. No pitch.

Tax and labour data verified July 2026 (CONASAMI, SAT, IMSS, PwC). Figures change; we confirm the current position when we scope your hire.