Recruiting Top Talent in Mexico

Mexico Top Talent

Finding and recruiting top talent in any overseas territory poses many potential issues for companies like yours, who are expanding their international presence.  You need your new staff to be ‘up and running’ as quickly as possible. This certainly applies to Mexico, where employment laws are strictly governed by the Federal Labor Law and other statutes.

You need a specialist to oversee the process – and this is where Bradford Jacobs steps in. Our expertise in international recruitment is indispensable for expansion into the Mexican economy.

Bradford Jacobs leads the way with our Professional Employment Organization (PEO) recruitment networks, and a worldwide reach that will find the highest quality staff, managers, and executives for your move into this new territory.

The Recruitment Process in Mexico

If you are expanding into Mexico, it is mandatory to establish a legal entity to hire and pay employees. Additionally, whether the employees are Mexican or foreign nationals they must be registered with the Tax Administration Service (SAT) at the Ministry of Finance and Credit (Secretaria de Hacienda et Credito Publico) and the Social Security Institute (Instituto Mexicano del Segura Social, IMSS). Companies must also register with the Sistema de Informacion Empresarial Mexicano (SIEM), which keeps a register of all businesses in Mexico.

However, the first step in the expansion process is recruitment. It is vital to know where to locate the best talent who will be a ‘perfect fit’ for your company’s plans.

What makes Mexico a prime target for international expansion? Mexico’s economy has grown to become the 15^th largest in the world and has borders with the USA and South America and coastlines on both the Atlantic and Pacific oceans. Further, the United Nations 2020 World Investment Report ranked Mexico 14^th globally for attracting Foreign Direct Investment (FDI) and sixth among developing nations.

This foreign investment and influx of international companies has brought higher salaries and job satisfaction, which has filtered down to local companies in terms of working conditions and wages.

You will have a lot of questions … and the answers do not come easily. Once the right employees are found, employers must follow strict registration procedures for their new staff. These include:

• Registering with the relevant state’s local tax administration for payroll (Secretaria de Finanzas del Gobierno de Distrito Federal).
• Drawing up an employee contract/agreement, which are mandatory in Mexico.
• Remitting withheld taxes to the SAT on a fortnightly basis for white collar staff and weekly for blue collar workers.

There is a simple answer to avoiding these time-consuming and unproductive demands. Engage with Bradford Jacobs as your Employer of Record (EOR). We will convert your Mexican expansion blueprint into an action plan, as follows:

• Bradford Jacobs step in as EOR through our legal Mexican entity to guarantee your employees comply with employment contracts, payroll, HR, tax and, where required, visas and work permits.
• You have daily control of your employee, while Bradford Jacobs manages all work-related registration formalities.
• Your employee completes time sheets and approved expenses claims and we invoice you, the client. Once paid, we remit all contributions to the Mexican tax and social security authorities and transfer the balance into the employee’s nominated account.

Legal Checks on Employees in Mexico

Only the prospective employee can obtain data on any criminal record, while credit checks are rare as there is no established procedure for employers to obtain the information. The Data Privacy Law loosely gives employees protection against checks that are not directly related to the role.

Mexico’s Federal Labor Law does not regulate the recruitment process and imposes few limitations on employers’ background checks on employees or interviewees.

• Discrimination: The Federal Labor Law prohibits discrimination during interview or employment based on race or nationality, gender, or sexual orientation, religious or political beliefs, health, disability, or social status. Under the Data Protection Law employers should not ask questions that might result in the discrimination against the employee or applicant.
• Privacy:  The Federal Law on the Protection of Personal Data (FDPL) applies to individuals or legal entities that process personal data. Employers must have the applicant’s consent to obtain personal information.

Permitted questions and documents include:

• That the applicant meets all requirements regarding work permits and visas.

Basic Facts on Hiring in Mexico

• Employers’ interview questions should not include any that might lead to discrimination against the potential employee, but as the Federal Labor Law does not regulate the recruitment process there are few other restrictions. However, criminal record checks can be made only with the applicant’s permission and the Data Privacy Law restricts questions to being relevant to the designated role.
• The Federal Labor Law bars discrimination during employment or at interview on the grounds of religious or political beliefs, gender or sexual preference, nationality or race, social status, disability, or health.
• Terms and conditions of employment come under the umbrella of the Federal Labor Law, plus supplementary laws and statutes, the Mexican Constitution, the National Housing Institute Law, the Employment and Social Prevention Secretariat, the Mexican Social Security Institute, and the Anti-Discrimination Law.
• Regional and federal labor boards are the main enforcement agencies in employer-employee relationships.
• Written contracts and agreements between employers and employees are mandatory in Mexico. If an employer fails to provide a written contract, the employee does not lose any legal rights or entitlements. Each party should have a signed copy of the contract.
• The contract should include full details of the employee, whether the contract is fixed term or indefinite, type and location of work, vacations, amount and payment schedule of salary and any bonuses.
• Once recruited, employees must be registered with the Mexican Social Security Institute (Instituto Mexicano del Segura Social) and the relevant local tax administration for payroll (Secretaria de Finanzas del Gobierno de Distrito Federal).

Employers must also ensure they comply with various employee entitlements, benefits, and mandatory minimums. These include:

• The National Minimum Wage was raised from January 2001 to MXN (Mexican pesos) 141.70 (US$7) per workday. This can be exceeded regionally and in the Northern Border Zone, for example, it is MXN 213.39 (US$10.55).
• Sick pay applies once illness or injury is certified by the medical authorities of the Mexican Social Insurance Institute (Instituto Mexicano de Seguridad, IMSS). The employee is then entitled to a maximum of 52 weeks’ paid sickness leave, at 60% of their regular wage from the fourth day of incapacity.
• Working hours are generally eight hours per day fitting into a flexible 14-hour window from 6am until 8pm.
• Minimum paid vacations depend on the years of service that qualify for days of paid leave:

Years of employment	Paid vacation days
1	6
2	8
3	10
4	12
5-9	14
10-14	16
15-19	18
10-24	20
25-29	22

• Vacation premiums are paid to employees at the rate of an extra 25% of their daily wage for each vacation day. Employees also receive 15 days salary for their Christmas bonus (‘aguinaldo’), or pro rata for the number of days worked in that year.
• The maternity leave allowance is for six weeks both before and after the birth. The employee receives full salary with 60% paid by the IMSS and the balance by the employer. Maternity leave can be extended by six weeks on half pay.
• Termination and severance is strictly regulated by the Federal Labor Law (FLL), with strong protection for employees regarding termination of employment and severance pay. Dismissal without ‘just cause’, as defined by the FLL, incurs severance payments by the employer.
• Employees are entitled to 90 days’ pay plus 12 days’ pay for each year’s seniority capped at twice the minimum wage, plus any benefits due for vacations and bonuses. There is a further entitlement to an extra 20 days’ pay and if the employer settles all three of the payments the dismissed employee cannot sue for unfair dismissal. Taxes apply. If dismissed for ‘just cause’ the employee is entitled only to salary due.