How to Hire Employees in Mexico: A Guide for Foreign Companies

Hiring in Mexico is more structured than in at-will jurisdictions. Employment is governed by the Federal Labor Law (Ley Federal del Trabajo, LFT), employees are registered with the social security institute (IMSS), and a set of mandatory benefits applies from day one. This guide explains what foreign companies need to know before making a first hire.

The basic legal framework

Mexican employment is built on the principle that labor rights are minimum and cannot be waived. A contract may give an employee more than the law requires, never less. Unlike in many US states, there is no at-will employment: ending a relationship without a legally recognized cause generally triggers severance. Planning for that reality from the start avoids costly surprises.

Who can employ people in Mexico

To hire employees directly, a company needs a Mexican legal presence, typically a corporation (S.A. de C.V.) or limited liability company (S. de R.L. de C.V.), registered with the tax authority (SAT) and as an employer with IMSS. Hiring individuals without an entity creates legal and tax risks, which we cover in separate guides on employer of record models and remote workers.

Contracts and documentation

Employment conditions must be put in writing, in Spanish, in two copies. The contract should state the type of relationship (indefinite, fixed-term, seasonal or probationary), the job description, workplace, working hours, salary and payment date, vacation and other conditions. Indefinite-term contracts are the rule; fixed-term contracts are valid only when the nature of the work requires it.

• Probationary period: up to 30 days, or up to 180 days for managerial and specialized technical roles
• Initial training period: up to three months, or six for the same specialized roles
• Both must be documented and cannot be applied consecutively to the same person

Mandatory benefits and pay rules

Employers must provide a minimum package that is independent of salary negotiations.

• Annual bonus (aguinaldo): at least 15 days of salary, paid by December 20
• Paid vacation: at least 12 days after the first year, increasing with seniority, plus a vacation premium of at least 25%
• Profit sharing (PTU): 10% of taxable profit distributed among employees, with an annual cap per person
• Weekly rest day, paid holidays and overtime at double or triple pay
• IMSS social security and INFONAVIT housing contributions
• Paid maternity (12 weeks) and paternity leave (5 days)

Social security and payroll registration

Before an employee starts, the employer must register them with IMSS (within five business days of starting at the latest) and report salary changes. Payroll must be paid at least weekly for manual workers and every two weeks for others, and every payment requires a tax-compliant electronic invoice (CFDI) with income tax withheld.

Working hours

The maximum daytime shift is eight hours (48 per week), night shifts seven hours and mixed shifts seven and a half. Overtime is limited to three hours a day and three times per week, paid at 200% for the first nine weekly hours and 300% thereafter.

Practical first steps for a foreign company

Confirm your entity structure, obtain tax and employer registrations, define the compensation package including statutory benefits, prepare Spanish-language contracts and policies, set up payroll with a provider or software, and plan for NOM-035 and workplace safety compliance. Engage a local labor lawyer and payroll specialist before the first hire.

This article is general information, not legal, tax or accounting advice. Mexican law and tax rules change often: confirm current requirements with a qualified Mexican advisor before making decisions.