Employee Benefits in Mexico – Statutory and Supplemental Benefits

Mexico offers a diverse range of employee benefits designed to provide financial security and well-being for its workforce. Understanding these benefits is crucial for both employers and employees. In this blog post, we will delve into the specifics of employee benefits in Mexico, covering both statutory and supplemental offerings.

We will begin by discussing who is eligible to receive employee benefits in Mexico. Next, we will explore the statutory benefits that employers are legally obligated to provide. Finally, we will discuss the supplemental benefits that many companies offer to enhance employee satisfaction and retention.

Who receives employee benefits in Mexico?

Although employee benefits in Mexico are typically granted to full-time employees, let us dig a little deeper.

Employee benefits in Mexico

1. Full-time employees

Employees who work a standard workweek, typically around 40 hours.
They are entitled to the full range of mandated benefits under Mexican labor law, which include paid vacation, sick leave, maternity leave, and social security benefits. This ensures comprehensive coverage and support for their well-being and job security.

2. Part-time employees

Workers typically have a reduced work schedule compared to full-time employees.
While they may not qualify for the complete set of benefits, part-time employees often receive prorated benefits based on the number of hours they work. For instance, if a part-time employee works 20 hours per week, they may receive half the vacation days and sick leave that a full-time employee would receive. This prorating helps provide some level of support while acknowledging their different work commitment.

3. Temporary employees

Employees are hired for a specific period or project, often through a contract.
Their eligibility for benefits can vary significantly based on the duration of their contract. Longer contracts may offer more substantial benefits, while shorter contracts might provide minimal or no benefits. Employers may tailor benefits to meet the specific terms of the temporary arrangement, which can lead to inconsistencies in coverage.

Exceptions to benefit eligibility

1. Independent contractors

• Individuals who work on a freelance basis or through contractual arrangements rather than as traditional employees.
• Independent contractors are typically not entitled to employee benefits, as they operate under different terms and are responsible for their own benefits. This lack of entitlement is based on the nature of their work arrangement, which does not classify them as employees under labor laws.

2. Undocumented workers

• Individuals working in Mexico without legal authorization.
• Generally, undocumented workers are not eligible for employee benefits due to their status. This lack of eligibility can leave them without access to crucial support, such as health care and legal protections, highlighting the vulnerabilities faced by this group in the labor market.

What are statutory employee benefits in Mexico?

In Mexico, statutory employee benefits are mandated by law to ensure that workers receive essential support and compensation.

1. Social security

Employers must contribute between 25% of an employee’s salary to the Mexican Social Security Institute (IMSS), which covers healthcare, pensions, and disability insurance.

2. Christmas bonus (Aguinaldo)

Disabled employees are entitled to a mandatory Christmas bonus equivalent to at least 15 days of salary.

3. Vacation days & premium

Employees are entitled to 6 vacation days after one year of employment, with an additional 2 days for each subsequent year, up to a maximum of 12 days. Starting in the fifth year, employees receive 14 vacation days, with an extra 2 days added for every additional five years of service. Your business is required to pay a vacation premium of 25% of the employee’s salary for the vacation days. Vacations must be taken within 6 months following the employee’s anniversary date, as determined by the employer.

4. Maternity leave

Female employees are entitled to 12 weeks of paid maternity leave, divided into six weeks before and six weeks after childbirth, funded by the IMSS.
Female employees can take 42 days of maternity leave after childbirth, during which the IMSS pays them 100% of their registered salary. This leave can be extended if necessary due to complications related to the pregnancy or delivery. Throughout the maternity leave, the employee continues to receive her regular salary.

Get more information about employee leave policies in Mexico

5. Seniority pension

Employees can receive an old-age pension at age 65 with at least 1,250 weeks of contributions or at age 60 with 500 weeks if unemployed and unable to find work. Early pensions are available at any age if the account balance supports at least 30% of the legal minimum pension, currently 2,574.72 pesos. Additional benefits include a dependent supplement for spouses, children, or dependent parents and a constant attendance allowance. Social pensions are available for those aged 65 who do not receive other pensions. Benefits can be paid abroad under reciprocal agreements, and if leaving Mexico permanently, pensioners can request a lump sum of two years’ worth of pension payments.

6. Severance pay

Employees hired for an undetermined term and dismissed without just cause are entitled to severance, including 20 days of daily wage per year worked, 90 days as Constitutional Indemnification, and a Seniority Bonus of 12 days per year, capped at twice the minimum daily wage, along with any accrued salaries and benefits. For determined term contracts, severance is half the salary for terms under a year, and for longer terms, six months’ wages for the first year plus 20 days for subsequent years, along with the same indemnifications. Employees dismissed for just cause receive only accrued salary and benefits.

What are supplemental employee benefits in Mexico?

• Private health insurance

  Many companies offer private health insurance plans to provide employees with better healthcare options than those available through public social security.

• Flexible work arrangements

  Options for remote work or flexible hours can enhance work-life balance and employee satisfaction.

• Professional development opportunities

  Companies may fund training programs, workshops, or courses to help employees advance their skills and careers.

• Wellness programs

  Initiatives promoting physical and mental health, such as gym memberships or wellness workshops, are increasingly popular.

• Performance bonuses

  Employers often provide bonuses based on individual or team performance to incentivize productivity.

• Food vouchers

  These vouchers help employees cover meal costs and are a common perk aimed at improving job satisfaction.

• Transportation stipends

  Companies may offer fixed stipends to assist with commuting costs, including gasoline or public transport expenses.

• Savings funds

  Some employers facilitate savings plans where employees can save a portion of their salary, often matched by the employer.

• Loans and credit options

  Employers might offer low-interest loans for personal needs, such as home purchases or emergencies.

• Company cars

  For certain positions, especially those requiring travel, companies may provide vehicles for business use.

• Internet service subsidies

  To support remote work, some companies cover internet costs for their employees.

• Devices and gadgets

  Providing laptops, tablets, or smartphones can help employees perform their jobs more effectively and maintain productivity.

Global Squirrels: hire and pay employees and contractors/freelancers in Mexico easily and cost-effectively

Global Squirrels is a staffing and payrolling platform that allows you to hire and manage compliance and payroll of full-time employees and freelancers in a simple and efficient way. You can do this by signing up, choosing a plan that suits your business requirements, and within 2 to 5 days.

How does Global Squirrels help you hire top talent in Mexico?

Once you sign up on the Global Squirrels platform, you can select plans for full-time employees and freelancers these plans include.

A) Subscription-based plans to hire full-time employees

1. Purple plan: This plan is well-suited for you if you already have a professional you want to onboard but need help with onboarding, payrolling & benefits, and generating offer letters.
2. Orange plan: The Orange plan helps you find and hire top talent based on your specific business requirements. This is done by offering background-verified and pre-screened profiles within 2 to 5 days, then allowing you to choose candidates you want to interview and choose to onboard.
3. Blue plan: This plan allows you to find and hire top talent from Mexico based on your specific requirements.

B) Subscription-based plans to hire freelancers

4. Purple plan: The Purple plan helps you onboard freelancers you are already interested in. Our platform manages compliance with local and international labor laws, timesheets, paying the freelancers, and performance management.
5. Orange plan: Similar to other Orange plans, our platform helps you find and onboard freelancers whose backgrounds are verified and profiles are screened. Once you select your candidate, you can interview them and choose the right candidate. Our platform will then begin the onboarding process and manage compliance with local and international labor laws, timesheets, payments to the freelancers, and performance management.

Our platform handles all HR functions, such as managing payroll, compliance, benefits, and generating offer letters. Global Squirrels does all this cost-effectively with our transparent pricing model. Our platform allows you to save up to 20% on hiring costs by eliminating all high markups and extra fees. All you need to pay is the flat platform fee and the compensation of the employee or freelancer.

Are you ready to hire top talent in Mexico while complying with labor laws? Request a demo today!