The 24 questions companies ask before hiring or expanding in Mexico, answered
No gate on the answers. Every question below is answered in full on this page. Jump to a topic below, or go straight to the calculator or guide that matches your question.
Every recommendation we issue is built on your actual roles, locations and timeline. The appropriate structure depends on the facts of each project.
Cost and money
What is the fully loaded cost of an employee in Mexico?
Budget 1.30 to 1.40 times base salary. On top of salary you pay IMSS social security, INFONAVIT housing at 5 percent, SAR retirement at 2 percent, state payroll tax of 1 to 4 percent, aguinaldo of at least 15 days, a 25 percent vacation premium and statutory profit sharing.
• Line by line burden model for a 25,000 MXN per month role in Nuevo Leon, Jalisco, Coahuila and Mexico City
• IMSS risk class table by role type and how it changes the number
• Typical market benefits above the legal minimum and what they add per head
Is an Employer of Record cheaper than opening my own entity?
There is no universal entity-versus-employment-solution break-even headcount. It depends on annual entity overhead, employment-provider fees, benefits, role mix, locations and the infrastructure the buyer already operates. Use the calculator for a first result, then we model both routes using your assumptions. Your own entity carries incorporation, accounting, payroll, legal, IMSS administration and annual compliance costs that run into the tens of thousands of dollars per year regardless of headcount.
• Breakeven model comparing EOR fees against the real annual run cost of an entity
• Transition plan for moving EOR employees into your own entity later without severance exposure
What does it cost to terminate an employee in Mexico?
Where a termination is without justified cause, exposure typically includes three months of integrated salary, plus 20 days per year of service where applicable, plus a seniority premium of 12 days per year capped at twice the minimum wage, plus accrued vacation, vacation premium and prorated aguinaldo. Terminations with documented justified cause, resignation, or a negotiated mutual separation agreement do not automatically trigger the same amounts.
• Worked severance calculations at 1, 3 and 5 years of service
• The difference between rescission with cause, mutual agreement and unjustified dismissal
• Documentation that protects you: the acta administrativa, the convenio ratified before the labor authority
What salaries should I offer to be competitive in Mexico?
It depends on the city and the sector, and the gap is wide. Monterrey and Queretaro engineering salaries can run 20 to 40 percent above secondary markets, while Bajio manufacturing operators track local cluster rates. Pay at market or you will lose candidates in the offer stage.
• Current salary bands for your specific roles in the cities you are considering
• Total compensation norms: vales de despensa, fondo de ahorro, private medical, transport
• Counteroffer and turnover data for your cluster
Get the Mexico Answer for Your Workforce Decision
Tell us the roles, locations or decision your team is evaluating. A Mexico specialist will identify the strongest route, the cost drivers and the next step.
How does PTU profit sharing work and does it apply to me?
Yes, most employers pay PTU. Employees receive 10 percent of taxable profit, capped at either three months of salary or the average PTU of the last three years, whichever is higher for the employee. Newly incorporated entities are exempt in their first year.
• How PTU is calculated and distributed between days worked and salary earned
• How PTU works under an EOR versus your own entity
• Budgeting guidance so PTU does not surprise your May cash flow
Can I pay employees in US dollars?
No. Employees in Mexico must be paid in Mexican pesos through a compliant payroll with CFDI stamped receipts. You can fund payroll in dollars, but the employment contract, payslip and tax filings are peso based.
• How FX exposure is handled in monthly funding and invoicing
• Payroll calendar, CFDI timing and IMSS payment deadlines
• How to structure allowances for expatriate or cross border staff
What is REPSE and do I need my supplier to have it?
Yes, if the supplier provides specialized services or specialized works with its own personnel, it must be registered in REPSE. Contracting an unregistered provider exposes you to loss of tax deductibility, VAT credit rejection and joint liability for labor and social security obligations.
• How to verify a REPSE registration and what the certificate must cover
• Four-month (cuatrimestral) ICSOE and SISUB reporting duties and who files them
• Contract clauses that shift and evidence compliance
Is labor outsourcing legal in Mexico after the 2021 reform?
Yes, with the right structure, and that is exactly what we build. Specialized services outside your corporate purpose and predominant economic activity are legal when the provider holds REPSE registration and the contract is properly documented, which is how we operate. Staffing, recruitment, EOR of specialized functions and BPO all run inside that frame, with one partner accountable.
• Plain language map of what is allowed and what is banned
• How to define the specialized scope so it survives an audit
• What an SAT or IMSS review actually asks for
Am I jointly liable for my staffing provider's employees?
You can be. If the provider fails to pay salaries, IMSS or taxes, the client can be held jointly and severally liable, especially if the provider is not REPSE registered or the contract is not compliant. Provider solvency and monthly compliance evidence matter more than price.
• Monthly compliance evidence pack you should demand from any provider
• Indemnity and audit clauses to insert into your services agreement
• Red flags in provider structures that create liability
Will hiring in Mexico create a permanent establishment for my US company?
It can. PE risk rises when local staff habitually conclude contracts, hold a dependent agent role or operate a fixed place of business for your company. Using an EOR reduces but does not eliminate the analysis, because PE depends on activity, not only on who signs the payroll.
• Activity checklist that raises and lowers PE risk under the US Mexico treaty
• Safer role design for sales versus support versus engineering staff
• When to switch from EOR to your own entity for tax reasons
How do I protect IP and confidential information with a Mexican team?
IP created by an employee in the course of employment generally belongs to the employer, but you need written assignment, confidentiality and invention clauses in Spanish, plus a clear chain from the EOR to your company when you are not the direct employer.
• IP assignment chain diagram for EOR, staffing and SOW models
• Enforceable confidentiality and non solicitation language in Mexico
• Data and equipment control practices for nearshore teams
Do I have to deal with unions in Mexico?
In manufacturing you usually will. Collective bargaining agreements must now be legitimized by worker vote, and the USMCA rapid response mechanism raises the stakes. Site selection, wage positioning and union strategy should be decided before you sign a lease.
• Union landscape by state and cluster
• How to prepare for a legitimization vote
• USMCA labor chapter exposure and how buyers mitigate it
With an EOR, a first employee can be onboarded in days once documents are complete. For recruited roles, shortlists typically arrive in one to two weeks and offers close within three to five weeks depending on seniority and location.
• Stage by stage timeline with owner and duration for your role mix
• Document checklist that removes the most common delays
• Where projects usually slip and how to compress the schedule
Can I hire in Mexico without a legal entity?
Yes. An Employer of Record hires the employee on your behalf under a compliant Mexican contract while the person works to your direction. You get a legal workforce without incorporation, and you can convert to your own entity later.
• What the EOR does and what stays your responsibility
• Onboarding pack and timeline for the first hire
• Conversion path and cost of moving to your own entity
How long does it take to set up a Mexican entity?
Plan four to twelve weeks to be operational. Incorporation itself can be quick, but RFC registration, e.firma, bank account opening, IMSS employer registry and state tax registration are the real critical path, and bank onboarding is usually the slowest step.
• Milestone plan from notary to first compliant payroll
• Documents your parent company must apostille in advance
• Parallel path that lets you hire through EOR while the entity is being formed
Which city in Mexico should I hire in?
Match the cluster to the skill. Monterrey and Saltillo for heavy manufacturing and automotive, Queretaro and Guanajuato for aerospace and Bajio manufacturing, Guadalajara for software, electronics and shared services, Tijuana and Juarez for cross border manufacturing, Mexico City for finance, legal and commercial roles.
• Labor availability, wage level and turnover comparison for your shortlist cities
• Payroll tax and incentive differences by state
• Talent depth for your specific job titles
How do I move expatriate managers into Mexico?
You need a work permit sponsored by a Mexican entity holding an INM employer constancia, then a visa issued at a consulate and a residency card once in country. Budget six to ten weeks and start before your project timeline depends on it.
• Step by step immigration timeline and document list
• Options when you do not yet have an entity to sponsor
• Tax residency and payroll split considerations for expatriates
Is the talent quality in Mexico good enough for engineering and technical work?
Yes. Mexico graduates over 110,000 engineers a year, supports the automotive, aerospace, medical device and semiconductor supply chains, and offers time zone overlap with the United States that India and Eastern Europe cannot match.
• Talent supply data for your discipline and city
• Sample anonymized profiles at your seniority level
• Retention benchmarks and what drives attrition in your cluster
Global platforms are built for one or two remote hires in many countries. They rarely handle union sites, IMSS risk class disputes, REPSE reporting, blue collar volume hiring, site selection or physical operations. A Mexico specialist handles all of that with in country people.
• Feature by feature comparison against the major global platforms
• Where platform buyers most often get stuck and what it costs them
• How our pricing compares at 5, 25 and 100 employees
Will I be locked into a long contract?
Not with us. Our agreements are month to month after the initial term, employees can be converted to your entity without conversion penalties, and we hand over documentation if you leave. Lock in is a pricing tactic, not a service.
• Our standard commercial terms and notice periods
• Conversion and exit process with timelines
• What a fair staffing contract should and should not contain
What happens if a hire does not work out?
Recruited placements carry a replacement guarantee. Staffed and EOR workers can be replaced within the notice terms of the agreement, and we manage the separation process so the compliance and severance exposure is handled correctly.
• Replacement guarantee terms by service line
• Service level table with response, shortlist and fill commitments
• How separations are documented to avoid labor claims
How is your pricing structured?
Recruitment is a percentage of first year compensation, EOR and staffing are a monthly fee per worker or a markup on payroll, and SOW managed services are priced per output or per team. You see the full pass through cost, not a blended number.
• Indicative price bands for each service line
• Cost stack transparency: what is pass through and what is fee
• How to compare quotes from providers on a like for like basis
Should I use recruitment, staffing, EOR or a managed SOW?
Use recruitment when you have an entity and want permanent hires, staffing for flexible or temporary headcount, EOR when you have no entity or want speed, and SOW managed services when you want an outcome delivered rather than headcount supervised.
• Decision matrix mapping your situation to the right model
• Risk and control tradeoffs of each model in Mexico
• How companies combine models across a two year expansion
How do I verify a Mexico partner before I commit?
Ask for the REPSE certificate, IMSS employer registry, proof of monthly social security payments, insurance certificates, the names of the in country people who will run your account and references from clients in your sector and state.
• Supplier due diligence checklist you can send to any provider
• The documents we hand over during onboarding
• Named specialists who would run your account and their track record
Send the question in your own words. A Mexico specialist answers it in writing, on your actual roles, locations and timeline, with the cost drivers behind the answer.
