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?
Below roughly 15 to 20 employees an EOR is almost always cheaper. 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
- • Hidden entity costs buyers forget: statutory audit, transfer pricing, CFDI payroll stamping, labor lawyer retainer
- • 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
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
