Hours and shifts
Maximum weekly hours are phasing down 48→46→44→42→40 from 2026 to 2030 under the reform effective May 1, 2026, without reducing salary or benefits; premium pay for overtime and Sunday work still applies.
Employer guide
Mexico Employment Law: A Practical Guide for US Employers
Mexico has no at-will employment. Statutory vacation, aguinaldo, profit sharing, IMSS and INFONAVIT, severance rules and NOM-035 all apply from day one, and they are the difference between a labor cost model that holds and one that fails at the first termination.
Last reviewed: September 2, 2026 · Reviewed by the Staffing in Mexico delivery team, a Gracemark Global Group company. General business information, not legal or tax advice. The appropriate structure depends on the facts of each project.
US companies rarely get Mexico wrong on salary. They get it wrong on everything attached to salary: the statutory bonus, the vacation premium, the profit share, the social contributions and the cost of ending an employment relationship that cannot simply be ended.
This guide covers the obligations that actually drive cost and risk for a US employer, hours and shifts, leave and bonuses, social security enrollment, terminations and severance, workplace standards and union exposure, in the order they hit your budget.
It is a planning guide written by an operator, not legal advice. For a specific engagement we model your loaded cost, confirm which structure applies and coordinate with Mexican counsel where a legal opinion is required. General business information only; the appropriate structure depends on the facts of each project. Primary source for the working-hours transition: the LFT reform published May 1, 2026 (diputados.gob.mx/LeyesBiblio/ref/lft/LFT_ref52_01may26.pdf).
Definition
Ley Federal del Trabajo (Federal Labor Law)
Mexico's national employment statute. It sets minimum conditions that apply to every employee nationwide; contracts and company policy may improve on them but never reduce them.
What you get
Leave and bonuses
12 to 20+ vacation days, 25 percent vacation premium, 15-day minimum aguinaldo by December 20.
Profit sharing (PTU)
10 percent of taxable profit, capped at three months of salary or a three-year average.
Social security
IMSS, INFONAVIT and SAR contributions, plus state payroll tax of roughly 1 to 4 percent.
Termination and severance
Cause must be documented; unjustified dismissal triggers three months plus seniority-based amounts.
Workplace standards
NOM-035 psychosocial risk, NOM-037 for remote work and the record keeping inspectors ask for.
Statutory minimums at a glance
| Obligation | Statutory minimum | Common market practice |
|---|---|---|
| Vacation (year 1) | 12 working days | 12–15 days |
| Vacation premium | 25% of vacation salary | 25–50% |
| Aguinaldo | 15 days of salary | 15–30 days |
| Profit sharing (PTU) | 10% of taxable profit, capped | Statutory |
| Food/grocery vouchers | Not required | Widely offered, tax-efficient |
| Private medical insurance | Not required | Standard for professional roles |
| Severance (no cause) | 3 months + 20 days per year where applicable | Negotiated settlement |
| Weekly working hours (2026 → 2030) | 48 → 46 → 44 → 42 → 40, phased by law | Phase-in schedule per role |
Enterprise and MSP programs
Programs delivered inside enterprise and MSP frameworks
Netflix: Latin America expansion, one country at a time
Netflix needed to stabilize a new Latin America program quickly, run from the United States without a local entity in each market.
Gracemark became the local staffing and payroll supplier across the region, supporting compliant local invoicing market by market and earning a formal client award.
Experience shown belongs to Gracemark group teams and companies, including work delivered outside Mexico. Relationships referenced: Netflix, NextSource, Magnit, AgileOne, KellyOCG.
What we commit to on this type of engagement
- Supplier onboarding, compliance documentation and program reporting handled by our team
- Multi-market delivery coordinated under one accountable relationship
- Local invoicing and employment structures adapted market by market
- Recurring, multi-year placement programs administered end to end
Frequently asked questions
What is the standard work week in Mexico?+
The maximum weekly working hours are being phased down under a labor reform enacted effective May 1, 2026: 48 hours in 2026, 46 in 2027, 44 in 2028, 42 in 2029 and 40 hours from 2030 (Diario Oficial reform to the Ley Federal del Trabajo, published May 1, 2026). The reduction cannot be used to cut salaries or benefits, and employers must keep an electronic work-time record as the reform phases in. Night-shift and mixed-shift maximums are reduced proportionally from their prior 42- and 45-hour ceilings during the same transition.
How much vacation are Mexican employees entitled to?+
Since the 2023 'vacaciones dignas' reform, employees receive 12 working days of vacation after the first year, rising by two days per year to 20 days at year five, then by two days every five years. A vacation premium of at least 25 percent of the vacation salary is also mandatory.
What is aguinaldo?+
A statutory year-end bonus of at least 15 days of salary, payable by December 20 each year and prorated for partial years. Many employers pay 30 days as a competitive practice.
Is there at-will employment in Mexico?+
No. Termination requires legally justified cause with documentation, or a negotiated separation. Where a dismissal is without cause, severance typically includes three months of salary, plus 20 days per year of service where applicable, a seniority premium and accrued benefits; the 20-days component is not automatically owed in every termination, for example where cause is documented or the employee resigns.
What is PTU profit sharing?+
Employers distribute 10 percent of taxable profit to employees, capped since 2021 at either three months of salary or the average of the last three years' payments, whichever is more favorable to the worker. It is paid by late May for calendar-year taxpayers.
What are the employer's social security obligations?+
Registration and monthly contributions to IMSS for health, risk, disability and retirement, bimonthly INFONAVIT housing contributions and SAR retirement contributions, plus state payroll tax which typically ranges between 1 and 4 percent depending on the state.
What is NOM-035?+
A workplace standard requiring employers to identify, prevent and address psychosocial risk factors, including policy documentation, employee surveys and record keeping. It is inspected and fined like any other labor obligation.
How do unions work in Mexico?+
Collective bargaining agreements must be supported by a verified free vote of workers under the 2019 reform and the USMCA labor chapter. Union presence varies sharply by state and sector, which is why site selection and labor-relations diligence matter before you commit to a location.
Sources and methodology
- Author
- Staffing in Mexico delivery team, A Gracemark Global Group company
- Reviewer
- Mexico workforce compliance review, A Gracemark Global Group company
- Last reviewed
- September 2, 2026
- What changed in this review
- Reviewed against the current Ley Federal del Trabajo text, the enacted 2026 to 2030 weekly working-hours transition and the 2026 CONASAMI minimum-wage resolution.
Primary sources
- Cámara de Diputados: Ley Federal del Trabajo, current text (PDF)
- Cámara de Diputados: Ley Federal del Trabajo reform on weekly working hours, published May 1, 2026 (PDF)
- Cámara de Diputados: Ley del Seguro Social, current text (PDF)
- CONASAMI: minimum wage resolutions by zone
- IMSS: employer registration and contributions
- INFONAVIT: employer portal and contribution rules
- STPS: Secretaría del Trabajo y Previsión Social
- Diario Oficial de la Federación
Official Mexican sources are cited directly so you can verify every figure. General business information, not legal or tax advice. The appropriate structure depends on the facts of each project.
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