PEO Mexico

Professional Employer Organization (PEO)

Employer of Record (EOR) | Remote Work

peo mexico

World Bank Ease of Doing Business Ranking

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  • DB Rank – 60
  • DB Score – 72.4

Rankings on Doing Business topics – Mexico

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Topic Scores

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Global PEO in Mexico

Mexico stands out as a compelling choice for businesses seeking the advantages of a Professional Employer Organization (PEO). With its strategic location, robust economy, and skilled workforce, Mexico offers a conducive environment for companies aiming to expand their operations internationally. The country’s pro-business policies, coupled with a growing market and diverse industries, create a fertile ground for PEOs to provide efficient HR and employment solutions. Navigating Mexico’s complex employment regulations becomes more manageable with the expertise of PEOs, ensuring compliance while tapping into a dynamic talent pool. Whether streamlining administrative processes or accessing new opportunities, Mexico’s status as a PEO country provides a gateway to smoother business expansion and enhanced success.

What Is a PEO?

A PEO, or Professional Employer Organization, is a company that provides a range of HR and payroll services to small and medium-sized businesses. These services can include employee benefits, payroll, compliance with labor laws, and recruiting and training.

PEOs work by entering into a co-employment agreement with the businesses they serve. In this arrangement, the PEO becomes the employer of record for the business’s employees, taking on responsibilities such as payroll, tax withholding, and employee benefits. The business, however, retains control over its day-to-day operations and the supervision of its employees.

PEOs can help businesses streamline their HR and payroll processes, reduce costs, and free up time and resources to focus on their core business activities. They can also provide access to a range of benefits and resources that small businesses may not be able to afford or manage on their own.

PEOs are also understood as employer of record / EOR at times.

Mexico – Country Overview

Mexico is a stretch of land linking the continents of North and South America. In the north, Mexico borders the United States, and to the south, Guatemala, the Caribbean Sea, and Belize. Mexico is bordered, to the east, by the Gulf of Mexico and to the west by the Gulf of California.

Capital City

Mexico City


Mexican Peso (Mex$)

Principal Language



Federal Presidential Republic

Employment Contracts in Mexico

A written contract is the most common type of contract in Mexico.

Some of the details typically mentioned in the written employment  contract in Mexico include:

  • Unique Population Registration Code also called Clave Única de Registro de Población (CURP)
  • Federal Taxpayer Registration
  • The need for a period of training or proof of capability (if applicable)
  • A declaration that the worker will be educated and trained with the plans and programs drawn up by the company in accordance with the provisions of the law
  • and more

The different types of employment relationships are:

  • Permanent Employment – Unless specified in the employment contract, employment in Mexico is deemed indefinite.
  • Fixed-Term Contracts – Per Mexico’s Federal Labor Law, fixed-term contracts may only be established when the nature of the activity requires it or when the objective is to temporarily replace a worker. The contract’s duration must be indicated expressly in the employment contract.
  • Temporary Employment – The Federal Labour Law of Mexico does not distinguish temporary employment from fixed-term or special-purpose employment.

Probationary Period

In Mexico, a probationary period lasts up to 30 days and can extend up to 180 days for workers in managerial, technical, or professional jobs.

Working Hours in Mexico

Employees are only allowed to work 6 days a week. Standard working hours are limited to 8 hours per day and 48 hours per week. A day shift workday can last up to 8 hours, a night shift up to 7 hours, and a mixed work shift up to 7.5 hours.

Employee Leave in Mexico

Employees in Mexico are entitled to the following leaves:

  • Annual leave in Mexico – Per the Federal Labor Law, employees who have been with the company for more than a year are entitled to 6 working days of annual leave. The length of leave is determined by the length of service or seniority.
  • Maternity leave in Mexico – Female employees in Mexico are entitled to 84 days (12 weeks) of fully paid maternity leave, with an extension if they are unable to return to work due to pregnancy or confinement. The leave is divided into two parts: 6 weeks preceding the delivery and 6 weeks following the delivery.
  • Sick leave in Mexico – Employees in Mexico who are unable to work due to a non-work-related accident or illness and have made payments into the social security system in the fo4ur weeks preceding the onset of the condition are eligible for paid sick leave through the Social Security Institute. In the event of a work-related illness or accident, 4 weeks’ contribution is not required to be eligible for sick leave.
  • Paternity leave in Mexico – Employees in Mexico are entitled to 5 working days of paid paternity leave following the birth of their child or the adoption of an infant.

The following are the statutory national holidays in Mexico:

  • January 1 – New Year’s Day
  • February 1 – Constitution Day
  • March 15 – Benito Juárez’s Birthday Memorial
  • May 1 – Labor Day / May Day
  • September 16 – Independence Day
  • November 15 – Revolution Day Memorial
  • December 25 – Christmas Day

Other Paid Leave

Maternity leave is strict in Mexico. Women are entitled to 6 paid weeks prior to giving birth and 6 paid weeks after giving birth. Medical complications allow for an additional two weeks of paid leave while men receive 5 paid days for paternity leave when a child is born or adopted.


Employees in Mexico pay a progressive income tax with the top rate being 35% and starting at a salary rate of Mexican pesos (MXN) of 3,000,000.01.

Mexico’s current income tax brackets look like this (in MXN):

  • 0 – 6,942.20: 1.92%
  • 6,942.21 – 58,922.16: 6.40%
  • 58,922.17 – 103,550.44: 10.88%
  • 103,550.45 – 120,372.83: 16.00%
  • 120,372.84 – 144,119.23: 17.92%
  • 144,119.24 – 290,667.75: 21.36%
  • 290,667.76 – 458,132.29: 23.52%
  • 458,132.30 – 874,650.00: 30.00%
  • 874,650.01 – 1,166,200.00: 32.00%
  • 1,166,200.01 – 3,498,600.00: 34.00%
  • 3,498,600.01 and over: 35.00%

It’s the employer’s responsibility to deduct income tax according to their Mexican employees’ earnings under this progressive system.

Employee Termination in Mexico

Typically there is no minimum notice period in Mexico.

Global Mobility in Mexico

There are typically the following categories of visas in Mexico:

  • Tourist visa
  • Business visitor visa
  • Technical visitor visa
  • Temporary resident visa
  • Permanent resident visa
  • Student visa
  • Visitor on a cooperation program visa
  • Long-term visitor visa

Certain visitors do not need a visa to enter Mexico for tourism or business purposes for up to 180 days. Nationals of Barbados and Trinidad and Tobago, nationals of any nation with proof of residency or a valid business or tourist visa for the United States (B1/B2), Japan, Canada, the United Kingdom, or any Schengen country, and individuals with permanent residency in Chile, Colombia, or Peru are among those eligible.

To obtain a work permit in Mexico, a foreign national must have a Mexican company or organization ready to employ them. A Mexican company must apply to the National Migration Institute on behalf of the worker and must have an Employee Registration Certificate.

Employee Benefits in Mexico

The Mexican Institute of Social Security (IMSS) provides insured employees with a retirement pension. A monthly pension, medical assistance, family allowances, and assistance aid are among the benefits.

Social insurance, often known as social welfare, is a government-mandated insurance program that provides financial help to the elderly, the disabled and the injured, and the unemployed.

Some examples of social insurance programs in Mexico are:

  • Dependents’/Survivors Benefit – Survivor benefits are covered by the Mexican Institute of Social Security’s Life and Disability Insurance. It is available to survivors if the insured worker was a pensioner or had contributed for at least 150 weeks before death which must not be the result of an occupational injury. A funeral grant is provided with at least 12 weeks of contributions in the last 9 months.
  • Life and Disability Insurance/Benefit – The Institute of Social Security offers benefits to disabled people with insurance. To be eligible for disability benefits, the insured must have made at least 250 weeks of contributions. 150 weeks of contributions are sufficient for more than 75% disability.

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