According to Velocity Global's employment agreement template, when is the salary due in Mexico?

According to Mexican labor regulations, salaries must be paid at intervals not exceeding a fortnight. This means that employers in Mexico are required to pay salaries at least every 15 days.

What date does the law specify salary must be paid in Mexico?

In Mexico, the Federal Labor Law specifies that wages must be paid on a business day. Payment frequency varies by the type of employee:

• White-collar employees must be paid fortnightly.
• Blue-collar employees must be paid on a weekly basis.

How is salary calculated and what components does it consist of in Mexico?

In Mexico, the calculation of salary is governed by Federal Labor Law and can vary according to collective bargaining agreements, individual agreements, and company practices. The salary includes several components:

• Base Salary: This is the fixed amount stipulated in the employment agreement as basic remuneration for the regular workday. It can be paid monthly, semimonthly, or weekly, depending on the established payment period.
• Wage Supplements: These are additional payments to the base salary and may include:

- Overtime: Extra remuneration for hours worked beyond the regular workday.

- Bonuses: Special payments for achievements such as productivity, seniority, or awards.

- Commissions: Payments based on a percentage of sales or transactions made by the employee.

- Incentives: Additional compensation for meeting specific objectives or goals.

- Gratuities: Non-recurring payments given on special occasions, like a Christmas bonus or profit sharing.

- Benefits: These include additional benefits mandated by law or internal company policies such as:

- Aguinaldo: An annual payment at least equivalent to 15 days' salary, paid before December 20th each year.

- Vacation: Employees are entitled to 12 days of paid annual vacation in the first year, with an increase of 2 days each subsequent year up to 20 days.

- Vacation Premium: A minimum premium of 25% based on the vacation days and years of service, paid on the employee’s anniversary.

• Social Security: Contributions to the social security system, which include medical care and social security benefits.
• Savings Fund Allowance
• Food Vouchers: These are capped at 7% of the monthly salary, tax-free and paid on a Si Vale card.

Is there a legal obligation to pay salaries in the same month in Mexico?

In Mexico, there is a legal obligation to pay salaries within a specific timeframe. For white-collar workers, salaries must be paid at least every fortnight. For blue-collar workers, salaries must be paid at least every week.

How many salary payments are made per year in Mexico?

In Mexico, generally, 12 salaries are paid per year. Salary remuneration is divided into periodic payments which may be monthly, biweekly, or weekly, depending on the employment agreement and the company's practices.

Most companies in Mexico have a biweekly pay period, resulting in 24 payments per year. However, these payments are divided into 12 salaries since each biweekly payment corresponds to half of a monthly salary. Therefore, it is considered that there are 12 monthly salaries in a year.

In addition to the regular salaries, there are additional payments such as the aguinaldo, which corresponds to 15 days of salary and is paid once a year before December 20, in accordance with the Federal Labor Law. There may also be additional bonuses or incentives depending on the policies and practices of each company.

Is salary payment monthly and is payment standard at the end of the month in Mexico?

In Mexico, the payment of wages is regulated by specific guidelines. Employees performing manual work must receive their wages at least once a week. For other employees, the payment period can be no longer than 15 days.

Pebl, an Employer of Record (EoR) provider, operates with two payroll cycles each month for Mexico. This ensures that employees are paid in accordance with local laws and regulations.

Should the employment agreement specify salary in monthly or annual amounts in Mexico?

Our employment agreement template for supported employees in Mexico specifies the salary as monthly gross salary in the local currency, which is Mexican Pesos (MXN). For those earning hourly salaries, the salary is detailed as an hourly gross salary.

What tax and social security obligations do employees have in Mexico?

In Mexico, employers and employees have specific tax and social security obligations related to salaries. The primary obligations include:

• Income Tax (ISR): Employers must calculate, withhold, and pay Income Tax (ISR) on employees' salaries. This involves applying the corresponding tax rates and withholding the tax from wages paid. Additionally, employers must file tax returns and make ISR payments to the Tax Administration System (SAT) in accordance with established deadlines.

• Social Security Contributions: Employers are responsible for making social security contributions for each employee. This includes contributions to the Mexican Social Security Institute (IMSS) and the National Workers' Housing Fund Institute (Infonavit). These contributions are calculated as a percentage of the employee's salary and must be paid regularly.

• Payroll Tax: Some states in Mexico impose a local payroll tax on wages paid by employers. The rate and specific requirements may vary by state, so employers need to consult the corresponding state legislation.

What are the details of the statutory bonuses and 13th/14th-month salary, including the local name and payment schedule?

In Mexico, statutory bonuses and additional salary payments are structured as follows:

• Christmas Bonus: Is a mandatory payment by December 20 each year. Employers are required to pay this bonus, which is at least equivalent to 15 days' regular wages. Employees who have worked less than a year receive a prorated amount.

• Profit Sharing: According to the Federal Labor Law, employees are entitled to participate in their employer's profit-sharing program, which is determined by governmental decisions. This excludes executive officers and general managers. The shared profits are divided into two parts:

- The first part is equally distributed among all workers based on the number of days worked in the year.

- The second part is distributed according to each worker’s annual remuneration.

• Vacation Premium: This is an additional payment not typically equivalent to an extra month's salary. It is paid annually on the employee's work anniversary and consists of at least 25% of the employee’s daily salary for each day of vacation. However, it is common practice for employers to offer more than this statutory amount.

What is the minimum wage information in Mexico?

Effective January 1, 2025, the general minimum wage in Mexico is MXN 278.80 per day. In the Northern Border Free Zone, known as the ZLFN, the minimum wage is set at MXN 419.88 per day.