Mandatory Employee Benefits in Mexico

Manufacturing companies must take Mexico labor laws and mandatory employee benefits under consideration when exploring a potential Mexico manufacturing expansion. Mexico’s workforce is plentiful, affordable, highly trained, and often bilingual.

Federally mandated benefits for workers are typical in most industrialized nations including Mexico maquiladoras. When exploring Mexico as a potential manufacturing site you will often see the word “fully burdened” when looking at labor rates for manufacturing in Mexico. Fully Burdened labor costs mean the total cost of each employee including wages and the "burden" of the following mandatory benefits in Mexico. 

Health Insurance, Death and Disability

Mexico has social security similar to the United States. All employees must be registered with the Mexican Institute of Social Services (IMSS). This grants them access to public healthcare and enrolls them in housing and retirement funds. Such registration relieves the employer from any liability in connection with job-related accidents or illnesses. Payments into the IMSS system are made by the employer and by deductions to the employee’s salary during each payroll period. Mandatory maternity leave is 42 days before birth and 42 days after birth, paid in full. Extensions may be granted by a medical professional.

1. Compensation for death and disability is based on a combination of factors. In general terms, the following compensation is given:

• In the event of death, the deceased’s family is granted an amount of a certain number of federal daily minimum wages.

• For work related disabilities, the employee receives their corresponding salary in full, as registered with the Mexican Institute of Social Services (IMSS) and can be compensated for up to a year, based on determinations made by a medical professional. Extensions may be granted.

2. Housing & INFONAVIT

Passed in 2006, INFONAVIT is the “constitutional right for decent, dignified, and affordable housing” now accounts for 7/10 (>2 Million) loans for Mexican workers. It facilitates anything from home buying, financing, maintenance & repairs, mortgaging, credit, and all other services for new home buyers. This is often referred to as one of the largest social security programs for employees and is meant to ensure sustainable urban development across all industries.

INFONAVIT also promotes eco-technologies the construction of INFONAVIT financed homes in Mexico. This includes homes that run more efficiently, use less energy, and are far easier to maintain. Sustainable housing was often second-thought in past decades but is becoming a topic of political discussion in more recent times. Attractive housing allows more people to live in these thriving manufacturing communities, and ensures citizens have equal opportunity for sustainable housing.

3. Aguinaldo (Christmas Bonus)

Employees are entitled to a bonus equivalent to 15 days of salary if they have been with the company for a year, or the proportionate amount for less seniority.

4. Vacation Bonus: Time and Pay

Mandatory vacation time includes 6 days paid vacation after 12 months of employment. There is an increase of two vacation days every subsequent year until reaching 12 days, and after that a day is added for every 5 additional years worked. Vacation pay Employees are entitled to a 25% bonus over their regular compensation for vacation time.

5. Overtime Pay in Mexico

Overtime is permitted for a period of three hours per day without exceeding 9 hours per week, and with a compensation of 100% over the regular hourly pay. If overtime exceeds 9 hours, compensation is 200% over the regular hourly pay. Employees who work on Sunday are entitled to a 25% bonus over their daily salary.

6. Savings Account

A federally mandated benefit for workers in Mexico, employees can save a percentage of their paycheck during each pay period to save for retirement. Employers are required to match the employee’s contribution to their savings plan.

Using a provider of Shelter Services in Mexico to Manage Mexican Workers Benefits

Foreign manufacturers find the availability of the highly skilled and affordable labor force a key draw for manufacturing in Mexico. Co-Production International provides access to the IMMEX maquiladora program, manages recruitment, HR, and Mexico payroll laws. We also ensure that our clients are in compliance with Mexican Labor Law such as the mandatory benefits listed above.