This article is about Justworks EOR (Employer of Record). What product am I using?
Government-Provided Health Benefits (IMSS)
By law, all employees in Mexico must be enrolled in the Instituto Mexicano del Seguro Social (IMSS). Employers must register employees upon hire, and both parties are required to contribute to the system. Contributions are based on the national minimum wage and withheld from the employee’s salary with supplemental amounts from the employer.
IMSS covers:
- Routine checkups and prescription medications
- Hospitalization and maternity care
- Disability, injury, and daycare services for eligible children
This foundational coverage is required—but most competitive employers go further.
IMSS also manages the pensions system, allocating part of the contributions to the Retirement Fund Managers called Administradora de Fondos para el Retiro (AFORE). These institutions are responsible for investing contributions from employees, employers, and the government into individual retirement accounts. When a employee retires, the AFORE pays their pension.
Supplemental Health Benefits
To enhance care options, Justworks offers access to supplemental health plans that include medical, dental, and vision coverage. These private benefits help round out government-provided coverage with faster access, broader networks, and additional services.
Time Off & Statutory Leave
Mexican labor law entitles employees to generous paid time off:
- Vacation: 12 days of paid vacation in the first year, increasing by 2 days per year for the first five years. After that, employees gain 2 more days every four years.
- Vacation Bonus (Prima Vacacional): An annual 25% bonus on top of salary for vacation days.
- Paid Leave: Includes national holidays, sick leave, maternity/paternity leave, and marriage leave.
Profit Sharing (PTU)
Profit sharing is a constitutional right in Mexico. Here’s how it works:
- Companies with profits over MX$300,000 must distribute 10% of their taxable income to eligible employees (including subcontractors with over 60 days of work).
- New companies are exempt in their first year.
- Payments must be made within 60 days of the company’s annual tax return deadline (by May 30 in most cases).
- Late or missed enrollment can lead to fines of up to $18,000 USD.
Remote Work & Lifestyle Benefits
Employers must comply with NOM-037, a new remote work regulation. Justworks will provide a 500 MXN monthly stipend (about 25 USD) to support remote employees with electricity and internet expenses. Employers may choose to offer more.
Other lifestyle benefits commonly offered in Mexico include:
- Flexible or hybrid work arrangements
- Food vouchers (for use in grocery stores or restaurants)
- Catered office meals
- Transportation stipends (bus/metro passes, fuel, parking, taxi, or even car payments)
Financial Wellness & Retirement
Offering the bare minimum may keep you compliant, but it won’t help you attract top talent. Consider these additional financial benefits:
- Life Insurance: Commonly employer-paid, either partially or fully.
- Savings Fund (not currently offered by Justworks): Enables employees to contribute up to 13% of their gross pay, matched by the employer, up to 1.3 UMA.
- Productivity Bonuses and Employer Loans: Popular tools for rewarding high performance or supporting employees’ financial goals.
Build a Competitive Benefits Package in Mexico
Whether you’re expanding globally or just starting to hire in Mexico, benefits are key to retention and employee satisfaction. Justworks EOR can help you navigate local laws, contribute correctly to social security, and offer a benefits package that supports your people—and your growth.
Disclaimer
This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, legal or tax advice. If you have any legal or tax questions regarding this content or related issues, then you should consult with your professional legal or tax advisor.