How to hire in Mexico through an EOR

Indefinite contracts are the default in Mexico, and most companies use them. If you don't specify a contract type, the law presumes it's indefinite. That reflects Mexico's strong preference for job stability.

Most companies stick with indefinite contracts because Mexican law is built around permanence. Fixed-term contracts get scrutinized closely. If you use them repeatedly for the same role, courts will often convert them to indefinite, which means back pay and severance.

What has to be in the contract

Get it in writing. The law requires employers to document working conditions, with two copies signed, one for each party. Oral agreements exist legally, but they default to indefinite anyway.

You'll need to include: employee and employer names, nationality, age, sex, marital status, tax ID, and address. Beyond that, cover the job description, duration (or state it's indefinite), work location, schedule, salary, benefits, pay dates, rest days, and vacation. There's no legal language requirement, but Spanish is standard if you want the contract to hold up.

For contracts over 180 days, you can add a trial clause of up to 30 days (or up to 180 days for directors and specialists). If it's not working out, you can end employment during that period without severance. That said, you still owe full benefits during the trial, including social security contributions.

Contractor vs. employee

Misclassification is the biggest compliance risk here. Employees work under your direction, on your schedule, for a salary. Contractors set their own hours, use their own tools, and aren't exclusive to you.

Courts look at how the relationship actually works, not what the contract says. If you supervise daily, set hours, provide equipment, or pay fees that look like a salary, it'll likely be treated as employment. This comes up a lot with tech roles and remote hires.

If you get it wrong, the worker can sue for reclassification. You'd owe back benefits including vacation, bonuses, and profit sharing, plus a minimum of 3 months' salary in damages, and back social security contributions. Fines can reach up to 5,000x the daily minimum wage per violation, with no cap on total claims.

On non-competes: courts rarely enforce broad ones. If you want any chance of it holding up, keep it to 1 year maximum, limit it to specific roles, and pay the employee during the restriction period. For IP, it's enforceable if it's clearly written into the contract, but employees own their inventions by default unless you've stated otherwise. Get that in writing before they start.

For employees, use indefinite written contracts. If you're new to hiring in Mexico, working with an EOR is worth considering. They deal with classification questions and compliance requirements every day.

Mexico requires employers to pay a 25% vacation bonus on top of those 12 paid days off after year one. It's worth knowing upfront, because it affects your total payroll cost more than most people expect.

Time off

Employees get 12 paid vacation days after their first year. That number increases with each year of service. If an employee wants to take all 12 days in one block, you have to allow it.

Days accumulate each year of employment. Employees have six months after the service year ends to start using them, then one more year after that to claim any remaining days. After that, they lose them.

All leave types

Here's what the Federal Labor Law requires. Job protection means an employee can't lose their role for taking leave. Pay is full salary unless noted otherwise.

Mandatory benefits

These benefits run through IMSS, INFONAVIT, and AFORE. As the employer, you cover the larger share. Employees contribute a smaller portion.

Meal vouchers and transport allowances aren't required by law. The year-end bonus is, though: at least 15 days' salary, paid by December 20.

What people actually expect

If you're hiring in Mexico City or Guadalajara, the legal minimums won't get you far. Most employees, including junior roles, expect 20-25 vacation days. Factor in the 25% bonus, and strong candidates often expect 30+ total days off.

Private health insurance matters a lot. IMSS covers the basics, but wait times are long and quality varies. Employees with families especially want access to faster private care. Offering it puts you ahead of employers who don't.

Remote work stipends are increasingly common, typically around 1,000-2,000 MXN per month for internet and electricity. Meal cards (vales de despensa) worth 1-2 days' salary monthly are a low-cost way to add real value. Gym memberships or education support round out what competitive packages usually include.

If you stick to the minimums, expect slower hiring and higher turnover. Experienced engineers and managers tend to move toward employers who offer these extras. Budget around 10-15% above the legal baseline to put together a package that actually competes.

Firing someone in Mexico without solid proof of misconduct can cost you three months' salary plus back pay and benefits. It's one of the most employee-protective systems you'll come across. You need documented just cause, or you're looking at reinstatement orders or important payouts.

Firing someone

Mexico's Federal Labor Law (FLL) requires just cause for dismissal. Without it, it's considered unfair dismissal, and the employee can sue for reinstatement or three months' salary, seniority premium, back pay, and benefits.

Valid grounds come from a closed list in Article 47 of the FLL: false job qualifications or documents; dishonest or violent acts against the employer, family, or coworkers; harassment or sexual harassment; sabotage; negligence endangering safety; immoral acts at work; revealing trade secrets; three or more unexcused absences in 30 days; insubordination; failing safety measures; or arriving intoxicated. Lack of "integrity at work" covers poor effort or care too. For trust positions, loss of confidence is enough.

You bear the burden of proof, so document everything. Labor boards look closely at evidence, and unfair dismissal claims often succeed when proof is thin. Beyond general anti-discrimination protections, 2026 violence prevention reforms require employers to provide training against workplace violence, with a particular focus on protections for women.

Business reasons like non-profitability, force majeure, or insolvency can allow collective terminations with notice and severance. Employees can resign at any time without cause, but employers don't have that same flexibility.

Notice periods

Notice depends on tenure and who's ending the relationship. For cause terminations, employers don't typically give notice. For resignations, employees are expected to. Here's how it breaks down:

These apply to voluntary exits or mutual agreements. For just cause dismissals, you don't owe notice. Worth knowing: relocating the work can give an employee grounds to claim constructive dismissal and demand severance.

Severance

Severance is owed when there's no just cause. If you've documented misconduct and can prove it, it's not required. There are no statutory caps, so long-tenured employees can add up to important amounts.

Key components:

• Three months' integrated daily salary (includes base pay, premiums, and bonuses).
• 20 days' pay per year of service.
• Seniority premium: 12 days' salary per year (capped at twice minimum wage).
• Back pay from dismissal to resolution.
• Proportional vacation, aguinaldo (year-end bonus), and benefits.

Calculate everything based on the last integrated salary. You have 72 hours to pay or you'll face penalties. Negotiated exits often include additional amounts on top of the statutory minimums.

Work permits and visas

You can hire foreign nationals through an EOR, but they need valid work authorization first. The EOR can't sponsor visas directly. The employee or a local entity applies through INM (National Migration Institute), and the EOR takes over compliance once that's approved.

Main categories:

• Temporary resident visa with work permission: for salaried employees. Requires a job offer, proof of qualifications, and financial solvency. Valid 1-4 years and renewable.
• Temporary resident for independent professionals: for freelancers.
• Permanent resident: available after 4 years on temporary status, or sooner with qualifying ties.

Expect 2-4 weeks for the consulate visa, then 30 days inside Mexico to exchange it for a resident card. You'll need a clean criminal record, health insurance, and proof of address. There's no digital nomad visa in Mexico. Remote workers can use visitor status for up to 180 days, but that doesn't permit working legally without a work authorization.

Start the process early. Overstays or unauthorized work can trigger fines up to $10,000 USD per violation and deportation.

Other things worth knowing

Data protection is governed by the Federal Law on Protection of Personal Data Held by Private Parties. You'll need employee consent to process their data, a designated privacy officer, and a breach notification process. Fines can reach 4% of global revenue for serious violations.

Unions carry real weight in Mexico. More than 90% of formal sector workers are unionized following post-2019 reforms. If a collective bargaining agreement (CBA) applies to your workforce, it governs. Check for one early in the process. Your EOR can help verify this. Union involvement can importantly complicate terminations.

A few recent changes to plan for: from 2026, employers must provide training on workplace violence prevention with a focus on gender equality. A constitutional amendment is also gradually reducing the standard workweek: 46 hours in 2027, 44 in 2028, 42 in 2029, and 40 by 2030, starting May 1, 2026. It's worth reviewing contracts now to avoid disputes later. No other major hiring changes have been announced for 2024-2026 beyond these.