Mexico

Employer Income Tax Obligations:

• Employers are taxed roughly around 35% on a combination of maternity & illness, housing, retirement, labor risk, and more.

Employee Income Tax Obligations:

• Employees are required to pay their taxes based on a calculation according to their income. Tax rates range from 1.92% to 35%.


• Employees must pay taxes on seniority insurance, disability and life insurance, and maternity & illness.

• Statutory leave:
  All employers in Mexico are required to provide their employees with a minimum vacation period as per the Federal Labor Law.


• The length of minimum vacation days depends on the employee's length of service, as follows:
  • One year of service: 12 days
  • Two years of service: 14 days
  • Three years of service: 16 days
  • Four years of service: 18 days
  • Five years of service: 20 days
  • After the sixth year of service, the annual leave will increase by 2 days every 5 years of service.


• Pregnancy and maternity leave:
  
  • Pregnant employees are entitled to up to 12 weeks of paid maternity leave of absence as per the Federal Labor Law and the Social Security Law.
  • Six weeks can be taken before the birth and six weeks after, but with authorization from the Mexican Social Security Institute (IMSS), up to 4 weeks of the 6 weeks can be moved to after the birth.
  • Mothers are also entitled to additional rest breaks during the six months after the birth (the nursing period).


• Paternal leave:
  Employees have the right to take five working days of paid paternity leave of absence in the event of birth or adoption of a child.


• Other leaves
  
  • Women who adopt a child can take six weeks of paid maternity leave of absence after the date of adoption.
  • Fathers are entitled to five days of paid leave following the adoption of the child.
  
  

The Federal Labor Law in Mexico makes a distinction between two types of employment termination: dismissal (Spanish: despido) and termination (Spanish: terminación). Dismissal can be justified by reasons related to the employee's conduct, while termination can be for economic reasons, employee incapacity, force majeure, death of the employee, or termination of the work. Articles 47 and 52 of the country’s Federal Labor Law provide guidelines on dismissal and termination, respectively.

• Notice period
  Mexican law does not require employers or employees to give advance notice of a dismissal or resignation, and notice obligations for employees are not legally recognized or enforced. While employers can be obligated to provide notice if it has been agreed to, this is not common practice in Mexico.


• Probationary period
  For contracts longer than 180 days or with no set end date, employers may establish a probationary period of up to 30 days. This period can be extended for up to 180 days for certain managerial, technical, or professional positions.