Employment in Mexico is governed by the Federal Labour Law (Ley Federal del Trabajo), which sets mandatory benefits such as the Christmas bonus (aguinaldo), vacation premium and profit sharing. The maximum working week will fall from 48 to 40 hours between 2027 and 2030. Here is what employers need to know about leave, pay, tax and ending employment.
Since 2023, paid vacation starts at 12 days after the first year of service and rises with seniority. Maternity and sickness pay are covered by the Mexican Social Security Institute (IMSS).
Rising by 2 days a year to 20 days after year 5, then by 2 days for every further 5 years of service. At least 12 days must be taken consecutively if the employee wishes.
Employees receive at least 25% of the pay for their vacation days on top of their normal salary.
6 weeks before and 6 after the birth, with up to 4 of the pre-birth weeks movable to after. IMSS pays 100% of the registered salary to eligible employees.
Working days of paid leave for fathers on the birth or adoption of a child, paid by the employer.
| Years of service | Vacation days |
|---|---|
| 1 | 12 |
| 2 | 14 |
| 3 | 16 |
| 4 | 18 |
| 5 | 20 |
| 6 – 10 | 22 |
| 11 – 15 | 24 |
| 16 – 20 | 26 |
| 21 – 25 | 28 |
| 26 – 30 | 30 |
There is no employer-paid sick leave. For a general illness certified by IMSS, the employee receives a sickness subsidy of 60% of their registered salary from the 4th day of incapacity. Work-related injuries and illnesses are paid at 100% from the first day.
Set up Mexican vacation in IceHrm with its own accrual, carry forward and approval rules, with entitlements that step up with seniority. Employees see their live balance before they apply, and managers see who is away on a shared calendar. Leave management →
The National Minimum Wage Commission (CONASAMI) sets daily minimum wages each year, effective 1 January. A higher rate applies in the Northern Border Free Zone.
About MXN 9,582 a month, from 1 January 2026. Higher professional minimum wages apply to some occupations.
About MXN 13,410 a month, from 1 January 2026, for municipalities along the US border.
8 hours a day for day shifts, 7 for night shifts and 7.5 for mixed shifts, with at least 1 paid rest day a week.
A constitutional reform published in 2026 cuts the maximum working week gradually, by 2 hours a year from 2027, until it reaches 40 hours in 2030. Employers should plan schedules and pay for each step.
Capture attendance and overtime in IceHrm and feed the hours straight into payroll, so double and triple overtime reflect what was actually worked, as weekly limits change through 2030. Time & attendance →
Individual income tax (ISR) is progressive, from 1.92% to 35%. Employers withhold ISR from each payment using monthly tables, pay it to the tax authority (SAT) by the 17th of the following month and issue an electronic payroll receipt (CFDI de nómina) for every payment.
| Annual taxable income (MXN) | Fixed tax (MXN) | Rate on excess |
|---|---|---|
| 0.01 – 10,135.11 | 0 | 1.92% |
| 10,135.12 – 86,022.11 | 194.59 | 6.40% |
| 86,022.12 – 151,176.19 | 5,051.37 | 10.88% |
| 151,176.20 – 175,735.66 | 12,140.13 | 16.00% |
| 175,735.67 – 210,403.69 | 16,069.64 | 17.92% |
| 210,403.70 – 424,353.97 | 22,282.14 | 21.36% |
| 424,353.98 – 668,840.14 | 67,981.92 | 23.52% |
| 668,840.15 – 1,276,925.98 | 125,485.07 | 30.00% |
| 1,276,925.99 – 1,702,567.97 | 307,910.81 | 32.00% |
| 1,702,567.98 – 5,107,703.92 | 444,116.23 | 34.00% |
| 5,107,703.93 and over | 1,601,862.46 | 35.00% |
Part of the aguinaldo, vacation premium and PTU is exempt from ISR up to limits based on the UMA reference unit. Employees with income above set thresholds or from several employers must file an annual return in April.
Employer contributions are calculated on each employee’s integrated daily salary (SBC), which includes the aguinaldo, vacation premium and most benefits, up to a cap of 25 times the UMA.
Several insurance branches (sickness and maternity, disability and life, occupational risk, childcare). Most of the cost falls on the employer, with a smaller share withheld from the employee.
2% for retirement plus an employer old-age contribution (cesantía y vejez) that rises every year until 2030 under the 2020 pension reform, most steeply for higher earners.
Paid by the employer on the integrated salary. Employers also deduct housing loan repayments where the employee has an INFONAVIT loan.
Set by each state on total payroll, typically around 2–4%. Mexico City charges 4%.
Build Mexican pay the way you already structure it, with your own salary components, deductions and formula columns, such as aguinaldo, vacation premium and IMSS columns. Want to know how well IceHrm handles payroll calculations for Mexico? Contact us or see Payroll →
Employment in Mexico is not "at will". An employer can dismiss without liability only for one of the justified causes listed in the Federal Labour Law, such as dishonesty, violence, repeated unjustified absence or disobedience, and must give the employee written notice of the reasons.
There is no statutory notice period. For a justified dismissal, the employer must hand the employee a written notice stating the conduct and the date, or deliver it through the labour court within 5 working days. Without this notice, the dismissal is presumed unjustified.
| Payment | Amount |
|---|---|
| Constitutional indemnity | 3 months’ integrated salary |
| Additional indemnity (when reinstatement is refused) | 20 days’ salary per year of service |
| Seniority premium | 12 days’ salary per year of service |
| Back pay if the case goes to court | Up to 12 months, plus interest after that |
The seniority premium is also payable on any dismissal and to employees who resign after 15 or more years of service.
The Federal Labour Law lists the mandatory paid rest days. Several are fixed to a Monday, creating long weekends. Holy Thursday, Good Friday, 2 November and 12 December are widely observed but not mandatory.
Employees who work on a mandatory holiday receive double pay on top of their normal day’s pay.
Leave groups give each office its own holiday calendar, so your Mexican team gets the mandatory rest days, plus any extra days your company grants, automatically. Holiday calendars →
Employment contracts must be in writing, in Spanish (a bilingual version is common), with a copy for each party. Contracts are indefinite by default. Fixed-term contracts are allowed only when the nature of the work requires it, such as seasonal work or replacing an absent employee.
A probation period of up to 30 days may be agreed for indefinite contracts and contracts of more than 180 days, or up to 180 days for management, technical or professional roles. Contracts for initial training may last up to 3 months, or 6 months for management and professional roles.
Send Spanish or bilingual contracts for e-signing, store them on the employee’s record, and track onboarding with task lists, from IMSS registration to collecting RFC and CURP, so nothing is missed. Documents & e-signing →
This guide is general information to help you plan HR processes, not legal, tax or financial advice. Employment law and rates change regularly and awards, enterprise agreements and state rules may give employees more than the minimums shown here. Always confirm current requirements with the official sources or a qualified adviser.
Configure leave types, accrual rules and public holidays for Mexico, keep employee records and contracts in one place, and run payroll with your own salary components. Want to know how IceHrm handles payroll calculations for Mexico? Talk to us.
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