A Quick Overview of Employment Benefits in Mexico
Understanding the standard benefits to which you are entitled as a worker in Mexico can be difficult. In the same way, foreign companies with operations in Mexico or that are thinking about expanding into Mexico can face uncertainty when complying with the law. For instance, employers do not pay for certain benefits that are common in the U.S., such as unemployment, paid sick leave, or short and long-term disability. These are instead covered by the IMSS, Mexico’s equivalent of Social Security.
A solid employment benefits package as established by the Mexican Federal Labor Law (Ley Federal de Trabajo), which has been in effect since 1970, is just as important as a good salary. Here’s a brief overview of some Mexican employment benefits. For a more comprehensive understanding, download our free guide to Mexico standard and supplemental benefits and perks.
First thing’s first: The Mexican Federal Labor Law protects all individuals involved in an employment relationship, entitling them to mandatory minimum benefits. These include services and conveniences such as paid vacation days, seniority bonuses, severance payments, and more.
Paid vacation occurs annually and is established after the first year of an employee’s service to the company. The minimum requirement that must be met for a paid vacation in Mexico is six standard working days, but the amount of days is subject to increase for every additional year an employee works for a company. There is also a mandatory vacation premium of 25% of salary that Mexican law requires.
Seniority bonus requires that a bonus of 12 working days’ worth of salary must be paid to an employee after 15 years, and for every year employed.
Severance payments essentially stipulate that a worker terminated without just cause is entitled to 90 working days’ salary plus 20 days for every year worked, in addition to any contractual entitlements.
In addition to the mandatory benefits regulated by Mexican labor law, there also exists the possibility of supplemental perks. These are optional benefits, and they are often offered in Mexico as standard practice for management and professional level positions. Some examples of additional benefits include education reimbursement, gas allowance, or even a company car. It is important to note that not all companies abide by this standard, as it is considered to be optional, but we can help you find additional information and seek answers to specific inquiries.
When it comes to positions such as executives or senior management, it can be customary for some of the above-mentioned perks to be given to the employee. For instance, the company car is a common benefit provided to employees in this position, and the car itself is even regarded as a basic working tool.
Because the option to provide employees with a company car is not mandatory, the specific way in which companies go about this varies from one place to the next, but many businesses will cover affiliated expenses such as license plates, car insurance, maintenance and registration fees. If a car is not provided by the company, a car allowance is also often considered typical business practice.
Gas allowance is typically a supplemental perk afforded to sales professionals or senior level management, and it is often provided when a company car is also offered as a benefit. Although relatively uncommon, some companies might reimburse gas expenses or provide a cash-based gas allowance.
On the other hand, there are companies that opt to provide a debit card or a gas card, to be used exclusively at registered gas stations. For sales professionals, the amount of money ranges based on the mileage used to visit clients. Senior management employees who are offered this perk typically should expect to receive no more than $6,000 pesos on a monthly basis, although in some instances it can be higher.
Similarly, due to the optional nature of supplemental perks, different businesses will go about reimbursements for education differently. It has become increasingly common for employers to provide monetary support for their employees’ postgraduate studies, given that the degree attained diametrically corresponds to the responsibilities of the employee and the nature of current company activities. Some companies will cover a higher amount of the cost if school grades reflected an above average performance. Others may cap the reimbursement at a fixed amount that will not exceed a certain range.
Additionally, executive senior management is occasionally offered additional perks, such as roundtrip travel expenses to one’s country of origin on a semi-annual basis. Another potential perk you might be offered if you hold an executive senior management position is children’s tuition for private schools.
If you are an employee seeking a better understanding of the benefits you are entitled to and those you might be offered, it is important to take the time to thoroughly review your particular employer’s policy. On the other hand, if you are a company trying to establish competitive benefits for your company to offer, you should also consider factors such as company size, location, target workforce, educational requirements, salary ranges, and more. Moreover, taking the time to review what other businesses in your industry sector are doing can also be beneficial to determine what is standard and how you can make your company an even more competitive
By Barbachano Staff
This overview is intended to be a brief introduction into the mandatory and supplemental compensations offered by businesses in Mexico. For a more comprehensive understanding, please visit our website and download our Mexico Benefits Guide. For further inquiries, please email us at email@example.com or get in touch with us at (619) 427-2310.
By Fernando Ortiz-Barbachano
President and CEO of Barbachano International (BIP),
The Human Capital Solutions leader in Mexico, Latin America, and the USA, offering high-impact executive search, executive coaching, and outplacement.
At Barbachano International, we understand the importance of recruiting and the return on investment that top talent can deliver for you. With 27 years in the industry, we know firsthand how imperative it is for an organization to have the right people to achieve its business objectives. We help you avoid painful hiring mistakes and reduce turnover by identifying top performers for your team that result in long-term success.