Payroll Requirements in Mexico
IMSS, INFONAVIT, mandatory benefits, and labor law obligations for employers in Mexico.
Mandatory Payroll Registrations
- IMSS (Mexican Social Security Institute): Mandatory for all employees from day one of employment. Covers healthcare, disability, retirement, and maternity.
- INFONAVIT (Housing Fund): 5% employer contribution on integrated salary. Funds employee housing loans.
- SAR (Retirement Savings): 2% employer contribution deposited to employee's AFORE retirement account.
- RFC for the company and each employee: Required to issue CFDI payslips (recibos de nómina electrónicos).
IMSS Contribution Rates (Employer)
Total employer IMSS contributions are approximately 26.97% of the integrated daily salary (salario diario integrado — SDI). The SDI includes base salary plus proportional value of mandatory benefits. Key components:
- Enfermedad general y maternidad (illness and maternity): ~6.75%
- Invalidez y vida (disability and life): ~1.75%
- Retiro, cesantía y vejez (retirement): ~6.22% + 2% SAR
- Riesgo de trabajo (work injury): 0.5%–8.7%, varies by industry
- Guarderías y prestaciones sociales (childcare): 1%
- INFONAVIT: 5%
Mandatory Employee Benefits (LFT)
- Aguinaldo (Christmas bonus): Minimum 15 days' salary, paid no later than December 20. Pro-rated for employees with less than one year of service.
- Vacation days (vacaciones): 12 days minimum in the first year, increasing by 2 days for each subsequent year up to 20 days, then 2 days per additional 5 years.
- Vacation premium (prima vacacional): At least 25% of the salary earned during vacation days, paid before vacation begins.
- PTU (profit sharing): 10% of taxable profit distributed to employees, paid by May 31 each year. Calculated based on prior year's ISR declaration.
Payroll Frequency
The most common payroll frequency in Mexico is bi-weekly (quincena — 15th and last day of the month). Weekly payroll is also permitted. Monthly payroll is only allowed for certain executive positions. Each payment must be accompanied by a digital CFDI payslip (recibo de nómina electrónico) issued through an authorized PAC.
Outsourcing and Subcontracting Rules
Mexico's 2021 labor reform (reforma de subcontratación) banned traditional outsourcing arrangements where a third party provided all personnel. Today:
- Specialized services (servicios especializados) are permitted with STPS/IMSS registration
- The contracting company must verify the service provider's IMSS and tax compliance
- Joint liability applies if a subcontractor fails to pay IMSS or taxes
Important: Failing to register employees with IMSS from day one can result in significant back-payments, fines, and legal liability. Register before — not after — the employee starts work.
Termination Obligations
When terminating an employee without justified cause (despido injustificado), employers owe:
- 3 months' salary (indemnización constitucional)
- 20 days' salary per year of service
- Seniority premium (prima de antigüedad): 12 days' salary per year after 15 years of service
- Prorated aguinaldo and vacation premium
Voluntary resignation (renuncia voluntaria) carries lower obligations: only the prorated aguinaldo, vacation, and vacation premium are required. Seniority premium applies after 15 years.
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