Hiring in Mexico Just Got Easier: EOR & Labor Reforms Foreign Employers Must Know

Mexico offers a large bilingual talent pool in North American time zones. Using an employer of record (EOR) there is different from most of Latin America, though. Since the 2021 outsourcing reform, the law limits when one company can provide workers to another, so a foreign company has to check whether an EOR arrangement fits its activity before hiring.

What the 2021 outsourcing reform allows

• Since April 2021, supplying personnel to work for another company is prohibited (Federal Labor Law, art. 12).
• Only specialized services or works that are not part of the client’s corporate purpose or main economic activity may be subcontracted (art. 13), and the provider must be registered in the Ministry of Labor’s REPSE registry.
• The client is jointly liable if the provider fails to meet its obligations to the workers (art. 15).

In practice, an EOR arrangement for staff who do your company’s core work carries legal risk in Mexico. Get local legal advice for your case, and expect most long-term teams to be employed by a Mexican subsidiary.

What employing someone costs in Mexico

• Minimum wage: MXN 315.04 a day from 1 January 2026, or MXN 440.87 in the Northern Border Free Zone (CONASAMI).
• Social security: IMSS, retirement (SAR) and INFONAVIT housing contributions, calculated on the integrated daily salary (SBC).
• State payroll tax (ISN): set by each state.
• ISR: income tax withheld from salaries and paid to the SAT monthly, with a CFDI payroll receipt for every payment.
• Aguinaldo: at least 15 days’ salary, paid by 20 December.
• Vacation: at least 12 days after the first year, rising with seniority, plus a vacation premium of at least 25%.
• Profit sharing (PTU): 10% of the company’s taxable profit.

Ending employment

Unjustified dismissal under the Federal Labor Law costs a constitutional indemnity of three months’ salary (art. 48), plus a seniority premium of 12 days’ salary per year of service (art. 162, with the salary for that premium capped at twice the minimum wage under arts. 485–486), plus accrued aguinaldo, vacation and vacation premium. Where the employer is exempt from reinstating the worker, art. 50 adds 20 days’ salary per year of service on indefinite contracts.

EOR or your own company?

For most foreign companies hiring in Mexico, the safest structure is a Mexican company that employs staff directly, registers with the IMSS and runs payroll. Set up your own company in Mexico, read our payroll compliance in Mexico guide, or compare the options on our employer of record and PEO services in Latin America page.

Get help from Easyco

Easyco coordinates the company setup in Mexico up to the issue of the RFC, and supports companies afterwards with tax, accounting, payroll and company compliance, including a registered office address. Request a quote.