Every worker is entitled to wages, and this is what employee benefits in Mexico are all about. Mexican labor laws are structured so that every worker is duly paid for all their efforts on the job. As a foreign company on a global expansion plan and looking to become a big player in the Mexican economy, hiring employees in Mexico comes with many requirements.
There are robust labor laws that cover employees, granting them various benefits. This article aims to give you an overview of employee incentives in Mexico. Before venturing into the Mexican labor market, you need information as an employer.
Mandatory Employee Benefits in Mexico
These benefits are known as the Statutory Minimums, although independent contractors in Mexico are not entitled to any employment benefits. Below is a summary of employee benefits in Mexico;
The Social Security
Also known as the Instituto Mexicano del Seguro Social or the IMSS is the most popular employee benefit in Mexico. It is structured to cover all Mexican workers’ medical and social needs. Employers are mandated to contribute between (25-35)% in addition to their employee’s salary to this social security initiative.
This contribution covers pension plans, healthcare, employment, life, and work risk insurance. Disability payments, sick leaves, childcare, and social housing. In all, most of the benefits Mexican employees are used to receiving are statutory, as most are covered by the IMSS rather than directly by their employer.
Other workplace perks in Mexico include the profit sharing package, severance pay, vacation time and vacation premiums, statutory holidays, weekly rest day, and sunday premiums.
Social Security and Healthcare Contributions
Employer contributions to employee benefits are those sums of money, obligations that employers in Mexico are mandated to fulfill for having employees. They are always not recoverable for the employer and go a long way to forming a bulk of social security and healthcare contributions for the concerned employee’s welfare.
Regarding social contributions, the employer is expected to register the worker with the Mexican Social Security scheme and then pay the resulting contribution. These payments go a long way in ensuring employee satisfaction.
These contributions also help employees access different state support schemes in case of uncharacteristic openings. State and federal taxes also go towards employee benefits in exchange for the resulting labor cost. When a worker is on holiday, he is entitled to at least 125% of their pay.
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Christmas Bonus (Aguinaldo) and Profit Sharing
Profit Sharing
This aligns with the Mexican constitution, which rules that all companies domiciled in Mexico or remotely doing business in the country must share 10% of their annual profits with their employees. Companies must also ensure to distribute their profit-sharing within 60 days of filing their tax return.
Christmas Bonus (Aguinaldo)
One of Mexico’s most common employee benefits is the Christmas Bonus (Aguinaldo), the 13th month salary. It is the biggest and most widely known employee perks in Mexico. The 13th month’s salary is calculated to equal the 15 – 30 days of the employee’s salary, which is all paid before Dec 20.
A portion of this Christmas bonus is also given to employees who just got with their employers and have only been with them for less than a year.
Vacation Entitlements and Premiums
According to the Benefits package in Mexican companies, vacation entitlements and premiums are provided for employees who have been with their employers for at least more than a year of working.
Employees, in this instance, enjoy paid vacation. Still, the amounts of monies they are entitled to and the number of days to spend all depends on their order of seniority, with those with a length of service of more than 6 years entitled to at least 20 days with two days for every 5 years of continuous employment over time.
Vacation premiums are a solid part of the employee benefits package in Mexican companies. Mexican employees are entitled to a wage payment equal to or at least 25% of their salary. This implies that Mexican employees receive 125% of their usual vacation pay, regarded as statutory.
Maternity and Paternity Leave Provisions
Maternity and paternity leave in Mexico is that period of time when a new mother and father, respectively, take time off work after the birth of a child. There are stipulations and eligibility criteria for these periods, which also vary across the country’s regions.
The eligibility criteria for maternity leave revolve around the employee’s length of service, employer size, and the extent of contribution to state funds. The law protects maternity leave in Mexico and is mandatory for all female workers covered by the Mexican social security scheme. All female employees under the scheme are entitled to various health and support benefits.
As for paternity leave, male employees in Mexico are entitled to at least five (5) working days of paid paternity leave per child according to federal labor laws. The eligibility criteria for this is simple: the concerned employee must be the father the newborn, or the adopted child. It is also the same for same-sex parents.
They must have also worked with their employer for at least a year, and an amount of working hours must have been reached.
Read more: Leave Policies in Mexico
Common Elective Employee Benefits in Mexico
Aside from the statutory benefits that are mandatory for employers in Mexico, there are some common employee benefits in Mexico. Employers also offer these popular non-mandatory benefits, and they include:
- Food Vouchers
- Savings Funds
- Transportation Stipends
- Quick loans
- Private health insurance, etc.
All of the aforementioned additional perks are based on the employer’s discretion. Still, adding them to the employment package is advisable to improve employee productivity and promote job satisfaction.
Private Health Insurance and Life Insurance Options
These common employee benefits in Mexico are a part of the employee reward programs in the country. The private health insurance and life insurance options for employees in Mexico are targeted at providing additional employee benefits.
As expected, the Mexican government provides insurance for all its citizens, but it might be at par with private options. Private health insurance is supplemental, as employers are always looking for the best means to attract top talent. With private insurance, workers can access optimum clinics and do not have to stay in long queues.
Employees can choose their private insurance formats, and some employers can provide stipends that employees can choose to purchase private health insurance. For life insurance, it is not out of order for employers to provide it for employees, and this comes in handy in the case of the employee dying. At the same time, the policy is still active, irrespective of whether the death occurs at work.
Savings Funds and Productivity Bonuses
Savings funds and productivity bonuses are Mexico’s most common employee perks. They are categorized as incentives given to employees beyond their normal salary. Regarding savings funds, companies can decide to keep a negligible amount of the employee’s salary in reserve every month to be placed into a company’s savings account.
However, the law mandates that the amount to be withheld cannot exceed 13% of the employee’s contribution. After helping to save this, the company releases the accumulated funds to the employee once a year.
Productivity bonuses are common in many regions and countries, and Mexico is not left behind. Productivity bonuses simply reward employees who achieve certain set goals, and they get bonuses in exchange. These bonuses and goals are always structured in tiers or levels.
Transportation and Communication Perks
Like food vouchers, companies in Mexico offer transportation and communication perks to workers. Fixed amounts stipends for gasoline to help employees get to work on time. Some companies even set up carpooling or transportation services to commute employees from homes to work and back.
Car benefits include free parking spaces in some parts of the city, which can exceed about a thousand pesos per month.
Read more: Employee Benefits in Mexico
Implementing Employee Benefits Effectively
For the optimum implementation of employee benefits in Mexico, it is always best to follow the Mexico staff benefits guide, which provides insight into how to implement employee benefits better and useful strategies to offer competitive benefits to workers.
Every company cannot offer its employees high salaries at the start, that can be counterproductive, but one area companies can level up and effectively compete with others for the best talents is by following the basics. A mix of mandatory benefits, group health insurance, vision, and dental insurance are great ways to start.
Other strategies to implement are the generous paid time off idea (PTO), employment assistance programs, retirement plans, savings funds, flexible remote work options, etc.
Challenges and Solutions in Managing Benefits
An effective benefits administration goes a long way in managing company benefits to its employees, and it is a strategic way of gaining a competitive advantage and hiring and retaining top talent while efficiently reducing operational costs.
A lack of communication with staff, failing to evaluate the value of current benefit programs properly, and slacking in helping employees enroll to tap from these benefit programs are some of the inherent challenges.
The solutions lie in the HR departments and benefits administrators outlining existing problems, as they are responsible for carrying out the process. Educating employees on the benefits offered by the company and steadily reviewing and updating employee benefits information.
Conclusion
Do your employees value your company, especially regarding benefits and compensation? Are you so stuck on achieving productivity without attending to the needs of your workers? Do you have a benefits program to attract and retain your best hires?
To better answer this question and ensure that the needs of your employees are prioritized so you are not shedding the top tech talents without appreciable impact on your company, Globy is that strategic partner that is well versed in assisting in designing and managing employee benefits and hiring in Mexico. We are ready when you are; let’s achieve your company goals and objectives together.
Let Globy assist you in navigating the complexities of the Mexican labor market to attract and retain the best talent.
FAQ
There are mandatory employee benefits in Mexico, and the top among them is the social security contribution that covers all the vital needs of your employees. Some include healthcare insurance, severance payments, leave bonuses, vacation premiums, etc.
Employers in Mexico are entitled to contribute to the Mexican social security, which covers healthcare, pension plans, etc. There can also be private healthcare insurance provisions for employees in Mexico, but they are added perks.
The Christmas bonus (Aguinaldo) is also known as the 13th salary for employees in Mexico. This is a mandatory payment that is given to employees in the country. It is a form of tradition.
Yes, there are special bonuses for employers in Mexico; productivity bonuses, savings funds, Christmas bonuses, and transportation perks are some of these special bonuses.
In Mexico, employees are entitled to at least 12 days of paid annual vacation in the first year of service, while this number of days increases by 2 days each additional year the employee stays with the company. The addition can take up to 20 days.
