So what makes up a worker’s salary in Mexico? Well the Federal Work Law (LFT) in Mexico clearly establishes the components that make up a worker’s salary. Specifically, it defines the salary as the retribution that an employer must pay an employee for their work, whereby there remuneration is made up of both a base salary and the following legal benefits:
Overtime is an integral part of an employee’s benefits package, whereby if an employ works overtime they will be paid 100% more on top of the normal salary for the duration they are working overtime. If the overtime then exceeds a cumulative total of nine hours per week, employers are then required to pay 200% more of the salary that corresponds to the workday.
Workers are entitled to a yearly annual bonus, which must be paid prior to December 20 and that must be equivalent to at least 15 days’ salary.
For employees that work on Sundays, they are entitled to a bonus that corresponds to an additional 25% of the employee’s salary.
This applies to all agricultural, industrial, and mining companies that are required to provide workers with clean and comfortable housing whilst onsite. To this end, companies must contribute 5% of their workers’ salaries to the National Housing Fund.
Paid Vacation and Vacation Premium
Employees that have rendered their services for more than one year are entitled to annual paid vacations, which cannot be less than six workdays. Initially this allowance will increase by two workdays for ever year of subsequent service, and then after the fourth year, the vacation period will increase by two days for each five years of service until it reaches a maximum of 12 days. In addition, employees will be entitled to a vacation premium of at least 25% of their salary corresponding to their vacation period.
Applicable only to hotel, restaurant, and bar employees and it corresponds to a percentage of consumption.
Employers must pay workers a share of their profits pursuant to the percentage set by the National Commission for the Participation of Workers in Companies’ Profits.
It is equivalent to 12 days of salary for each year of service, provided the employee has completed 15 years of services (and is paid in the event of resignation).
It is worth noting the aforementioned components are considered integral to the employee’s remuneration under Mexican law; however. It is important to understand that these benefits are the minimum legal requirements that employers must fulfill when hiring staff within Mexico, however some sough after employers chose to provide additional benefits in order to attract and retain the best staff.
When trying to understand the full cost of engaging staff and the legal benefits associated with an employee’s salary companies should seek expert advice in order to avoid misunderstanding salary negotiations and also to avoid making payroll mistakes. At Biz Latin Hub we are well positioned to guide companies through the hiring process from initial management through to calculation and managing the company payroll. Don’t hesitate to contact us here to see how we can help you!