Employer of Record in Mexico: 2026 Cost and Compliance Guide

Mexico is the leading nearshoring destination for US companies: same or similar time zones, a large engineering talent pool in Mexico City, Guadalajara and Monterrey, and salaries well below US levels. Employer costs, however, go beyond social security: mandatory bonuses (aguinaldo, vacation premium) and profit sharing (PTU) all add to the bill.

An Employer of Record (EOR) can employ your team in Mexico under Mexican labour law, with IMSS registration, Infonavit, payroll tax and CFDI-compliant payslips, without you setting up a Mexican company.

Mexico's 2021 subcontracting reform banned general staff outsourcing and created a registry for specialised services (REPSE). It changed how EOR works in Mexico, so the provider's structure is a key question. This guide covers costs, the reform, key rules, provider comparison and when to set up your own entity. Figures link to official sources. We do not test or use the providers listed; see our methodology.

An Employer of Record in Mexico employs staff on behalf of foreign companies. It signs the Mexican employment contract, registers the employee with the Mexican Social Security Institute (IMSS) and the housing fund (Infonavit), withholds income tax (ISR), pays state payroll tax, issues electronic payslips (CFDI), and pays mandatory bonuses and profit sharing under the Federal Labour Law (Ley Federal del Trabajo, LFT).

Since the April 2021 reform, Mexican law prohibits supplying personnel to another company in general. Only specialised services that are not part of the client's core business, provided by companies registered in REPSE, may be subcontracted, and the client can be jointly liable if the provider is non-compliant.

EOR providers have adapted in different ways: some register in REPSE for specialised services, while others argue their model is direct employment rather than subcontracting. Ask each provider how its Mexican structure complies, whether it holds REPSE registration, and get local legal advice, especially if the role is part of your core business.

Mexican employment cost has several layers: base salary, mandatory bonuses (aguinaldo and vacation premium), employer contributions (IMSS, Infonavit and state payroll tax), profit sharing and the EOR fee.

Contributions are calculated on the integrated salary (salario base de cotización, SBC), which includes the bonuses and is capped at 25 times the UMA. The model below approximates that integration.

Annual cost at example salaries

What these figures include and exclude

• Profit sharing (PTU) is not included: employers must distribute 10% of taxable profit to employees, capped per employee at three months' salary or the average of the last three years. With an EOR, ask how PTU is calculated and billed.
• IMSS contributions use a blended rate. Real contributions depend on salary level (some components are fixed amounts or apply only above 3 UMA), the employer's risk class and the old-age contribution schedule, which rises each year until 2030.
• Employee IMSS contributions and income tax (ISR) are withheld from pay and are not employer costs.
• Common extra benefits include food vouchers (vales de despensa), a savings fund (fondo de ahorro) and life insurance.

Estimate your own cost

Enter a salary to see the estimated annual cost, including mandatory employer contributions and an EOR fee. Change the fee to match the quotes you receive.

Mexican employment is governed by the Federal Labour Law (LFT). Rules below are statutory minimums; contracts and collective agreements often improve them.

Subcontracting (EOR relevance)

General personnel supply is prohibited. Specialised services outside the client's core activity may be subcontracted by providers registered in REPSE.[4]Verify

Clients can be jointly liable for a non-compliant provider's obligations.

Employment contracts

Written contracts are required. Employment is open-ended by default; fixed-term contracts need a justified reason.[3]Verify

Probation period

Up to 30 days, or up to 180 days for management, technical or professional roles, and only in open-ended contracts.[3]Verify

Working time

Maximum 8 hours a day for day shifts. The May 2026 reform cuts the maximum week from 48 hours (2026) to 46 (2027), 44 (2028), 42 (2029) and 40 hours (2030), with no reduction in pay.[3]

Overtime is paid at 100% extra up to a weekly limit (9 hours in 2026, rising to 12 by 2030) and 200% extra beyond it.

Annual leave

12 days after the first year, increasing by 2 days a year to 20 days in year five, then by 2 days every five years.[3]

Paid with a vacation premium of at least 25%.

Aguinaldo

At least 15 days' salary, paid before 20 December (pro rata for partial years).[3]

Profit sharing (PTU)

Employers distribute 10% of taxable profit to employees each year, subject to a per-employee cap.[3]Verify

Termination

Dismissal without justified cause entitles the employee to three months' salary plus 20 days per year of service, a seniority premium, and accrued benefits.[3]Verify

Most exits are settled by agreement before the labour authorities.

These EOR providers publish information about employing in Mexico. Prices are their own published starting rates in USD. Quote-only providers are marked.

In Mexico, ask about REPSE registration, how the provider treats roles in your core business, how PTU is billed, and whether benefits like major medical insurance are included.

For Mexico-specific selection criteria and a shortlist, see best EOR providers in Mexico. For each provider's products and pricing model, see the provider directory.

The usual vehicle is a Sociedad de Responsabilidad Limitada (S. de R.L. de C.V.), often preferred by US companies for tax reasons, or a Sociedad Anónima (S.A. de C.V.). Formation involves a notarised deed, registration with the tax authority (SAT) and the public registry, a tax domicile, an e-signature (e.firma), and employer registration with IMSS.

Ongoing costs include accounting and payroll (with monthly tax filings and CFDI invoicing), legal representation, corporate income tax (30%) and the administrative work of IMSS, Infonavit and state payroll tax.

For a step-by-step version of this calculation, see EOR vs local entity: a break-even framework.

1. 1

   Define the role and salaryDay 0

   Agree a monthly gross salary and benefits package (aguinaldo above 15 days, food vouchers, major medical insurance).

2. 2

   Check subcontracting fit

   Confirm with the provider and your counsel how the arrangement complies with the 2021 reform, especially for core-business roles.

3. 3

   Compare itemised quotes2–5 days

   Request Mexico quotes covering the fee, deposit, benefits, PTU handling and offboarding. Use the estimator to sanity-check totals.

4. 4

   Contract and onboarding3–7 days

   The EOR issues a Mexican contract. The employee provides their RFC (tax ID), CURP, NSS (IMSS number), ID and bank details.

5. 5

   IMSS registration

   The EOR registers the employee with IMSS before or on the start date.

6. 6

   Ongoing administrationBiweekly

   Biweekly payroll with CFDI payslips, bimonthly Infonavit and retirement contributions, aguinaldo in December and PTU in May.

Rates and rules on this page are based on the following official sources. Numbers in brackets in the tables above link to these entries.

1. 1
   Gaceta Oficial de la Ciudad de México No. 1515 Tomo I (27 Dec 2024): Código Fiscal reform, art. 158

   Gobierno de la Ciudad de México

   Mexico City payroll tax (Impuesto sobre Nóminas) at 4% of total payroll from 1 January 2025.

2. 2
   Unidad de Medida y Actualización (UMA) 2026

   INEGI

   UMA of MXN 117.31 a day for 2026, used for the contribution cap.

3. 3
   Federal Labour Law (Ley Federal del Trabajo)

   Cámara de Diputados

   Contracts, working time, vacation, aguinaldo, PTU and termination.

4. 4
   Registry of Specialised Services (REPSE)

   Secretaría del Trabajo y Previsión Social (STPS)

   Registration and search for specialised service providers.

5. 5
   Employer contributions (cuotas obrero-patronales)

   Instituto Mexicano del Seguro Social (IMSS)

   Employer registration and contribution rules.

6. 6
   Ley del Infonavit, artículo 29, fracción II

   Cámara de Diputados

   Employers contribute 5% (cinco por ciento) of each worker's salary to the housing fund (last reform DOF 21-02-2025).

7. 7
   Resolución de salarios mínimos 2026 (DOF 09/12/2025)

   Diario Oficial de la Federación

   General minimum wage of MXN 315.04 a day (MXN 440.87 in the northern border zone) from 1 January 2026.

Mexico offers strong nearshore talent at competitive cost. Plan for roughly 1.35–1.7× base salary in total through an EOR (the flat fee weighs most on junior salaries), including mandatory bonuses but before profit sharing and benefits.

The 2021 subcontracting reform makes provider structure a critical question: confirm REPSE status and how core-business roles are handled.

For a growing nearshore hub, compare against your own entity with our EOR vs local entity guide, and see Brazil for South America's largest market.