Employee benefits in Mexico

Employee benefits and employment rules in Mexico

Employers in Mexico must provide a range of statutory benefits and comply with local employment laws. These benefits are regulated under national labor legislation and the Mexican Social Security Institute (IMSS).

This guide outlines key entitlements, employer obligations, and commonly offered additional benefits.

Mandatory employee benefits

All employees in Mexico, including those in private sector roles, are entitled to several mandatory benefits. These include social security, paid time off, and bonuses.

• Social security coverage via IMSS
• Pension and retirement plans
• Annual paid vacation
• Vacation bonus
• Christmas (year-end) bonus
• Occupational accident and illness insurance
• Maternity and sickness leave
• Profit sharing
• Daycare services

Pension and retirement

Pension arrangements depend on the employee's entry date into the IMSS system. There are two main regimes:

• 1973 Regime: Applies to those who contributed before July 1, 1997. Pension is based on total contributions during employment.
• 1997 Regime: Applies to those who began contributions on or after July 1, 1997. Employees manage individual retirement accounts with a Retirement Funds Administrator.

Old-age and severance pensions require a minimum number of weeks of contributions (500 for the 1973 Regime, 1,250 for the 1997 Regime). Pension percentages rise incrementally from age 60 to 65.

Annual leave and holidays

After one year of service, employees are entitled to at least six days of paid vacation. This minimum increases by two days for each additional year until twelve days are reached.

After the fourth year, the vacation period increases by two days every subsequent five years of service.

Vacation days must be granted within six months after the employee's service anniversary. Employees also receive a vacation bonus of at least 25% of the wages for the vacation period.

Christmas bonus (Aguinaldo)

All employees must receive a yearly Christmas bonus equal to at least 15 days of wages or a proportional amount if employed less than one year.

This payment is due by December 20 and must be paid in cash, not in kind or vouchers.

Profit sharing (PTU)

Employees are entitled to receive 10% of the employer's taxable profits from the previous year. This profit-sharing must take place within 60 days after the annual tax filing deadline.

Certain groups are excluded, including senior directors, employees with less than 60 days of service, partners, and fee-based contractors.

Social security and healthcare

Registration with IMSS is mandatory. IMSS coverage includes medical care, hospitalization, prescription medicines, and insurance for occupational risks.

Maternity and sickness benefits are provided as follows:

• Sick leave: 60% of the registered salary while the employee is unable to work
• Maternity leave: 100% of the registered salary during certified maternity disability (including pre- and postnatal periods)
• Additional rest breaks for breastfeeding mothers during the first six months after birth

Occupational accident and illness insurance

IMSS provides medical care and financial benefits for work-related accidents and illnesses. Employees receive 100% of their salary during periods of temporary incapacity.

Permanent disability benefits and survivor pensions are also provided in accordance with the severity and duration of incapacity.

Daycare services

IMSS daycare services are available for children of eligible insured workers. These services cover basic care, nutrition, education, and recreation during early childhood.

Employer compliance requirements

Employers must register all employees with IMSS and provide necessary payroll documentation. Failure to comply may result in financial penalties.

• Accurate wage reporting
• Timely social security contributions
• Annual holiday entitlement certificates

Optional and additional benefits

Some employers offer benefits beyond statutory requirements to remain competitive and improve retention.

• Remote or hybrid work arrangements
• Relocation support
• Supplemental life or health insurance
• Major medical expense coverage

These benefits and their conditions depend on employer policy and individual agreements.