Countries › Mexico › Guide › 7. Labor and employment › Employing people in Mexico: minimum wage, the move to a 40 hour week, mandatory benefits, dismissal costs, the outsourcing ban and social security

Employing people in Mexico: minimum wage, the move to a 40 hour week, mandatory benefits, dismissal costs, the outsourcing ban and social security

Last verified: 2026-10-26 · Status: Changing

Mexico has one federal labor code: the 2026 minimum wage is MXN 315.04 a day (MXN 440.87 in the northern border free zone), contracts are indefinite unless the work requires otherwise, and every employee gets a year end bonus of at least 15 days, at least 12 vacation days after the first year with a 25 percent premium, and 10 percent of the employer's taxable profit shared among staff. The maximum ordinary week falls from 48 hours in 2026 to 40 hours in 2030 in two hour steps each 1 January, without any cut in pay, and employers must keep an electronic record of each worker's hours. Dismissal without proven cause costs at least three months of salary plus back wages, outsourcing of personnel is banned except registered specialized services, and employers must register staff with IMSS within five business days and pay social security and the 5 percent housing fund contribution.

USD conversions use MXN 18.5026 per US dollar, the US Federal Reserve H.10 noon buying rate in New York for 16 October 2026 (FRED series DEXMXUS), the latest observation available when this page was verified. Conversions are for orientation only.

Key facts

General minimum wage, 2026	315.04 MXN per dayCONASAMI resolution, DOF 9 December 2025, as of 2026-10-26 · in force
General minimum wage, 2026, monthly (daily rate x 365 / 12, as published by CONASAMI)	9582.47 MXN per monthCONASAMI resolution, DOF 9 December 2025, fourth resolutive point, as of 2026-10-26 · in force
Northern Border Free Zone minimum wage, 2026	440.87 MXN per dayCONASAMI resolution, DOF 9 December 2025, as of 2026-10-26 · in force
Maximum ordinary working week, 2026	48 hoursLFT art. 59; decree DOF 1 May 2026, transitional art. Segundo, as of 2026-10-26 · in force
Maximum ordinary working week from 1 January 2030	40 hoursLFT art. 59; decree DOF 1 May 2026, transitional art. Segundo, as of 2026-10-26 · pending
Overtime pay within the weekly cap	100 % above ordinary hourly payLFT art. 66, as of 2026-10-26 · in force
Maximum probation period (180 days for management and specialized roles)	30 daysLFT art. 39-A, as of 2026-10-26 · in force
Minimum paid vacation after first year	12 working daysLFT art. 76, as of 2026-10-26 · in force
Vacation premium	25 %LFT art. 80, as of 2026-10-26 · in force
Year end bonus (aguinaldo), minimum	15 days of salaryLFT art. 87, as of 2026-10-26 · in force
Employee profit sharing (PTU)	10 % of taxable incomeSixth PTU Commission resolution, DOF 18 September 2020; LFT art. 117, as of 2026-10-26 · in force
Indemnity for unjustified dismissal	3 months of salaryLFT art. 48, as of 2026-10-26 · in force
Additional indemnity where reinstatement is refused (indefinite contracts)	20 days of salary per yearLFT art. 50, as of 2026-10-26 · in force
Seniority premium (salary capped at twice the minimum wage)	12 days per yearLFT arts. 162 and 486, as of 2026-10-26 · in force
Deadline to register hires with IMSS	5 business daysLSS art. 15, as of 2026-10-26 · in force
Employer retirement contribution	2 % of contribution salaryLSS art. 168, as of 2026-10-26 · in force
Employer old age contribution, 4.01 UMA and above, 2026	7.513 % of contribution salaryLSS art. 168; decree DOF 16 December 2020, transitional art. Segundo, as of 2026-10-26 · in force
Employer INFONAVIT housing contribution	5 % of salaryLey del INFONAVIT art. 29, as of 2026-10-26 · in force
Unit of Measure and Update (UMA), from 1 February 2026	117.31 MXN per dayINEGI publication, DOF 9 January 2026, as of 2026-10-26 · in force

The rule

1. Minimum wage for 2026: MXN 315.04 per day nationally and MXN 440.87 per day in the Northern Border Free Zone, in force since 1 January 2026. The minimum wage is the least a worker may receive in cash for a working day. It is set by the National Minimum Wage Commission (CONASAMI), made up of worker, employer and government representatives, and the annual setting may never be below the inflation observed during the period it was in force. For 2026 the general minimum rose 13 percent (a fixed 6.5 percent increase plus an independent recovery amount of MXN 17.01) and the border zone minimum rose 5 percent. Monthly salaries are converted to a daily salary by dividing by 30.
Cost to do it: The floor for every employee's daily cash wage; social security contributions and benefits are calculated on top of it.
Example: A full time worker at the general minimum earns MXN 315.04 a day, which the CONASAMI resolution expresses as MXN 9,582.47 a month (daily rate times 365 divided by 12); in a municipality of the Northern Border Free Zone the floor is MXN 440.87 a day, or MXN 13,409.80 a month. / About USD 17.03 a day and USD 518 a month nationally; about USD 23.83 a day and USD 725 a month in the border zone at 18.5026.Resolution of the Council of Representatives of CONASAMI fixing the general and professional minimum wages in force from 1 January 2026, DOF 9 December 2025; LFT, DOF 1 April 1970 (consolidated text, last reform DOF 14 May 2026), Resolution, general minimum wage points; LFT arts. 89, 90 and 94, 2025-12-09 official text · verified 2026-10-26 · changed: From 1 January 2026 the general minimum wage rose 13 percent to MXN 315.04 per day and the Northern Border Free Zone minimum rose 5 percent to MXN 440.87 per day, per the CONASAMI resolution published in the DOF on 9 December 2025.

2. The maximum ordinary working week falls from 48 to 40 hours, two hours per year from 2027 to 2030, with no cut in pay. A reform published on 1 May 2026 set the legal maximum ordinary week at 40 hours, reached gradually from 1 January of each year: 48 hours in 2026, 46 in 2027, 44 in 2028, 42 in 2029 and 40 in 2030. The daily maximum stays at 8 hours for day shifts, 7 for night shifts and 7.5 for mixed shifts, and workers keep at least one paid rest day for every six days worked, with a Sunday premium of at least 25 percent. Overtime is paid at double the ordinary hourly rate and is capped per week at 9 hours in 2026 and 2027, 10 in 2028, 11 in 2029 and 12 from 2030, in up to 4 hours a day on no more than 4 days; hours beyond that cap (no more than 4 a week) are paid at triple, and ordinary plus overtime may never exceed 12 hours in a day. The reduction may not reduce wages, salaries or benefits. Employers must also keep an electronic record of each worker's start and end times and give it to the authorities on request; the STPS general provisions setting its scope and exceptions take effect on 1 January 2027, and failure to comply carries a fine of 250 to 5,000 UMA.
Cost to do it: Same weekly pay for fewer hours: each two hour step raises the cost per hour worked by about 4 to 5 percent, and covering lost hours with overtime costs double time. Fine for not keeping the electronic time record: 250 to 5,000 UMA, MXN 29,327.50 to MXN 586,550 at the 2026 UMA of MXN 117.31.
Example: A factory worker paid MXN 1,000 a day for an 8 hour shift (MXN 125 an hour) who works 9 overtime hours in a week in 2026 earns MXN 2,250 of overtime (9 hours at MXN 250). In 2030 the same weekly salary must cover a 40 hour week instead of 48. / Overtime of about USD 122 at 18.5026; the time record fine ranges from about USD 1,585 to USD 31,701.Decree amending the LFT on the reduction of the working day, DOF 1 May 2026, in force 1 May 2026; Ley Federal del Trabajo (LFT), DOF 1 April 1970 (Chamber of Deputies consolidated text, last reform DOF 14 May 2026), LFT arts. 58, 59, 61, 66, 68, 69, 71, 132 section XXXIV and 994 section IV Bis; decree transitional arts. Segundo, Cuarto, Quinto and Séptimo, 2026-05-01 official text · verified 2026-10-26 · changed: The decree of 1 May 2026 replaced the 48 hour week with a 40 hour maximum phased in from 1 January 2027 (46 hours) to 1 January 2030 (40 hours), redefined the overtime caps (9 hours a week in 2026 and 2027 rising to 12 in 2030, paid at double, with up to 4 further hours at triple), and created the duty to keep an electronic record of working hours, with STPS rules taking effect 1 January 2027.

3. Contracts are indefinite by default, and probation is short. Employment may be for a specific job or period, by season, or indefinite, and may include a probation period or initial training. Absent an express term the relationship is indefinite, and a fixed term may only be agreed where the nature of the work requires it, to replace another worker temporarily, or in other cases the law provides; if the term expires and the work continues, the contract is extended for as long as the work lasts. For indefinite contracts or those over 180 days, a probation period may be set of up to 30 days, or up to 180 days for management and specialized technical or professional roles; probation may not be extended and the worker receives full salary, social security and benefits during it. The written contract must state, among other things, the parties' details, the type and term, the services, place of work, hours, salary and pay day.
Cost to do it: No registration fee for individual contracts. The cost of a weak contract is that a fixed term without a lawful reason is treated as indefinite, so termination triggers dismissal liability.
Example: A company hires a sales manager on an indefinite contract with a 180 day probation period and a monthly salary of MXN 60,000. If, at the end of probation, the manager does not meet the role's requirements, the employer may end the relationship without liability; after that, termination is a dismissal. / Salary of about USD 3,243 a month at 18.5026.Ley Federal del Trabajo (LFT), DOF 1 April 1970 (Chamber of Deputies consolidated text, last reform DOF 14 May 2026), Arts. 25, 35, 37, 39, 39-A and 39-D, 2012-11-30 official text · verified 2026-10-26

4. Mandatory benefits: year end bonus, vacations with a premium, and rest days. Every worker is entitled to a year end bonus (aguinaldo) of at least 15 days of salary, paid before 20 December, pro rata for those with less than a year of service. After one year of service workers get at least 12 working days of paid vacation, rising by two days a year to 20 days in the fifth year and then by two days for every five years of service; at least 12 days must be taken continuously, and vacations may not be replaced by pay except pro rata on termination. A vacation premium of at least 25 percent of the salary for the vacation days is due on top.
Cost to do it: On a daily salary of MXN 1,000, the statutory minimum is MXN 15,000 of aguinaldo, MXN 12,000 of vacation pay in the second year and MXN 3,000 of vacation premium.
Example: An employee earning MXN 30,000 a month (MXN 1,000 a day) who completes one year of service is owed at least MXN 15,000 of aguinaldo by 19 December, 12 paid vacation days and a premium of at least MXN 3,000. / Aguinaldo of about USD 811 and vacation premium of about USD 162 at 18.5026.Ley Federal del Trabajo (LFT), DOF 1 April 1970 (Chamber of Deputies consolidated text, last reform DOF 14 May 2026), Arts. 76, 78, 79, 80 and 87, 2022-12-27 official text · verified 2026-10-26 · changed: The decree published in the DOF on 27 December 2022, in force 1 January 2023, set the minimum first year vacation at 12 working days and the current scale of arts. 76 and 78.

5. Employee profit sharing (PTU): 10 percent of taxable profit, capped per worker. Workers share in the employer's profits at the percentage set by the national PTU commission, applied to taxable income as determined under the income tax law. The current rate is 10 percent, kept by the Sixth Commission's resolution published in the DOF on 18 September 2020. The share must be paid within 60 days after the date the annual income tax return is due, which for companies means by 30 May. Each worker's share is capped at the greater of three months of salary or the average PTU received in the last three years. Directors, administrators and general managers do not participate, and new companies are exempt in their first year of operation (two years if they make a new product).
Cost to do it: 10 percent of taxable income for the year, subject to the per worker cap; PTU paid in the year is deducted from the base for the 30 percent income tax (see the taxes page).
Example: A Mexican subsidiary with taxable income of MXN 10,000,000 for 2025 sets aside MXN 1,000,000 of PTU and pays it to eligible staff by 30 May 2026, half by days worked and half by salary, with each worker's share capped at three months of salary or their three year average, whichever is higher. / Taxable income of about USD 540,465; PTU pool of about USD 54,046 at 18.5026.Resolution of the Council of Representatives of the Sixth National Commission for Workers' Profit Sharing, DOF 18 September 2020; Ley Federal del Trabajo (LFT), DOF 1 April 1970 (Chamber of Deputies consolidated text, last reform DOF 14 May 2026), Resolution, first resolutive point; LFT arts. 117, 120, 122, 126 and 127, 2020-09-18 official text · verified 2026-10-26

6. Dismissal: the employer must prove a legal cause, give written notice, or pay. The law lists the causes for termination without employer liability (for example falsified credentials, dishonesty or violence, more than three unjustified absences in 30 days, disobedience, or revealing trade secrets). The employer must give the worker written notice of the conduct and dates, either in person at the time of dismissal or through the labor court within five business days; without that notice the dismissal is presumed unjustified. A worker dismissed without proven cause may ask, after mandatory conciliation, for reinstatement or for three months of salary, plus back wages from dismissal for up to 12 months and, after that, 2 percent monthly interest on 15 months of salary. Where the employer may refuse reinstatement (workers with less than one year, confidence employees, workers in direct and permanent contact with the employer, domestic, temporary and platform workers), it must also pay 20 days of salary per year of service on indefinite contracts. Every permanent worker who is dismissed, with or without cause, or who leaves for a justified cause, also receives a seniority premium of 12 days per year of service, with the daily salary capped at twice the applicable minimum wage, and voluntary resignations earn it after 15 years. Compensation is calculated on the integrated salary, including cash, bonuses, premiums, commissions and benefits in kind.
Cost to do it: At least three months of integrated salary, plus 20 days per year where reinstatement is refused, plus the seniority premium and accrued pro rata aguinaldo, vacation and premium; back wages of up to 12 months if the case is litigated and lost.
Example: A confidence employee (manager) with 5 years of service and an integrated salary of MXN 1,000 a day is dismissed without a proven cause and the employer declines reinstatement: three months (MXN 90,000) plus 20 days for each of 5 years (MXN 100,000) plus the seniority premium of 12 days for each of 5 years at the capped MXN 630.08 a day (MXN 37,804.80), MXN 227,804.80 in total before accrued benefits and any back wages. / About USD 12,312 in total at 18.5026 (three months about USD 4,864; 20 days per year about USD 5,405; seniority premium about USD 2,043).Ley Federal del Trabajo (LFT), DOF 1 April 1970 (Chamber of Deputies consolidated text, last reform DOF 14 May 2026), Arts. 47, 48, 49, 50, 84, 89, 162 and 486, 2019-05-01 official text · verified 2026-10-26

7. Outsourcing of personnel is banned; only registered specialized services are allowed. Since the 2021 reform no person or company may provide or make its own workers available for the benefit of another. Staffing agencies may recruit, select and train, but the employer is whoever benefits from the services. Subcontracting is allowed only for specialized services or works that are not part of the client's corporate purpose or main economic activity, and only if the contractor is registered with the STPS in the public registry of specialized service contractors (REPSE); services shared within a corporate group count as specialized under the same test. The contract must be in writing and state the services and the approximate number of workers, and the client is jointly liable if the contractor fails its labor obligations. Registration requires being current on tax and social security obligations, must be renewed every three years, and STPS must rule within 20 days. Using banned outsourcing, providing it, or providing specialized services without registration carries a fine of 2,000 to 50,000 UMA, for both the provider and the beneficiary.
Cost to do it: REPSE registration has no government fee but requires a clean tax and social security record and renewal every three years. Fine for prohibited outsourcing: 2,000 to 50,000 UMA, MXN 234,620 to MXN 5,865,500 at the 2026 UMA of MXN 117.31.
Example: A foreign manufacturer that staffs its Mexican plant's production line through a third party payroll company is using prohibited outsourcing, since production is its main activity; it should hire the workers directly. Hiring a REPSE registered security or cleaning contractor remains allowed. / Fine range of about USD 12,680 to USD 317,010 at 18.5026.Decree reforming the LFT and other laws on subcontracting, DOF 23 April 2021; Ley Federal del Trabajo (LFT), DOF 1 April 1970 (Chamber of Deputies consolidated text, last reform DOF 14 May 2026), LFT arts. 12, 13, 14, 15 and 1004-C, 2021-04-23 official text · verified 2026-10-26

8. Social security and housing fund: register within five business days and pay monthly. Employers must register themselves and their workers with the Mexican Social Security Institute (IMSS) and report hires, departures and salary changes within five business days, keep payroll records for five years, and calculate and pay contributions for each month by the 17th of the following month. The mandatory scheme covers work risk, sickness and maternity, disability and life, retirement and old age, and day care. Under the 2020 pension reform the employer's retirement contributions are 2 percent of the contribution salary for retirement plus an old age and unemployment at advanced age contribution that rises by salary band and by year: in 2026 from 3.150 percent at the minimum wage to 7.513 percent at 4.01 UMA and above, reaching 4.202 to 11.875 percent in 2030; the worker pays 1.125 percent. Employers must also register workers with INFONAVIT and contribute 5 percent of salary to each worker's housing subaccount.
Cost to do it: For an employee earning MXN 30,000 a month (about 8.5 UMA a day), the employer pays at least MXN 600 retirement (2 percent), MXN 2,253.90 old age (7.513 percent) and MXN 1,500 INFONAVIT (5 percent) a month in 2026, before the work risk, sickness and maternity, disability and life and day care branches.
Example: For one employee at MXN 30,000 a month the three contributions above total MXN 4,353.90 a month, due with the monthly IMSS payment by the 17th of the following month. / About USD 235 a month on a salary of about USD 1,621 at 18.5026.Ley del Seguro Social (LSS), DOF 21 December 1995 (Chamber of Deputies consolidated text, last reform DOF 15 January 2026), as amended by decree DOF 16 December 2020; Ley del INFONAVIT, DOF 24 April 1972 (consolidated text, last reform DOF 21 February 2025), LSS arts. 11, 15, 39 and 168, and transitional art. Segundo of the decree of 16 December 2020; Ley del INFONAVIT art. 29, sections I and II, 2020-12-16 official text · verified 2026-10-26 · changed: The employer contribution for old age and unemployment at advanced age has risen each 1 January since 2023 under the decree of 16 December 2020; for workers earning 4.01 UMA or more it went from 6.422 percent in 2025 to 7.513 percent in 2026 and will be 8.603 percent in 2027.

9. Unions and collective contracts: proven worker support and a secret ballot. To demand an initial collective bargaining agreement, a union must first obtain a certificate of representativeness from the Federal Center for Conciliation and Labor Registration (CFCRL), backed by at least 30 percent of the workers to be covered. An initial agreement or a revision can only be registered if a majority of covered workers approve its content in a personal, free and secret vote, announced at least 10 days in advance, in which the employer may not intervene. This proof of support is a condition of validity of the collective agreement.
Cost to do it: No fee for the employer; the practical cost is negotiating and administering the agreement and staying out of the vote.
Example: A union seeking a first collective agreement at a plant with 500 workers needs signed support from at least 150 of them to obtain the CFCRL certificate, and the negotiated agreement then needs approval by more than 250 in a secret ballot. / Not applicable: no monetary amount.Ley Federal del Trabajo (LFT), DOF 1 April 1970 (Chamber of Deputies consolidated text, last reform DOF 14 May 2026), Arts. 386 Bis, 390 Bis and 390 Ter, 2019-05-01 official text · verified 2026-10-26

Year	Maximum ordinary week (hours)	Weekly overtime cap at double pay (hours)
2026	48	9
2027	46	9
2028	44	10
2029	42	11
2030	40	12

Phase in of the maximum ordinary working week and the weekly overtime cap, from 1 January of each year (decree DOF 1 May 2026, transitional arts. Segundo and Cuarto).

Item	Rule	Source
Minimum wage 2026	MXN 315.04 a day; MXN 440.87 in the Northern Border Free Zone	CONASAMI resolution, DOF 9 December 2025
Year end bonus	At least 15 days of salary, before 20 December	LFT art. 87
Vacation	12 working days after year one, rising to 20 by year five, plus a 25 percent premium	LFT arts. 76 and 80
Profit sharing	10 percent of taxable income, paid by 30 May for companies, capped per worker	PTU resolution DOF 18 September 2020; LFT arts. 122 and 127
Unjustified dismissal	3 months of salary plus up to 12 months of back wages; plus 20 days per year where reinstatement is refused	LFT arts. 48 to 50
Seniority premium	12 days per year, salary capped at twice the minimum wage	LFT arts. 162 and 486
Outsourcing	Personnel outsourcing banned; specialized services only with REPSE registration	LFT arts. 12 to 15
Social security	Register within 5 business days; pay monthly by the 17th; employer retirement 2 percent plus old age 3.150 to 7.513 percent in 2026	LSS arts. 15, 39 and 168
Housing fund	5 percent of salary	Ley del INFONAVIT art. 29

Main employer labor costs and rules in Mexico, verified 26 October 2026 against the official texts cited on this page.

Worked example

A foreign company opens a Mexican subsidiary in Monterrey and hires a plant supervisor on an indefinite contract at MXN 30,000 a month (MXN 1,000 a day, about USD 1,621 a month at 18.5026), with a 30 day probation period.
It registers the supervisor with IMSS and INFONAVIT within five business days of hire and pays, each month by the 17th, at least MXN 600 for retirement, MXN 2,253.90 for old age and MXN 1,500 for housing (about USD 235 together), plus the other IMSS branches.
Each year it pays at least MXN 15,000 of aguinaldo before 20 December (about USD 811) and, from the second year, 12 vacation days with a premium of at least MXN 3,000 (about USD 162).
If the subsidiary's taxable income for the year is MXN 10,000,000 (about USD 540,465), it shares MXN 1,000,000 (about USD 54,046) with staff by 30 May of the following year.
From 1 January 2027 the supervisor's ordinary week may not exceed 46 hours, falling to 40 hours in 2030, at the same salary, and the company must have an electronic time record in place.

Step by step

1. Before the first hire, register the company as an employer with IMSS and INFONAVIT and obtain the company's e.firma, which SAT filings and the STPS REPSE platform require.
2. Sign a written contract with each worker covering the items in LFT art. 25, and decide on probation (up to 30 days, or 180 days for management and specialized roles) before day one.
3. Register each hire with IMSS within five business days, and set the payroll calendar: IMSS contributions by the 17th of each month, aguinaldo before 20 December, PTU by 30 May.
4. Plan shifts for the 46 hour week in 2027 and the 40 hour week in 2030, and set up an electronic record of start and end times, checking the STPS general provisions that take effect on 1 January 2027.
5. Map every service contract: move any personnel supply onto your own payroll, and keep specialized contractors only if they hold a current REPSE registration and a written contract.
6. For any dismissal, document the cause and deliver written notice in person or through the labor court within five business days, or budget the statutory compensation; conciliation is mandatory before a lawsuit.
7. Recheck this page before large hiring or restructuring decisions; the verified date is shown at the top.

Common traps

Paying the national minimum in the border zone. In the Northern Border Free Zone the 2026 floor is MXN 440.87 a day, not MXN 315.04.
Firing without written notice. If the worker does not receive written notice of the cause, in person or through the labor court within five business days, the dismissal is presumed unjustified (LFT art. 47).
Using fixed term contracts for permanent work. A fixed term is only valid where the nature of the work requires it or to replace another worker (LFT art. 37); otherwise the relationship is indefinite.
Keeping a payroll company for core staff. Supplying personnel to another company is banned and both the provider and the beneficiary face fines of 2,000 to 50,000 UMA (LFT arts. 12 and 1004-C).
Assuming the shorter week allows a pay cut. The decree of 1 May 2026 forbids any reduction in wages, salaries or benefits as a result of the shorter week (transitional art. Séptimo).
Budgeting social security at last year's rates. The employer old age contribution rises every 1 January until 2030 (LSS art. 168 and the decree of 16 December 2020).
Forgetting PTU in year two. New companies are exempt from profit sharing only in their first year of operation (LFT art. 126), so the second year's taxable profit is shared.
Calculating severance on base salary only. Compensation uses the integrated salary, including bonuses, premiums, commissions and benefits in kind (LFT arts. 84 and 89).

Sources

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