Great talent is everywhere. One popular outsourcing destination is Mexico — offering a large pool of highly skilled professionals. But sometimes, the problem is legally hiring the talent that you need.
An Employer Of Record (EOR) can be ideal for companies looking to hire and pay talent around the world without the legal hassle.
This article will walk you through the reasons, processes, and advantages of hiring employees in Mexico through an EOR.
Why Hire Talent in Mexico?
Outsourcing to Mexico is nothing new but has become ever more popular as companies set up remote operations post-pandemic. This is particularly true for tech talent since Mexico has a well-established IT infrastructure and invests heavily in Science, Technology, Engineering, and Math (STEM) talent cultivation.
Another advantage of hiring employees in Mexico for companies based in the US and Canada is real-time collaboration. Mexico’s time zones match up nicely with both the East and West coasts, allowing companies to seamlessly integrate Mexican staff into their meetings and processes.
This is also true for culture and language. Many Mexicans have close ties to the US and Canada, understand the culture, and speak fluent English. Plus, for companies working with the Spanish-speaking market, hiring bilingual employees in Mexico can be a huge advantage.
Notably, cost plays a significant role when hiring Mexican employees. Salaries remain well below the US and Canadian averages. So, it’s a good opportunity to save on human resources expenditures while employing some of the global top talent.
How Can I Legally Hire an Employee in Mexico?
Things can get tricky if you want to legally hire talent in Mexico on your own. Essentially, hiring in Mexico requires companies to set up an entity based in Mexico. The process can be a legal nightmare and is only worth it if you are going to set up long-term operations in the country.
This is where EORs come in handy. An EOR acts as a broker for hiring talent outside of the country you legally operate in. It will already have an entity set up and the legal framework in place to do the hiring for you. You, on the other hand, will manage the relationship with your employees. Going through an EOR is possibly the easiest way to hire talent in Mexico without all the legal hassle.
What Does an EOR Do?
Simply put, EORs take care of the legal procedures while you manage your employees. The legal frameworks for hiring in Mexico can be quite different from those in the US and Canada. EORs handle worker visas and work permits, employment contracts, payroll, local compliance, termination, and any other HR services.
For example, did you know that you need to pay a mandatory thirteenth month bonus to employees in Mexico? Or that there is no legal requirement to give notice when an employee leaves their post? EORs will take care of this and so much more.
To learn more, check out our article on everything there is to know about EORs.
Contracts and Documentation
An EOR will handle the tedious administration involved in preparing and collecting contracts and documentation. This includes employment offers, signed contracts, banking information, and more so can focus on growing your business.
Employee Insurance and Benefits
When the world is your competition, it pays to incentivize new and existing hires with attractive benefits like medical, dental, vision and life insurance, and retirement savings plans. A comprehensive EOR will have those kinds of benefits built into its service offering.
Vacation and Public Holidays
As of 2023, after one year of service, employees in Mexico are entitled to twelve working days of paid leave. This number increases by two days every year until the employee reaches twenty days. There is also sick leave. An EOR can keep track of all this and the corresponding payments for you.
In addition, Mexico has certain federally mandated statutory holidays that companies are obligated to provide to their employees. Important cultural dates like Easter and the Day of the Dead are also usually observed although not legally mandatory. These include:
- New Year’s Day: January 1
- Constitution Day: First Monday of February
- Benito Juarez’s Birthday: Third Monday in March
- Labor Day: May 1
- Independence Day: September 16
- Revolution Day: Third Monday in November
- New Presidency: December 1, every 6 years
- Christmas Day: December 25
Taxes
Employers in Mexico pay a range of taxes or social security contributions, which are calculated based on the employee’s gross salary. These include illness and maternity, pension plan, disability and life insurance, and childcare benefits, among others.
This can be a tedious process but is necessary to ensure you are paying employees in a compliant manner. Thankfully, an EOR can handle the logistics and ensure that payroll is processed properly and per the regulations in whichever country you are operating.
What Are Your Responsibilities?
While the EOR handles everything related to legal and HR processes, many aspects of the company’s workings fall under your purview. So, you take care of your staff in the same way you would with your local hires. That means search and recruitment, company onboarding, training, management, day-to-day communications, progress tracking, and so on, should be managed by you.
While the relationship with the employee won’t be all that different through an EOR, you need to be clear with your staff on the legalities of their contracts. Of course, retention is also up to you. You will need to consider how you help your staff grow and succeed in their new roles at your organization.
What Are the Advantages of Going Through an EOR in Mexico?
Using an EOR to hire talent in Mexico will save you time, reduce costs, and mitigate risks.
Setting up an entity for hiring in Mexico is time-consuming and frankly, can be a huge headache. Since the EOR is already set up to hire employees in the country, it will be faster and easier to start hiring right away. In fact, the process won’t be that much different from hiring locally.
The set-up and HR costs can also be quite high, so going through an EOR can save you money. You will also be paying lower salaries than you would be in the US and Canada, so you’re bound to see some positive impact on your bottom line.
Most importantly though, you’ll be mitigating the risks associated with non-compliance. Because EORs have extensive experience in navigating complex local HR policies, you won’t have to worry about any issues arising from improper hiring practices.
How Do I Choose the Right EOR for Me?
There are a few key things to consider when you are selecting an EOR in Mexico.
- Local Experience: Does the EOR have experience hiring in Mexico? As discussed earlier, one of the biggest advantages of hiring an EOR is the assurance of compliance. Often, this requires a lot of past experience, so check the EOR’s track record in the country.
- Service Scale: Do you need someone who offers a full suite of services? If you want happy employees that you can retain in the long run, then you may need to offer them benefits like insurance and other welfare. Some EORs have systems in place for this but others may not. Also, certain EORs will offer consulting services to optimize your global hiring practices.
- Data and Systems Security: Protecting intellectual property in a remote working environment is critical. Ensure your vendor of choice has a specific agreement outlining the ways in which they plan to keep your sensitive information safe and secure.
- Collaboration: Ensure your vendor’s approach to communication and collaboration with its clients is aligned with your organization’s approach. Love having a point of contact person? Perhaps all you need is access to a Slack channel so you can quickly reach your vendor. Whatever your communication style, ensure your vendor can meet your needs.
Borderless: The Employer of Record your Company Needs
Need an EOR? Look no further than Borderless. We can help you hire employees in Mexico – giving you access to a massive talent pool without the headaches of traditional global expansion.
Book a demo today and see how we can help you quickly and easily hire, onboard, pay, and retain the Mexico-based talent your organization needs.
Disclaimer
Borderless does not provide legal services or legal advice to anyone. This includes customers, contractors, employees, partners, and the general public. We are not lawyers or paralegals. Please read our full disclaimer here.
