Employer Of Record in Mexico
There are several solutions in Mexico for a business to set up and one of them is wage portage.
Wage portage is very often a formula chosen by French companies wishing to develop in Mexico. This hiring solution very often precedes the establishment of its own legal structure.
This solution allows you to hire an on-site resource through our subsidiary SLA International Development (existing Mexican legal entity) who will manage all the procedures related to this hiring for you. The mechanism is simple, we manage recruitment for you, obtaining a work visa, setting up an employment contract under Mexican law, payroll management, expense management, leave monitoring paid, and where applicable the management of termination of the contract.
You will therefore be able to legally have a local team, or at least one person from your company, operational immediately, without having to manage Mexican accounting and taxation yourself, nor immediately create a local legal structure saving you valuable time and energy.
This formula is simple, flexible and guarantees you a relevant return on investment. Many clients today entrust us with their Mexican or French employees, whom we bring here to Mexico.
Mechanism and specificities of Employer Of Record in Mexico
We take care of all the Mexican specificities for you, and there are several that you obviously need to know.
When drafting your employee’s employment contract, you decide the conditions of employment: salary, leave, commissions, etc. In Mexico, you should know that the legal duration of leave after the first year of employment is a minimum of 12 days. In addition, your employee will pay their taxes in the country.
Consequently, EOR is a solution more suited to experienced profiles (unlike V.I.E).
We also manage on a daily basis the specificities of Mexican labor law, with which we are familiar. One of the examples that best characterizes these specificities is the processing and payment of “the aguinaldo” is a legal bonus to be paid by the company just before the Christmas period equivalent to 15 days of minimum wage, a sort of 13th month in Mexico.
We also take care of pay slip missions: we also have an explanatory document in French and Spanish for companies and employees to fully understand the specifics. All your employee’s expenses are managed and processed by us to make them easier for you to read and validate. We ensure that all supporting documents are tax deductible, always according to the amounts allocated under Mexican law.
For visa and administrative procedures, our local Mexican structure is required to obtain and renew each year, from the Mexican immigration services: a license or authorization to hire foreigners, known as “constancia de empleador”. For French people we draft all the documents necessary to obtain legal work authorizations from the immigration services.
We manage for you the payment of various taxes with the Mexican tax authorities known as SAT (Servicio de Administración Tributaria), we also pay employer and social charges with the social security organization IMSS (Instituto Mexicano del Seguro Social). In addition, the company must pay federal tax equivalent to 3% of salary.
We pay the mandatory contributions (5% withholding from salary by the employer) to the INFONAVIT institution (Instituto del Fondo Nacional de la Vivienda para los Trabajadores) their mission is to grant real estate loans to employees. All these costs are re-invoiced to you in full transparency on our monthly service invoice.
Another example regarding Mexican subtleties is the PTU (Participación de los Trabajadores en las Utilidades de la empresa). The PTU is in the Federal Labor Law. The company has a legal obligation to pay back all years part of its net profit before taxes, equivalent to 10% of this net profit. It is an instrument contributing to the redistribution of wealth and social justice.
Another important topic is that of medical coverage. You have the possibility to choose “ à la carte ” medical coverage, that is to say expatriate type French medical coverage (we, a local Mexican entity, can subscribe to this insurance in France) or local Mexican coverage, less expensive. Companies in Mexico are required to contribute to Mexican social security for their employees (a fairly precarious system). Mexican companies very frequently take out additional insurance “ gastos medicos mayores ” which covers the employee for large sums or significant treatment (surgical operation, etc.). It is also possible that the insurance covers all members of family. It depends on the agreement between the employer and the employee.
In the event of termination of the employment contract, the company must pay compensation corresponding to 90 days of the annualized average daily salary.
Finally, as part of the daily management of our “ portés ” in Mexico we ask them every month to send us an activity report in order to be informed. We meet with all our staff once a quarter to make sure everything is working properly and to have them sign their original pay slips.
Your locally present employee is efficient and more efficient. Saving time thanks to our management of its social, legal and accounting environment ensures that it can remain focused on its activities and the objectives that you entrust to it. Our people in Mexico are very often Mexicans or French residents for several years in Mexico, so they are perfectly familiar with the uses and customs of Mexican culture.
Thus, EOR provides a form of establishment of companies in the Mexican market and greatly reduces the risks. It allows you to assert the physical presence of the company. Your customers and business partners benefit from direct and local contact with the representative, on the same time zone, with the same +52, etc.
You will then be able to establish a relationship of trust with your customers. They will know that for any situation to be managed, someone is there to respond. The relationship is even healthier and can thus last over time. Wage portage allows us to increase our added value with our customers.
Many of our clients only see advantages in wage portage. Indeed, the solution is profitable for them, their “supported” employees are productive and fulfilled. The administrative burden is non-existent. Even if this can be seen as a short-term solution, some companies do not hesitate to make the contract permanent.
There are many benefits for the company and the employee. The employee follows local holidays and holidays which allows him to always be in tune with the country and its customers.
Finally, EOR solution is a beneficial option for positioning your business on the Mexican market. Flexible, flexible, economical and easy, you will make your job easier and will offer more proximity to your customers.
The Mexican subsidiary of the Salveo Group is now the preferred service provider of the Franco-Mexican Chamber of Commerce and Business France, particularly for EOR services.
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