Mandatory Benefits in Mexico
Pension
Mexico has two pension regimes, and they are determined according to the date on which the employee started into IMSS or ISSSTE contributions. (Boundless’ employees would be affiliated with IMSS insurance, since ISSSTE insurance is for employees of a government agency only):
1973 Regime: If the employee started contributing before July 1, 1997: The pension amount is determined by the contributions the employee made to IMSS or ISSSTE while the employee was in active employment.
1997 Regime: If the employee started contributing on or after July 1, 1997: The employee will have to manage their retirement savings with the Administradoras de Fondos para el Retiro (Retirement Funds Administrator) of their choice and thus obtain returns for their future.
Holiday entitlement
Employees with more than one year of service shall enjoy an annual period of paid vacation, which in no case may be less than 6 working days, and which shall increase by 2 working days until reaching 12, for each subsequent year of service.
- After the fourth year, the vacation period will increase by 2 days for every 5 days of service.
- Discontinuous and seasonal employees shall be entitled to an annual vacation period, in proportion to the number of working days in the year.
- Workers shall continuously enjoy at least 6 days of vacation.
- Holidays may not be compensated with remuneration. If the employment relationship terminates before the end of the year of services, the employee shall be entitled to a proportionate remuneration to the time rendered.
- Employees shall be entitled to a bonus of not less than 25 percent of the wages due to them during the holiday period.
- Holidays must be granted to employees within six months following the completion of the year of service. Employers shall deliver annually to their employees a certificate containing their seniority and in accordance with the holiday period that corresponds to them and the date on which they must enjoy it.
Vacation bonus
This is an economic benefit (an amount of money) that must be granted to all employees so that they can enjoy their vacations.
This payment must be a minimum of 25% of the employee’s monthly salary and is calculated on the salary plus the amount corresponding to the vacations.
Christmas bonus
All company employees, without exception, must receive this extra amount of money in proportion to the days worked. The Christmas bonus must be granted no later than December 20 of each year and should for a minimum of 15 days of salary. If employees have been with the company for less than one year, they are granted the proportional part of the time they have been working.
This benefit may be granted in cash only and not in kind or in food vouchers.
The monthly salary, the date the employee started working, and the days missed by the employee (if any) must be considered in order to calculate the amount to be paid for this labour benefit.
Occupational Accident Insurance
IMSS will provide (1) employees with the necessary medical care as protection, through the payment of a pension, while they are temporarily or permanently incapacitated for work or (2) their beneficiaries in the event of the employee’s death.
Any harmful event that occurs during a commute between the employee’s home and the place of work is also considered to be an accident at work.
Percentage of payment: 100% of the salary registered before IMSS, at the beginning of the disability.
Employees who suffer an occupational accident are entitled to the following cash benefits:
- If they are incapacitated for work, they will receive, for the duration of the incapacity, 100 percent of the salary they were contributing at the time of the accident.
- When the total permanent disability of the insured is declared, the insured will receive a definitive monthly pension equivalent to 70% of the salary at which the insured was contributing at the time the risk occurred. In the case of occupational diseases, it will be calculated with the average of the base salary of contribution of the last 52 weeks or those that the insured had if the insurance was for a shorter period, to determine the amount of the pension. Likewise, disabled persons must take out a survivorship insurance policy in the event of their death, which will grant their beneficiaries the pensions and other economic benefits to which they are entitled.
- If the declared disability is permanent partial, greater than 50%, the insured will receive a pension that will be granted by the insurance institution of the insured’s choice. The amount of the pension will be calculated in accordance with the disability valuation table contained in FLL, taking as a basis the amount of the pension that would correspond to total permanent disability.
- IMSS will grant pensioners for total and partial permanent disability with a minimum of more than 50% disability, an annual bonus equivalent to 15 days of the pension amount they receive.
Occupational Risks Insurance
Occupational risk insurance protects workers against potential accidents and illnesses to which they are exposed in the course of their work.
Percentage of payment: 100% of the base contribution salary at the time the risk occurs, as long as (1) the employee is not declared able to work, or (2) the partial or total permanent disability is declared, which must be done within 52 weeks.
Sickness and Maternity
Sickness and maternity insurance provides affiliated workers with the necessary medical care during treatment or pregnancy, as well as the economic and in-kind benefits that correspond to them.
Sickness pay percentage: 60% of the salary registered before IMSS, at the beginning of the incapacity.
Percentage of payment for maternity: The sick pay rate is 100% of the salary registered before IMSS, at the beginning of the 34th week of gestation, for the total number of days covered by the certificate of maternity disability.
During the nursing period of six months, the new mother is entitled to two additional 32-minute rest periods per day to feed the child in an adequate and hygienic place set aside by the employer.
Old-age severance insurance
Old-age severance insurance is granted to insured individuals who are 60 years of age and have been left without paid work.
To qualify, the individual must also have the minimum contribution period required by the Social Security Law, which corresponds to 500 weeks of work for 1973 Regime, and 1,250 weeks of work for 1997 Regime.
Old Age Severance Insurance
| Age |
Percentage |
| 60 |
75% |
| 61 |
80% |
| 62 |
85% |
| 63 |
90% |
| 64 |
95% |
| 65 |
100% |
Old-age Insurance
Old-age insurance is for insured individuals who have reached the age of 65 and have the period of 1,250 weeks recognized by the Institute.
To qualify, the individual must also have the minimum contribution period required by the Social Security Law, which corresponds to 500 weeks of work for 1973 Regime, and 1,250 weeks of work for 1997 Regime.
Old Age Insurance Contribution
| Age |
Percentage |
| 60 |
75% |
| 61 |
80% |
| 62 |
85% |
| 63 |
90% |
| 64 |
95% |
| 65 |
100% |
Daycare
IMSS provides daycare insurance to care for the children of those who meet the requirements established by law, during their early childhood. The daycare services include cleaning, feeding, health care, education, and recreation.
The employer has the obligation to register its workers at IMSS. Companies that do not register at IMSS or do so after the established term and that do not register their workers at IMSS or do it late are sanctioned with a fine equivalent to the amount of Mex$20–Mex$350 times the UMA value.
Profit sharing (PTU)
All employees who perform subordinate personnel work for an individual or a company and get paid a salary are entitled to participate in the profits of their employers.
Employees not entitled to receive profit-sharing payments are listed below:
- directors, general managers, and administrators
- temporary employees who have worked for less than 60 days
- partners and shareholders
- collaborators under a fee-based payment scheme (because no subordinate employment relationship exists)
- domestic employees
Profit sharing (i.e., distribution of profits) must take place within 60 days after the date on which the annual tax return is due before the Tax Administration Service (March 31 for companies; April 30 for individuals).
Profit sharing is 10 percent of the taxable income generated in the immediately preceding year, based on the information reported by the company in its annual tax return.
Non-Mandatory Benefits in Mexico
Working from home
Some companies offer working-from-home flexibility. This could come in a hybrid model that may require people to come to the office a few days a weel or give them the option for fulltime WFH and if they desire to come to the office some of the days.
Paid relocation
Some companies pay for employees’ relocation costs when they accept the job offer.
Life insurance
Life insurance covers the employee and is a policy for a determined amount of money given to the employee’s relatives in case of the employee’s death.
Major medical expense insurance
Some companies offer major medical insurance to cover employees’ treatment in hospitals or private clinics. This type of insurance covers employees in case of accidents or serious illnesses. The insurance coverage depends on the insurance company and the agreement it has with the employer. The deductible amount is chosen when the major medical insurance policy is taken out.
