In recent times, due to technological advancements and a rise in demand for competency, many global companies have expanded their criteria and are readily foraying into Latin America, Mexico in particular. However, deciding to expand is just the tip of the iceberg a company must counter.
The surplus of skilled workforce in Mexico has been a hot spring for global companies wanting to nurture their growth while taking advantage of the country’s strategic location. Nonetheless, even the most successful companies might be unable to leverage the benefits of hiring employees in Mexico without proper infrastructure, planning, and preparation. If your business is looking to branch out in the region, many things must be taken care of to ensure a hassle-free establishment and business run.
Here’s everything you need to know about expanding in the Latin America region as a global company.
Why expand in Mexico
Whether it is the automotive industry, electronics, or manufacturing, Mexico boasts a highly skilled workforce who can instantly take up job roles and deliver exceptional results. Aside from this, here are other reasons to get into this region:
- The country has a simplified tax system and relatively relaxed labor laws, making it easier for companies to hire and retain employees without additional costs.
- The country has a stable and progressive political system, which allows businesses to establish and operate without fear of uncertainties.
- Mexico has multiple free trade agreements (FTAs), which allow businesses access to a significant portion of the world’s GDP.
- The country also treats Mexican and foreign business establishments the same way, enabling them to function without restrictions or limitations.
Solutions to hire in Mexico
Hiring a workforce in Mexico is the best way to save resources without compromising on the quality of work your business delivers. However, getting started with the hiring process can be tricky and daunting if you are not taking the proper steps. Here’s how to hire employees in Mexico:
- Partner with EOR
Partnering with an employee of record is the simplest way to start hiring your own team in Mexico. An EOR is a local entity that acts like an extended human resource arm of your organization, allowing your business to hire talent without worrying about setting up a legal entity.
An EOR has adequate international infrastructure and global exposure, making it incredibly easy and efficient. Moreover, as EORs are well-acquainted with the local regulations and laws, your organization will not violate local employment regulations.
Also, an EOR will take care of payroll, taxes, and compliance with local regulations and labor laws while ensuring all employees enjoy your business’s benefits (health insurance, leave and vacation policies, and more). The entity will also handle the complexities of 13th and 14th-month pay without causing any hassles to the business operations.
- Create a company
Creating your own company is another smart and effective way to step into the waters. Doing so enables your business to take control of everything, from hiring teams to deciding how the employee’s benefits will be rolled out. This option is great if you want to hire more than a bunch of talent.
When creating a company in the region, you will be required to obtain necessary permits and licenses from authorities, including the Mexican Tax Administration Service (Servicio de Administración Tributaria or SAT) and the National Registry of Foreign Investments (Registro Nacional de Inversión Extranjera or RNIE). Additional permits from the Mexican Social Security Institute (IMSS) and the National Workers Housing Fund (INFONAVIT) will be required to ensure your company is recognized as a legal entity.
- Engage a contractor
Some businesses engage contractors instead of hiring full-time employees. This is a viable option when looking to save on costs and the hassles of the hiring process. While it may seem like an ideal solution, engaging extensively with contractors can limit your organization’s ability to achieve growth and have a permanent team to work with.
Employment practices
When hiring employees in Mexico, the business is required to adhere to Mexican employment laws and practices. Here’s a quick overview of these practices:
- Shift timings are divided into daytime (8 hours a shift limit), nighttime (7 hours a shift limit), and mixed shifts (7½ hours a shift limit).
- Bonuses are necessary, including Christmas, vacation, Sunday, and seniority.
- Employers are also required to pay severance in case of employee termination.
- In addition to these, employers are also required to offer sick leave, maternity and paternity leave, and, in some cases, bereavement leave.
Compliance risks
To ensure your business can operate without encountering any hassles, it must comply with certain requirements. Here are the key aspects to adhere to:
- The company must register with the Tax Administration Authority and declare its monthly and annual income to the department annually.
- Compliance with laws and regulations to protect information about employees (full-time & contract employees).
- Adherence to requirements as defined by the Anti-Money Laundering Law.
Hiring teams for business growth and success!
As Mexico beams with fresh talent ready to get hired, global companies must abide by local laws and regulations to ensure they have a hassle-free experience hiring a new-age workforce. Whether you are employing an EOR or a local extended entity, make sure that your business offers world-class benefits and is constantly working towards growth with strategic planning and seamless implementations.
