Navigating the Differences in Work Weeks and Wages When Manufacturing in Mexico

Understanding how to navigate operating in a foreign country often requires a learning curve many manufacturers aren’t prepared for. At the top of the list is understanding the nuances when recruiting and retaining workers in Mexico.

Though Mexico is known for its robust industrially skilled workforce, there are several labor standards and regulations companies should be aware of in advance. For instance, Mexico follows a different work-week and wage schedule than the U.S. and other countries. There are also unique paid holidays, as well as benefit expectations to consider.

Ensuring companies stay compliant with Mexico’s complex labor laws, including mandatory benefits, bonuses, and paid leave, reduces their legal risk and allows them to focus fully on their production needs. A Mexico shelter company like IVEMSA can guide you through what you need to know and keep you updated with changing regulations as they occur.

Here are a few of the basic differences regarding hiring employees in Mexico and how U.S. and other foreign manufacturers can stay competitive:

48-Hour Work Week

The U.S. typically recognizes a 40-hour work week for full-time employees. Whereas, a standard work week in Mexico extends to 48 hours, adding Saturday to a regular week-long shift. However, it is common for manufacturers to divide the 48-hour work shift into a five-day Monday-to-Friday work week.

Furthermore, wages are paid out weekly with overtime pay applied for employees who work on Sundays or for those who work more than 48 hours during the week. Overtime is considered as time worked after a normal shift and must be paid as double.

Paid Time Off

Mexico recognizes separate categories of paid time off, which manufacturers must adhere to according to labor laws and to ensure they retain and recruit the best workers.

Holidays

Mexico recognizes several paid holidays, similar to the U.S., including New Year’s Day and Christmas. However, they also honor country-specific holidays, including Mexico’s Independence Day on September 16th, Labor Day on May 1st, and Inauguration Day on December 1, which occurs every six years when a new president is sworn in.

For these designated time-off holidays, workers are still paid their full wages. And while there may be instances where work is necessary regardless, any assigned holidays are paid at double the typical time.

Vacation

Workers also receive paid vacation and bonuses per Mexico’s labor law. As of January 1, 2023, employees who have provided one year of service are granted a minimum of 12 paid vacation days in their first year of employment, which must be taken consecutively.

Every year following, two additional days are added through their fifth year of service. Then, once an employee reaches six years of employment, they are entitled to receive an extra two days of vacation time, every five years, until the maximum of 32 days is reached.

Vacation Bonuses

In addition to paid time off for vacations, employees are entitled to receive a vacation premium at a minimum of 25% of their salary for these vacation days. Though these standards are what’s required by Mexico labor law, many companies offer a wider range of benefits to ensure they recruit and retain the best workers.

A Mexico shelter company can guide manufacturers in what’s currently in demand to put together the most alluring compensation packages.

Other Employee Benefits

Full-time employees in Mexico automatically receive paid sick leave, paid parental leave, as well as profit sharing and pensions. Here’s a breakdown of each:

Paid sick leave

Sick or injured workers receive paid sick leave when verified by a medical professional. For non-work-related illness or injury, employees receive 60% of their salary. Meanwhile, any work-related illness or injury provides 100% of salary pay for workers up to 52 weeks. Work-related illness salary is covered by Social Security services, not the employer.

Paid maternal and paternal leave

Employees receive 12 weeks of paid maternal leave, commonly taken six weeks before the child’s birth and six weeks after. If an additional hospital stay is required for the mother or child, mothers receive half of their salary pay for up to 60 days.

Paternal leave extends to five working days with similar stipulations for adopting children. In this instance, mothers receive six weeks of paid leave or half their wages and working fathers receive five days of paid leave.

Pension

Employers are required to pay 2% of each employee’s base salary toward their retirement pension and 3.15% of the base salary as pension contributions for unemployment and insurance. Starting this year, this percentage will increase with contributions increasing to 13.87% at set intervals into 2030.

Reduce Your Learning Curve with Mexico Shelter Services

This serves as a general guideline of how labor laws affect foreign manufacturers in Mexico. There are additional specifics employers must know to stay compliant and competitive.

A Mexico shelter company like IVEMSA helps manufacturing leaders manage labor law compliance and workforce competitiveness as part of its full suite of shelter services.

To learn more about the benefits, contact our team today.

Source:
https://www.justworks.com/blog/PTU-mexico#how-does-profit-sharing-work