Operating a Business

flag Mexico Mexico: Operating a Business

In this page: Legal Forms of Companies | The Active Population in Figures | Working Conditions | The Cost of Labour | Management of Human Resources

 

Legal Forms of Companies

Sociedad de Responsabilidad Limitada: Variable Stock Limited Liability Partnership
Number of partners: Minimum: 2; Maximum: 50
Capital (max/min): Minimum of  MXN 3,000. Each partner must bring in at least 50% at the time of its creation.
Shareholders and liability: Liability is limited to the contributed amount.
Sociedad en Nombre Colectivo: General Partnership
Number of partners: Minimum: 2. On of the partners must be designed as manager.
Capital (max/min): No minimum capital.
Shareholders and liability: Liability is unlimited and responsibility is joint.
Sociedad Anonima de Capital Variable (S.A. de C.V.): Variable Capital Limited Liability Company
Number of partners: Minimum: 2, including an administrator.
Capital (max/min): Minimum of  MXN 50,000
Shareholders and liability: Liability is limited to the contributed amount.
Sociedad Anonima (S.A.): Limited Liability Company or Corporation
Number of partners: Minimum: 2, including an administrator.
Capital (max/min): Minimum of  MXN 50,000
Shareholders and liability: Liability is limited to the contributed amount.
 

Business Setup Procedures

Setting Up a Company Mexico Latin America & Caribbean
Procedures (number) 8.00 8.00
Time (days) 8.40 25.22

Source: Doing Business - Latest available data.

 
For Further Information
Doing Business: Mexico, to learn about procedures to start a business in Mexico
SIEM - Sistema de Información Empresarial Mexicano (Mexican Business Information System)
The Competent Organisation
The National Business Information System
 

Recovery Procedures

Minimum Debt-to-Capital Ratio Triggering Liquidation
When losses are two thirds of the social capital.
Bankruptcy Laws
General Law of Commercial Companies
Reorganization and Rehabilitation Laws
Comapny mergers, transformations, and splits are regulated by the General Law of Commercial Companies.

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The Active Population in Figures

201820192020
Labour Force 56,255,84257,839,04653,978,977

Source: International Labour Organization, ILOSTAT database

 
201720182019
Total activity rate 64.04%64.35%65.25%
Men activity rate 82.31%82.29%82.38%
Women activity rate 46.89%47.48%49.13%

Source: International Labour Organization, ILOSTAT database

 

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Working Conditions

Opening Hours
 
  • Legal Weekly Duration
48 hours per week (8 hours per day)
  • Maximum Duration
Maximum of three extra hours daily on a maximum of three times per week.
  • Night Hours
From 10 p.m. to 6 a.m.
Working Rest Day
From 6 a.m. to 8 p.m.
Paid Annual Vacation
After one year of continuous work, the employee has the right to six working days of paid vacation. This increases from two to twelve days for every additional year worked .
Retirement Age
65 years old
Child Labour and Minimum Age For Employment
Minors, aged between 14 and 16 years old cannot work more than six hours per day, they do not have the right to work extra hours or holidays.
Informal Labour Market
According to the International Work Organization, there are 25.5 millions of persons in Mexico who work in the informal market (about 50% of the active population).

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The Cost of Labour

Pay

Minimum Wage
In 2020, Mexican President Andres Manuel Lopez Obrador lifted the minimum wage by 20 percent. The minimum wage is 123.22 pesos, or about $6.53 a day.
Average Wage
Monthly average gross salary: 33,200 MXN
Other Forms of Pay
  • Pay For Overtime
Overtime is paid double per each extra hour worked. It cannot exceed more than 9 hours per week.
  • Pay For Rest Days Worked
The worker is entitled to an additional 25% of his daily salary.
  • Pay For Night Hours
According to the minimum salary assigned to the geographical area as established by the National Minimum Salary Commission.
  • Pay For Overtime at Night
The extra night hours are paid double.
 

Social Security Costs

The Areas Covered
Disability insurance; pensions for disability, old age and death; medical assistance for maternity care, accidents and illness with benefits extending to members of the employee's family. 
Contributions
Contributions Paid By the Employer: Employers contribute to the social security system (9.934% to 24.434%), the housing fund (5%), and the retirement fund (2%), for a total of about 16.934% to 31.434% of wages. However, these contributions are deducted from the salaries of employees.
Contributions Paid By the Employee: Employees contributes up to 2.727% of their salary for social security system.
Competent Organization
Institute of Security and Social Services for the State Workers
Ministry of Health

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Management of Human Resources

 

Recruitment

Method of Recruitment
Enterprises use specialised methods of recruitment, but recommendations by word of mouth are also common. Nevertheless, applying for a job over the Internet is becoming increasingly popular.
Recruitment Agencies
Occ, Trovit, and Bumeran.
Recruitment Websites
Bolsa Mexico
Infojobs Mexico
Federal Government Employment Website
 

The Contract

Type of Contract
Employment contracts can be for a specific job assignment or for a fixed period of time. Unless stated otherwise, contracts are for an indefinite period of time.

Breach of Contracts

  • Retirement
Reasons to break a job contract include:
- False information, certificates or references given by the employee or syndicate.
- Involvement in violent acts, lack of honesty or maltreatment against supervisors.
- Intentional damage of materials during work hours.
- Revealing confidential information of the enterprise.
- Working under the influence of alcohol or drugs.
  • Dismissals
An employee can break his job contract at any moment without liability if there is justification. Justifications include:
- Deception on the part of the supervisor or the management group.
- Violence, lack of honesty or threats against the employee or his family.
- Reduction of the employee's salary.
- Evidence of an existing danger to the employee's safety or health.
Labour Laws
Work Legislation
Doing Business: Mexico, to obtain a summary of lab or regulations that apply to local enterprises
 

Dispute Settlement

 

Conciliation Process

Cases of Dispute
Working conditions, unfair dismissal, sexual and moral harassment, verbal violence and physical violence.
  • Legal Framework
Labour conflicts are regulated by the Federal Labour Law and the article 123 of the Mexican Constitution.
  • Procedure
Once the three representatives of the sectors (a government representative, an employee and one of the managers) are present at the Board of Conciliation, the situation is negotiated in order to reach a settlement convenient for all parties. The board can try to conciliate, but if they are not willing or able to reach an agreement then an arbitration process is initiated.

More information can be found in Art. 123 of the Mexican Constitution
 

Judicial Structures

  • Legal Framework
The Federal Labour Law gives the Federal Board of Conciliation and the Board of Conciliation and Arbitration the power to act as conciliatory instances for workers and managers.
  • Competent Legal Body
The Board of Conciliation and Arbitrage and The Federal Board of Conciliation answer to the Ministry of Labour and Social Security.
 

Social Partners

Social Dialogue and Involvement of Social Partners
Mexican labour unions are organised by activity sectors and most are affiliated with the Confederation of Mexican Workers (CTM). They are relatively powerful and originally emerged as institutions of social resistance. As a result, in some cases, the unions resist economic structural reforms that may ultimately serve to benefit the economic development of the country.
Unionisation Rate
13.5% of wage and salary earners in 2014 (OECD)
Unions
List of Labour Unions in Mexico
Confederation of Mexican Workers (CTM)
Regulation Bodies
Ministry of Labour and Social Security
Confederation of Employers of the Mexican Republic
 
 

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Latest Update: June 2022