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: The World Bank - Doing Business, Latest data available.

The Competent Organisation: The National Business Information System
For Further Information: Doing Business: Mexico, to learn about procedures to start a business in Mexico

Financial Information Directories

Dun & Bradstreet - Worldwide directory with financial information on businesses

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.

The Active Population in Figures

	2018	2019	2020
Labour Force	56,255,842	57,839,046	53,978,977

Source: International Labour Organization - ILOSTAT, Latest data available.

	2017	2018	2019
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, Latest data available.

For Further Statistics: Mexico National Labour Statistics (in Spanish)

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).

The Cost of Labour

Pay

Minimum Wage: In 2022, the minimum wage was increased by 22%, reaching 172.87 pesos a day.
Average Wage: Annual average gross salary: USD 16,610 in 2021 (OECD)
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

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: 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: 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)
Labour Unions: Confederation of Mexican Workers (CTM)
Regulation Bodies: Ministry of Labour and Social Security
Confederation of Employers of the Mexican Republic

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