Hiring employees in Mexico is a wise business decision, especially if you want to speed up the process of getting your products to the market. Mexico has a smart, skilled workforce that’s not only cost-friendly but also experienced. Mexican employees can ensure quality at an affordable price. Unfortunately, hiring staff in an unfamiliar country like Mexico can be a challenging process. Here are 7 challenges you’re likely to encounter when hiring staff in Mexico.
- The Repercussions of Non-compliance are Extremely High
Like many other countries, Mexico has its own unique set of employment standards and requirements. There are various local, federal, and state labor regulations to think about. Also, there are a variety of permits and licenses to collect and safety regulations to comply with. It’s almost impossible for one person to be familiar with every law, but failing to comply with even a single piece of legislation could result in irreversible damages to your business.
If you want to stay compliant when hiring employees in Mexico, consider outsourcing your recruitment tasks to an established professional employer organization (PEO) service. A PEO service can help you expand your business in a foreign market without overburdening yourself with significant investments and a broad range of complex foreign compliance requirements. On top of helping you comply with new and unusual employment and industry-specific regulations when hiring staff, a Mexico PEO will also take care of your payroll, staff compensation, employee safety, and tax needs.
- Many Hidden Costs during the Hiring Process
When hiring in Mexico, it’s highly likely that you may overlook some costs involved while coming up with a budget for the task. Often, these costs arise in the process of hiring and tend to be industry-specific. They are usually unpredictable and inevitable, making the task far more costly than you might have projected.
- New Mexican Payroll Regulations
Based on the New Mexican Tax Revenue rules, employers must pay the net income for all their workers (including expats) in Mexican Pesos and deposit it in official Mexican banks. That simply means that ‘split payroll’ strategies are not allowed in Mexico because the whole net income must be issued on the Mexican payroll outsourcing or Mexican employer of record and the relevant paid taxes..
- Complex and Time-consuming Process of Issuing Payslips
Issuance of Mexican payslips is an intricate and time-consuming process. Payslips must adhere to the Mexican law – the SAT (Mexican Tax Authorities) must approve and release them before the employer or employee gets an official copy. Before a payroll system issues official copies of payslips, SAT must verify whether the amount transferred from the bank account of the employer is the same as what is received in an employee’s bank account and then stamp them electronically.
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- Work Permits
A work permit coupled with a temporary resident visa is compulsory for all expats working in Mexico. And employees can only apply for these permits at a consulate in their home country, not from the inside of Mexico.
- Compulsory Vacation Bonus
Besides the 13th month bonus, all workers in Mexico are entitled to a 25 percent vacation bonus on top of their usual salary when they are on vacation. Some companies do provide a bit higher than this, either willingly or via a collective bargaining agreement with trade unions. What’s more, employees are entitled to payment for their unused vacation time when the job or contract ends.
- Language Barrier
Languages spoken in Mexico may be different from those of your home country. Three of the most popular languages in Mexico are Spanish with roughly 110 million speakers, Nahuatl with approximately 2 million speakers, and English with about 2 million speakers. These numbers show that you’re likely to encounter skilled job seekers who aren’t conversant with the English language or your home country’s language when hiring in Mexico. This creates a huge gap in allowing you to communicate effectively with potential hires and vice versa.
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From this overview, it’s obvious that the process of hiring staff in Mexico can be daunting. But that doesn’t mean it’s impossible. You just have to be careful and comply with every piece of legislation. As mentioned earlier, you can avoid all the headaches of hiring employees in this North American country by working with a PEO service.