Employing Help in Mexico - Employees Rights

Social Security

Employees are entitled to Social Security, the bulk of which is paid by the employer based on employee’s weekly wage. The employee pays a little, which is retained weekly by the employer. Payment to this program, through ISR, is every month and bi-monthly for INFONAVIT.

Social Security is comprised of 3 components: IMSS health care, senior’s pension (AFORE) and INFONAVIT. Many employees for fear of loosing their job will not insist on being placed on SS. Nor do they understand the ramifications of not having contributions made to Social Security. Some simply ask for a slightly higher wage not thinking of long-term implications. Employers, at times, try to avoid SS altogether or, they under report their employee wage to save a small amount of money.

IMSS is government healthcare supported by employer contributions and a relatively small number of individuals including some expats who pay for the coverage. For employees it provides full health coverage including medical clinics, hospitals, medications and dental. One can not substitute Seguro Popular for IMSS.

Pension (AFORE) as name implies is similar to US Social Security or Canadian CPP and is based on contributions related to an employee’s wage and years of employment. Compared to foreign standards it is not a lot of pension income but certainly important for retired seniors.

INFONAVIT was started in 1972. It provides homes to Mexicans who otherwise could not qualify for financing nor save for a down payment. The interest is extremely low. The amount one qualifies for is based on their wage and duration of employment reported by employer. After time, a person qualifies for assistance. Example based on actual case, an employee works for a small organization making 1,200 pesos a week. After a very few years she bought an INFONAVIT in August 2015. The home is 280,000 pesos. She contributed 1,500 pesos to the purchase price and the rest from INFONAVIT. Her payment is 1,497 pesos per month to pay off the home. All closing costs were paid by same program. The homes are basic and may start at ~500 sq ft on one floor. Some are up to double that size with a second floor. In more expensive areas and with bigger homes, prices go up accordingly but seldom go beyond 700,000 pesos. The person can also buy land or any home from their INFONAVIT credits. If one does not qualify for the full amount they may borrow from the pension noted above or qualify for a bank loan for a portion. The housing loan payment is deducted from the employee’s wage.

An employee making for example 1,000 pesos a week would cost the employer approx. 800 pesos a month for this coverage. It is important employees are provided Social Security and to be based on full wage. The ramifications are significant.