Social security contributions in detail
Both employers and employees pay social security contributions set out in social security law, which establishes five types of insurance:
The Social Security contributions must be withheld from the employee’s salary and remitted each month by the employer to the Mexican Institute for Social Security. Both the employer and employee contributions are based on a percentage of the employee’s wages. The following rates apply:
sickness and maternity, approximately 8.75% by the employer and 1% by the employee;
incapacity, 2.80% by the employer and 3.125% by the employee; and
retirement fund, pension and severance pay, 5.150% by the employer and 1.125% by the employee.
The employer must also pay a premium for each employee based on a percentage of the employee's salary and varying according to the risk level of the particular job. Such percentages range from 0.54% for administrative employees to 7.5% for employees engaged in heavy industry.
Further, the employer must contribute an amount equal to 5% of the employee’s wages to the National Worker's Housing Institute.
There is a cap of 25 times the measure known as the Unidad de Medida Actualizacion (‘UMA’), which is an economic reference tied to inflation. The daily rate for 2020 is MXN $86.88.
Employers must maintain various records for each employee and provide the employee and the Mexican Social Security Institute with certain information regarding the payment of Social Security contributions.
Author: Basham, Ringe y Correa S.C.
Date: April 2020
Note: All currency conversions into EUR were made on 1 February 2019, using a mid-market rate.