Foreign Companies in Mexico — Employment Obligations

Mainly three: establish a subsidiary (Mexican company with foreign capital), open a branch of the foreign company, or establish a representative office with limited activities.

The Ministry of Economy, through the General Directorate of Foreign Investment, which evaluates the request with data such as corporate purpose, amount of investment and name of the company.

A Mexican company, incorporated in accordance with the laws of Mexico, whose capital belongs totally or partially to foreign investors; legally it is a person other than its parent company abroad.

An extension of the foreign parent company that operates in Mexico without constituting a separate Mexican company, so it does not have its own legal personality other than the parent company.

A figure with limited activities (generally unable to carry out acts of commerce or generate income in Mexico), used for liaison, promotion or supervision tasks, without fully operating commercially.

In the subsidiary, liability is in principle limited to the assets of the Mexican company; in the branch, since there is no separate legal entity, the exposure of the foreign parent to employment obligations in Mexico may be more direct.

At least 90% of all workers, according to Art. 7 of the LFT — the rule applies to any company or establishment, whether with Mexican or foreign capital.

Yes, for categories of technical and professional workers: if there are no Mexicans available in a particular specialty, the employer can temporarily employ foreigners in that specialty, up to 10% of the workers in that specific category.

To directors, administrators and general managers, who are left out of this limitation — there is no legal limit to the percentage of foreign personnel in higher-level management positions.

The joint obligation to train Mexican workers in the specialty in question, so that they can occupy those positions in the future.

No. Art. 7 LFT expressly requires that the doctors in the service of companies be Mexican, without the exception of a shortage of specialists that applies to other technicians.

Yes When operating in Mexico, the foreign company (via its subsidiary or branch) is fully subject to the LFT: IMSS social security, contributions to INFONAVIT, membership in the AFORE system, bonus, holidays, PTU and other legal benefits.

Yes, any entity that employs workers in Mexico, whether with domestic or foreign capital, must process its employer registration with the IMSS in order to register its staff.

Yes, the PTU obligation applies to any company that operates in Mexican territory and generates tax profits, including subsidiaries or entities of foreign companies.

Yes: if the entity does not generate tax profits in the corresponding year, there is no obligation to distribute profits that year, regardless of whether it is a Mexican or foreign company.

Within 60 days after the filing of the annual return, which in practice places the payment of PTU between April 1 and May 30 of each year.

It is a scheme in which a local entity acts as a formal employer of workers for a foreign company that does not yet have its own legal presence in the country; in Mexico it must operate in compliance with the LFT just like any other employer, including the PTU obligation.

It is the relocation of manufacturing or service operations to Mexico by global companies, seeking closeness to the United States; in 2026, more than half of the foreign direct investment that reaches the country has this explicit motivation.

Around 41 billion dollars, placing Mexico in 10th place among the largest global recipients of foreign investment, according to the World Investment Report 2026.

More than 400,000 direct formal jobs, according to figures from the IMSS, concentrated mainly on advanced manufacturing, logistics and industrial real estate.

Advanced manufacturing (semiconductors, auto parts, appliances), logistics, industrial real estate and technological services, according to the most recent reports from Banco de México and the Ministry of Economy.

Yes, both the subsidiary and the branch or representative office must have a legal representative in Mexico for the purposes of procedures, notifications and responsibilities to the authorities.

Yes, but these foreign workers must have the corresponding work visa (Employment Visa or another one that applies) processed by the National Institute of Migration, in addition to respecting the limit of Art. 7 LFT.

It is subject to sanctions from the STPS for violating Art. 7 LFT, in addition to the fact that the employment relationship of workers hired in excess of the limit remains valid and protected, without prejudice to the sanction of the employer.

Yes, the LFT does not distinguish between the origin of the company's capital: the rules of working hours, overtime, breaks and other labor rights apply equally to any company operating in Mexican territory.

Yes, that obligation (like all safety and health obligations and NOM-STPS) applies equally to any workplace in Mexico, whether with domestic or foreign capital.

You can hire administrative support staff for your liaison functions, but since you are unable to perform acts of commerce or generate income, your hiring capacity is often more limited than that of a fully operational subsidiary.

A permanent establishment can be configured for tax purposes and a real employment relationship with the people who provide services to it in Mexico, generating retroactive tax and labor obligations plus a possible sanction for operating without registration.

A mainly fiscal concept that determines when a foreign company must be taxed in Mexico because it has a substantial presence in the country (fixed office, dependent agent, work or project, etc.), which is usually accompanied by labor obligations if there are also hired personnel.

No. If the work is actually performed in Mexican territory, the employment relationship is governed by the LFT as a rule of public order, regardless of the nationality of the company or what the clauses of the contract say in this regard.

The Mexican subsidiary, as a formal employer, remains directly responsible for the LFT's compliance with these workers (compensation, notices, procedures), regardless of whether the substantive decision is taken abroad.

Yes, the contribution to INFONAVIT (Institute of the National Fund for Workers' Housing) is mandatory for all employers with workers in Mexico, regardless of the source of the company's capital.

Yes, in full: NOM-019 (mixed commissions), NOM-017 (EPP), NOM-035 (psychosocial risk) and other regulations apply to these plants as to any other workplace in Mexico.

It does not require special prior authorization, but it must follow the same procedure and the same reasons that the LFT requires of any employer, including the payment of the corresponding compensation in the event of unjustified dismissal.

The possibility that, under certain circumstances (confusion of assets, real economic unity, use of figures to evade obligations), more than one company in the group is considered jointly and severally liable for employment obligations vis-à-vis workers.

Yes, the prohibition of general outsourcing of personnel and the REPSE requirement for specialized services apply equally between companies in the same corporate group, without exception because they are related parties.

You must verify that you have the condition of stay that authorizes you to work (for example, Temporary or Permanent Resident with a work permit, or the corresponding work visa), avoiding employing someone without current immigration authorization.

It is exposed to migratory and labor sanctions, without eliminating the labor rights already generated by the worker while providing the service, in accordance with the principle of protecting the work actually performed.

Yes, if your activity falls within the scope of application of a contract-law in force for that industrial branch, you are obliged to respect it just like any Mexican company in the same sector.

There are federal and some state fiscal incentives to attract investment (accelerated deductions, administrative facilities), but core labor obligations (LFT, social security, PTU) are not reduced or excluded because they are a nearshoring investment.

The border states of the North and Bajío, with a strong manufacturing and logistics vocation, have been the main recipients of new plants linked to nearshoring.

No. The minimum wage, bonus, vacation and other legal benefits are the same for any worker in Mexico, regardless of whether their formal employer is a company with domestic or foreign capital.

Yes, those who receive foreign investment authorization usually have periodic reporting obligations on the company's operation, in addition to their ordinary tax and labor obligations.

If the employment relationship is governed by the LFT (work provided in Mexico with an employer that has a legal presence here), the same teleworking rules as Chapter XII Bis apply, including the right to digital disconnection.

This is a complex scenario: if there is real subordination, there may be a de facto employment relationship subject to the LFT, even if the foreign company has no formal presence, which can create both labor and fiscal legal contingencies for that company.

It is advisable to protect the trademark before the Mexican Institute of Industrial Property (IMPI), although this is an intellectual property procedure different from the immigration, tax and labor requirements for operating and hiring personnel.

The Ministry of Labor and Social Security (STPS), through its inspections, and the IMSS and INFONAVIT with regard to social security and housing, with the same powers that they exercise over any Mexican company.

Yes, if the employment relationship was provided in Mexican territory, Mexican labor courts are competent to hear the dispute, regardless of where the parent company is domiciled.

Yes, it is an issue of increasing attention for the STPS given the accelerated increase in plants and contracts, which increases the relevance of these companies complying with the LFT and the NOM for safety and hygiene from the start.

No. The LFT protects all workers in Mexican territory equally regardless of the nationality of their employer's capital; the rights, benefits and avenues of complaint (STPS, PROFEDET, Labor Courts) are exactly the same.