Hiring Employees in Mexico

How does the Virtual Assistant hiring system work in Mexico?

Today, we will talk about several aspects of the different hiring models that exist in Mexico for Virtual Assistants that provide services to American companies or foreign employers. The boom of «word based» hiring has been on the rise especially among american employers who seek the services of a Virtual Assistant located in Mexico, because of the high professional-bilingual level and the low costs they represent.

But have you wondered about the risks involved in this contracting model?

What are the scope and legal limitations that derive from not having a legal entity to represent you in Mexico?

This is what you will learn

As an American business owner, based in the USA, can I sign an employment contract with my virtual assistant in Mexico?

Yes, but without any legal effect in mexico.

So, if you are:
1. A business owner located in the US,
2. Based in the U.S,
3. Do not have a work permit to work in Mexico,
4. Not a Mexican Resident or Citizen
5. Does not have a fiscal address

Then the contract you sign with your virtual assistant will have NO VALIDITY before the Federal Labor Law in Mexico.

In other words, the labor-employer relationship that is intended to be established in such contract will not exist even if your document stipulates otherwise. This is because you literally do not exist in Mexico either as a physical or moral person, therefore your virtual assistant is signing a paper with a «ghost».

Any contract or document you sign with your virtual assistant, under this scheme, will be based solely on the TRUST you both place in making a contractual arrangement, however, neither of you is legally protected in the event of a lawsuit or labor complaint for either party.

Can my virtual assistant sue me if I sign a contract under this scheme?

Not in Mexico. Since you do not exist in Mexico, there is no way to notify you of a claim or complaint since there is not even a mailing address where you can be reached inside the country, therefore a labor claim cannot be filed. However, they could do it but in the United States. With a good lawyer in international or labor law in the United States, a lawsuit could proceed against you, although one of the limitations would be the high costs that this would mean for your Virtual Assistant, since they would have to pay excessively expensive fees to transfer a lawsuit abroad.

In legal matters, what obligations does my Virtual Assistant have with or without an employment contract?

None. Since legally in Mexico you do not appear as their employer, you are a «ghost», there are no employer-employee obligations that your virtual assistant must legally comply with, for example:

Conversely, you are not required to provide your virtual assistant with the following:

REMEMBER! As mentioned above, the verbal or written contract you enter between both parties will be based ONLY on the TRUST and professional ETHICS you both have. No one is legally bound to any of the above.

Is there any other type of contract that can be used?

Yes, it is called Service Contract (in spanish Contrato de Prestación de Servicios Profesionales) which is a document where the main conditions that will define the relationship between the parties are expressed and regulated. The parties involved are: the Provider or Contractor, the one who performs the service, and the Client, the one who receives it. The provider or contractor can be either a company or a self-employed and independent professional.

This hiring scheme applies when the Client needs the services of a professional for a certain period of time, project, season, as someone external to your company. For example, if you as the owner of a company wants to hire an accountant only for the annual tax season.

This contracting is covered under Mexican Civil Law since the context is between private individuals. Therefore, you would not have any worker-employer obligations, nor is there any subordination on the part of the service provider. The document simply stipulates the scope of the activity to be performed and its fulfillment is under civil law.

I hired my Virtual Assistant, but I haven’t signed any contract. Is this illegal?

Yes. In Mexico working without a contract is illegal. This doesn’t mean that it doesn’t happen from time to time which is a relatively frequent situation in Mexico. Even so, a person who works without a contract has the same rights as a person who does have a contract, but with more risks of non-compliance for both the employer and the employee.

If you were their legal employer, you would have to follow what the law says: According to the Federal Labor Law (LFT), the employer has a term of 15 days to execute the employment contract, from the incorporation of the worker to the organization. If this does not happen within the stipulated time, the authorities may impose infractions ranging from fine payments to the closing of the establishment.

But in the case that you are a «ghost» in Mexican territory, this does not apply, however it’s still illegal and there are still risks of non-compliance for both parties that at any moment, no one could protect you.

In addition, in the practice there are several virtual assistants that take advantage of this contractual gap to receive a regular salary without paying taxes, this, besides being illegal, is risky for the person who evades it, because if the The Tax Administration Service (SAT) finds that they have monthly income without paying taxes, they may be subject to fines and be requested to clarify their tax situation.

Up to this point, we have said that as long as you are a «ghost» in Mexico, your rights and obligations as an employer do not exist and neither do those of your employees, everything is based on words and mutual trust. However, it must be said, this practice has been on the rise and at first glance, on the employer’s side it could be simple and a cheap system, and on the employee’s side, a well paid job with no deductions of any kind, but with a totally illegal and risky background that is far from being a healthy and competitive labor relationship within the Mexican labor market.

After all this, which ones are my options to hire a Mexican Virtual Assistant?

Right, If you want to go straight on hiring a Virtual Assistant in Mexico, we definitely recommend you to sign a Service Contract-Contractor figure– to be 100% legal. Make sure the contract is made by a Mexican labor lawyer to cover both parties into the Mexican legal system. Keep in mind that this contract is temporary, and you would not have any worker-employer obligations, nor is there any subordination on the part of the service provider.

Now, if you decide to have a Virtual Assistant playing under the labor rules -with subordination- then we recommend you to hire a third party, a staff outsourcing company that is legally constituted and that knows very well the labor culture in Mexico.
The functions of these companies are to hire the necessary staff, train them, take care of the formality and legality of the contracts, make payroll, tax payments, manage the rotation of staff, among many others.
The advantage of hiring a third party is that it will represent you as an employer in all aspects, the only thing you have to worry about is to choose your employee and have a correct training of your internal processes.

DISCLAIMER:

This document is for informational purposes only. We are a company specialized in recruiting employees in Mexico for foreign companies, we understand how the Mexican law works and we have experience in the matter, however, we are not a law firm that can offer you a legal consultation on your particular situation. Please consult with an expert in the field or contact us to recommend specialized attorneys.

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