Glossary and Legal Regulations of the Mexican Payroll
Introduction
Payroll management is fundamental in the workplace, and understanding the terms and concepts related to it is very important.
Here you will find a glossary that has been created as a practical guide to help you understand and familiarize yourself with the most common terms used in the world of payroll, in addition, you will find links to the current regulations governing payroll, if in doubt, do not just consult a blog, consult the law and its articles.
It is important to note that the payroll field is constantly evolving, with changes and updates in labor and tax regulations. Therefore, this glossary will be updated periodically to keep you up to date with the latest trends and changes in payroll management.
We hope this tool will be of great use to you and contribute to your success in this vast world.
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A
Afore (Administradora de Fondos para el Retiro): It is a financial institution in charge of managing workers' retirement funds. Employers must make contributions to the Afore corresponding to 6.5% of the base salary.
This is an annual benefit granted to employees in December, equivalent to at least 15 days of salary.
When an employee has not worked the full year, he/she is entitled to receive a proportional part of the Christmas bonus based on the time worked during that year.
This is the amount that employers pay to the national workers' housing fund administered by INFONAVIT and is a benefit that workers will receive in cash when they apply for a loan from INFONAVIT or when they retire.
It is a digital file containing an electronic signature certificate in public format. It is used to verify the authenticity of digital documents issued by a person or entity.
It is a digital file containing an electronic signature certificate in protected format. It is used to authenticate the identity of a person or entity when issuing digital documents.
C
It is a digital document that meets the legal and technical specifications to be
recognized as a tax receipt and is also valid for commercial, labor, notarial, etc. purposes. It must be issued through the Tax Administration Service (SAT) website or through the services of an authorized certification provider.
Refers to the various elements that make up the breakdown of payments and deductions made to employees, including salaries, benefits, taxes and other related items.
It is a process by which the information reported in the EMA and EBA is compared with the information generated by the employers through the records in their database. It can be done with the tool that the IMSS offers in the IDSE portal, or with the SUA program or through tools that some payroll systems offer.
refer to the mandatory economic contributions that both employees (workers) and employers (bosses) must make to the Mexican Social Security Institute (IMSS) and the National Workers' Housing Fund Institute (INFONAVIT). The Social Security Law defines them in Article 5 A, Section XV, as: "Contributions
or quotas: the social security contributions established in the Law to be paid by the employer, worker and obligated parties".
This is the portion of IMSS contributions payable by the employee and deducted from his or her salary.
This is the employer's portion of IMSS contributions paid separately from the employee's salary.
These are the contributions that employees affiliated to a union must make on a regular basis. These contributions are deducted from payroll and transferred to the corresponding union.
It is a legal document that establishes the terms and conditions of employment between the employer and the employee, including salary, hours, benefits, duration of the contract, among other aspects.
D
These are the amounts that are subtracted from an employee's income, such as taxes, social security contributions, loans, among others.
These are the days established by law on which employees are entitled to rest and receive their full salary, for example: January 1, May 1, September 16, among others.
Refers to the distribution or distribution of payroll payments to employees, either through bank transfers.
E
It is a proposal of amounts through a card issued by the IMSS with the detail of the employer contributions that are paid on a monthly basis. It contains the registration, cancellation or salary modifications of the workers registered in an employer's registry, but some movements may not appear, because it is not a formal or official document, only a mere proposal.
It is a proposal of amounts through a form issued by both the IMSS and INFONAVIT, with a detail of the bimonthly employer contributions paid. For the IMSS it is not a formal or official document, only a mere proposal. For INFONAVIT, it is a means of notification to the employer, both for the Notice of Withholding of Deductions and the Notice of Suspension of Deductions.
F
An employee's absences without justification. Unjustified absences may have salary consequences, such as proportional payroll deductions.
This is the document that details the concepts that the employee earned and that are pending payment at the time of termination of the labor relationship between the employee and the employer. It contains, among other concepts: the proportional part of the Christmas bonus, vacation bonus and vacations not taken and other legal concepts.
It is an institution that offers loans to workers for the purchase of goods and services through payroll deductions.
It is a benefit that consists of a savings program in which employees deposit a portion of their salary and the employer. The employer also makes contributions for the same amount as the worker. This benefit is granted mainly because of the tax benefits it offers, both to the employer and to the workers themselves.
H
It is a method of exchanging information between computer systems directly and automatically, without manual intervention.
These are hours worked in excess of the established workday. Overtime is generally paid at a higher rate than regular hours.
I
It is an IMSS online platform for employers to send the affiliation notices, the annual declaration file of the occupational risk premium, as well as to download the EMA and EBA, make the comparison among other queries.
It is a decentralized public agency in charge of the organization and administration of Social Security in Mexico. It is financed by tripartite contributions made by employers, workers and the Federal Government.
This is the situation in which an employee is temporarily unable to report to work due to illness, accident or pregnancy. During this period, the employee is not required to report to work and different benefits and subsidies may apply, depending on the duration and cause of the incapacity.
It is a public agency in charge of managing the resources of the National Housing Fund, establishing and operating a financing system that allows workers to obtain credit for: the acquisition of housing, construction, repair, expansion or improvement of their homes, and the payment of mortgage liabilities, as well as the acquisition of land for the construction of their homes.
It is the process of connecting and coordinating different computer systems so that they work together and can share information efficiently.
This is a state tax imposed by the states on employers for the payment of salaries and employee benefits. The percentages and regulations are determined in the rules established by the governments of each state.
This is a federal tax levied on income earned by individuals and corporations. Individuals who receive income from an employment relationship with an employer in Mexico pay this tax through a payroll withholding, and the tax is calculated using progressive rates established by the corresponding law.
J
It is the period of time during which an employee is at the employer's disposal to render subordinate personal services. In Mexico, the maximum duration of the workday is established by law. There are three types of workdays (daytime, nighttime and mixed) depending on the time during which the workday is worked. Currently, the maximum duration is 8 hours for daytime, 7 hours for nighttime and 7 and a half hours for mixed work during 6 days a week, resulting in 48, 42 and 45 hours per week, respectively.
L
It is a file with a specific format or structure set by each banking institution to make payroll payments through electronic means, such as bank transfers.
This is the Mexican labor law that regulates labor relations, establishes the rights and obligations of employees and employers, and guarantees fair working conditions.
This is the amount of money that the employer is required by law to pay to the employee for termination of the employment relationship. The liquidation includes severance payments and other items stipulated by law at the time of the employee's separation from the company.
N
The payroll is an itemized list of the workers where the payments, deductions and the net amount to be paid to the employees of a company for a given period of time are broken down.
Refers to the storage and processing of information on remote servers over the Internet. In the context of payroll, the cloud is used for the management and safeguarding of employee payroll data.
P
This is a payroll method in which employees receive their salary every fourteen days.
This is a payroll method in which employees receive their salary every fifteen days.
It is a form of payroll in which employees receive their salary once a week.
This is the income received by an employee for his or her work, such as base salary, commissions, overtime, among others.
It is a tax term used in payroll to refer to the procedure to be performed to calculate the base salary based on the net salary.
This is a loan granted by the employer to the employee, to be deducted directly from the payroll in periodic payments up to the limits established by law.
This is a legal benefit granted to employees for having rendered continuous services in a company. The seniority premium is calculated based on the salary (with a minimum and a maximum) and the number of years worked.
This is a legal benefit that consists of an additional amount of money (25% of the daily salary) granted to employees who work on Sundays on a regular basis and take their day off on any other day of the week.
Refers to an additional payment that some companies give to their employees for working at night. By law, night work hours are between 10:00 p.m. and 6:00 a.m.
This is a percentage that the employer must pay for the occupational risk insurance premium. This is variable depending on the type of risk determined by the activities carried out at the work center and the accident rate is reviewed annually to adjust the premium.
This is a labor benefit that consists of an additional payment to the salary, calculated on the salaries that correspond during the vacation period, equivalent to at least 25% of the base salary.
It is an annual benefit granted to the employees of a company calculated on a
percentage of the profits generated in a year. The amount of PTU to be distributed
to each employee is calculated based on the salaries earned, as well as
and the time worked during the year.
R
This is the number assigned by the IMSS to employers to identify them and keep track of compliance with their obligations. An employer may have one or more employer registries.
If the employee has a housing loan granted by INFONAVIT, payroll deductions will be made to cover the corresponding loan repayments.
It is the action of deducting the employee's taxes, such as income tax and social security contributions, from the employee's salary and benefits on the employee's payroll.
If the employee is a member of a union, regular union dues may be withheld from the payroll to finance union expenses.
It is a scheme whereby an employee decides to voluntarily terminate his or her employment relationship with the company.
S
It is a legal mechanism for mandatory savings to finance workers' pensions in Mexico. Employers must make contributions to this system equivalent to 2% of the
base salary of each worker and this amount is given to the AFOREs to manage and deliver to the workers at the time of retirement.
The Base Contribution Salary is the salary amount on which social security contributions are calculated in Mexico.
It is the daily quota of the salary that an employer must pay to a worker for his work in a workday.
It is the base salary integrated with the payments in cash and in kind that the employer pays to the employee, including benefits and any amount that the employer pays to the employee for his work and serves only for the calculation of labor indemnities.
This is the minimum amount that a worker must receive for a day's work. This amount is applicable according to the geographic area where the worker renders services and there are general minimum wages and professional minimum wages applicable to certain specific jobs and professions.
It is a type of salary that includes fixed and variable payments.
It is the government authority in charge of promoting and regulating labor policies at
Mexico, as well as guaranteeing compliance with workers' labor rights.
It is the acronym for "Sistema de Pagos Electrónicos Interbancarios" (Interbank Electronic Payment System). It is an electronic system used to make bank transfers between accounts at different Mexican financial institutions.
This is a tool provided by the IMSS so that employers can calculate the employer social security contributions, employer contributions,
amortization of housing loans and voluntary or complementary contributions to retirement insurance, severance at advanced age and old age that must be paid, both monthly and bimonthly.
It is a government benefit consisting of a specific amount according to the level of taxable income, which is subtracted from the ISR calculated on an employee's labor income. The subsidy is inversely proportional to the level of income, the higher the income, the lower the subsidy.
T
This is the process in which the file containing the CFDI information is sent to SAT or to an authorized certification provider for validation, to be assigned a fiscal folio (UUID) and to be digitally stamped with the authority's seal, so that the payroll Digital Tax Receipt (CFDI) is formally issued, certifying that it has been correctly issued and complies with the fiscal requirements.
V
They are a labor benefit consisting of paid rest days to which employees are entitled after completing one year of work. As of 2023, the minimum duration of vacation is 12 working days.
This refers to the calculation of the variable part of the SBC, which by law and regulation must be made bimonthly in order to report fluctuations or changes in the SBC to the IMSS.
W
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Z
It is the most accurate payroll system in Mexico. The only one that offers Zero Penalty Guarantee and protects each of your payroll calculations. A payroll software in the cloud with everything included: From users and companies to stamping and concepts.
Article 83, Article 123, Article 110, Article 51
Periodic income tax withholdings
ISR 2021 Tables: Daily withholdings
ISR 2021 Tables: Ten-year withholdings
ISR 2021 Tables: Bi-weekly payments
ISR 2021 Tables: Weekly payments
ISR 2021 Tables: Annual payments
Article 93, Article 110, Article 111
New UMA value 2022
New UMI 2022 value
Mexican Official Standard NOM-035-STPS-2018, Psychosocial risk factors at work - Identification, analysis and prevention.
Teleworking and the obligations of companies and workers
