Client Alert

As every year, during the months of April and May it is mandatory for every company to comply with company’s profit sharing obligations established by the Federal Labor Law. As a result, it’s important to acknowledge the new constraints to estimate the employee’s benefit.

Emphasizing that with the new dispositions published on April, companies must consider new rules to pay for the employees’ profits share, standing out article 127 of the Federal Labor Law, which establishes that the amount of profits share is capped up to 3 months of the employees’ salary, except in those cases in which the average of profits share received in the last three years exceeds that limit, in which case it will apply the amount that benefits the most.

Likewise, in compliance with the current normativity, companies must integrate a Joined Committee that will approve the profits sharing calculation, conformed by both employers and employees’ representatives, seeking a balance within the Committee.

In accordance with what was established by the National Commission for Employees’ Profit Sharing, a 10% over the profits of the Company remains as the percentage established for the profits sharing, which then is divided into two equal parts in order to assign the corresponding share, considering the worked days of every employee regardless of their salary in one part, and the amount based on the daily salary of each employee in the other part.

The aim is not to affect the companies and boost an increase in their profits, while they seek to benefit the employees since it is estimated that they will receive an average increase of 159% in their EPS, according to the Guide to comply with the obligations of employees profit sharing, submitted by the Ministry of Labor and Social Security on March 25 th , 2022.

If you have any additional questions or comments, please do not hesitate to contact us.

Contact

Gerardo Valencia García de Quevedo
gvalencia@cuestacampos.com

Karla Paola Jiménez
kjimenez@cuestacampos.com

Erick Sastré
esastre@cuestacampos.com

The above is provided as general information prepared by professionals with regard to the subject matter. This document only refers to the applicable law in Mexico. While every effort has been made to ensure accuracy, no responsibility can be accepted for errors or omissions. The information contained herein should not be relied on as legal, accounting or professional advice being rendered.