Important actions to consider for the payment of profit sharing in May 2022

One of the aspects in which the labor outsourcing reform of April 2021 had a great impact, was that of the Profit Sharing of the Companies, since a new limit was established for its calculation, which should be applied from May 2022.

The profit sharing is both an employer obligation and a right of the employees. Its foundation is found in fraction IX of section A of article 123 of the Political Constitution of the United Mexican States, as well as in Chapter VIII of the Federal Labor Law. Said ordinances establish that the employees will participate in the profits of the company in accordance with the percentage determined for that purpose by the National Commission for the Profit Sharing of the Companies. Likewise, to determine the profit sharing of each employee, a Mixed Commission must be constituted each year, made up of an equal number of representatives of the employees and the employer.

Derived from the outsourcing reform of April 23, 2021, section VIII was added to article 127 of the Federal Labor Law, which establishes:

“Article 127.- The right of the workers to participate in the distribution of profits, recognized in the Political Constitution of the United Mexican States, shall be in accordance with the following rules:

[…]

VIII. The amount of profit sharing will have a maximum limit of three months of the employee's salary, or the average of the profit sharing received in the last three years; the amount that is most favorable to the employee will be applied.”

With this addition, although the existing provisions regarding profit sharing were not modified, new limits were established for the distribution of profits, which correspond to three months of salary of the employees, or the average of the profit sharing paid in the three previous years, whichever is more favorable for the employee.

The challenge that companies will now have will be to analyze the strategies carried out within the framework of the restructurings that they carried out because of the reform, since they will have to consider different issues such as the transfers of employees carried out, the different compensation bonus payment schemes that they handle, payments made to employees as an advance on profit sharing, among others.

Based on the above, companies must review the correct compliance with the following points:

• Revision of the calculation of profit sharing, considering the new limits established by section VIII of article 127 of the Federal Labor Law.
• Analysis of the different scenarios or alternatives for the company, to identify more efficient schemes for profit sharing, especially when the company has contemplated variable bonuses in its different modalities.

·   This topic also contemplates the design of a strategy, in parallel with the Tax area, so that the CFDI’s have the proper concepts.

• Derived from the different interpretations of section VIII of article 127 of the Federal Law, it is relevant to have the Mixed Commission for profit sharing, since this is responsible for making the individualized calculation of each employee.
• Review of the classification of trusted employees in accordance with article 9 of the Federal Labor Law.
• Courses or workshops given to key company personnel on the implications of profit sharing.

In case of any questions, please do not hesitate to contact the following specialists:

Legal – Labor

Jacqueline Álvarez