Profit sharing: the percentage of the benefit is to be reviewed

The Department of Labor and Social Welfare (STPS) issued a call for the election of the – employers and employees – representatives to be part of the National Commission that will discuss and review the percentage of profit sharing for workers, which currently is fix at a 10%.

In accordance with the call, signed by the head of the Department of Labor, Luisa Alcalde Luján, the meetings will be held on October 3, 2019, and may be attended by duly registered employers as well as by independent employers; likewise in the case of union organizations.

After a a laps of 10 years, the National Commission is convened to review and determine the percentage of the companies’ profits to be allocated to the workers, “in this year in particular, it is important that we conduct this discussion, not only because the conditions of the economy has changed, but also because we are facing the most important amendment in labor matters with the reform that came into force on this past month of May”, stated labor attorney Oscar de la Vega, of the De la Vega & Martínez Rojas Law Firm.

“There has been simulation in the ways in which employees are hired, for various reasons, among them, the high percentage on profit paid to workers; this percentage has not been modified in four decades, which has caused companies to resort to either outsourcing or insourcing, which is nothing more than the use of a different corporate name through which they maintain the labor relationship with their workers”, stated De la Vega.

According to the call, given that the last time that the PTU [Profit Sharing] was reviewed was in April 2009, on this year, the unions, associations and confederations representing over 51% of unionized workers are requested to integrate the National Commission that will review and will determined the profit-sharing percentage. The National Commission on Employee Participation in Company Profits determines said percentage which, to date, amounts to 10% of the net profits; this amount is then divided in two equal parts. The first part is distributed equally among all workers, taking into consideration the number of days worked by each one of them during the year, regardless of the amount of their wages. The second part is distributed in proportion to the wages earned for the work provided during the year.

Under the terms of the call, interested parties must submit their interest to participate in the election of representatives to the National Commission .The election of representatives is divided in five groups, in accordance to the branches of industry and economic activities, which distributed based to their importance considering the primary sector and professional, financial and corporate services; manufacturing industry and government entities; extractive and electricity industries and commerce; construction, restaurants, lodging services, transportation, communications, mail and storage and various social services.

Originally published in “El Economista” by María del Pilar Martínez, August 11th, 2019