The Reform to the Federal Labor Law
A reform to the Federal Labor Law (LFT) was made in 2021 establishing, among other aspects, changes in regard to profit sharing. According to estimates made by El Economista, the new rules will cause workers to receive 2.59 times more than the amount they received last year. Or its equivalent, an average of 57 days of PTU [Employee Profit Sharing].
The above calculation derives from said standard, that explains that companies have until May 30 as a deadline to make the payment to workers. A fundamental change is that companies have to apply new legal caps this year; these caps consist of: three months of salary or the average of the amount received in the last three years.
What does the reform on PTU consist of?
Companies must distribute 10% of their profits among their workers; these profits are determined in line with the return on Income Tax (ISR) before the Tax Administration Service (SAT).
The percentage did not change, but the reform on subcontracting added two caps to the LFT to determine the amount corresponding to each worker.
These new legal caps merit different clarifications, namely:
The salary for determining the PTU may be considered under two criteria, specifically:
The salary that comprises the daily wage
Non-unionized employees: when the remuneration is higher than that of the unionized or permanent worker with the highest salary level; the highest salary of unionized workers is used as the maximum salary for non-unionized workers in the calculation of employee profit sharing.
The second criterion states that the worker would have the right to three months of his salary, but it does not make exceptions, it is just an addition.
Another aspect is that companies have the opportunity, at the moment of filing their yearly return, of limiting the maximum amount to be distributed among the workers to a lower amount, if the latter is obtained after applying the caps.
It could happen that once the caps are applied, the company has distributed 8.5% of the profits, without reaching the 10%, generating a difference. In this case, experts say, the difference does not have PTU characteristics in a tax sense and, therefore, there is no obligation of generating a liability toward the workers.
Unions play an active role in the review of these calculations; should any question in regard to the difference arise, the mechanism of presenting a complementary return is always available. Likewise, the union has the option of filing an objection before the Department of Finance, and the agency must decide whether the employer is right, in which case it must pay, or if the court decides that the employer is right, the surplus must be charged to active workers at the time in which the amparo was awarded [sic.].
Substituting the PTU
As to whether or not it is possible to substitute the PTU with commissions or performance bonuses, commissions integrate the salary, as explained by D&M Abogados and, therefore, this is not possible due to its constitutional nature.
Performance bonuses, however, may be used to compensate the payment of profit sharing. If an employee generates an amount that is higher than the one that would correspond to him as PTU, the difference could be paid to him as a performance bonus.
In light on the questions around the average for the last three years, the Department of Labor and Social Welfare stated that seniority should not be taken into account.
It is worth mentioning that each company, together with the union representatives must conduct internal work to establish a Mixed Commission. This commission will define the PTU for each worker.