Mexico: First Payment of PTU Profit Sharing After Outsourcing Ban Due this Month
The Mexican government passed a significant law last April prohibiting companies from outsourcing any of their core business activities to a third party. One of the goals is to ensure entitled workers have access to their PTU, the statutory requirement for companies to share a portion of their profits with their employees. With the deadline on May 31st, employers should ensure accurate calculation, effective communication, and on-time pay-out for compliance.
Following the reform, the Department of Labor and Social Welfare published a “Guide for Compliance with Obligations on Profit Sharing Matters” in March, and here are some key highlights:
The percentage of profit sharing will continue to be 10% of the company’s taxable income from the past fiscal year and a committee comprised of the employer and workers should be consulted on issues raised regarding the scheme.
All employees, including former employees, who worked more than 60 days during the past fiscal year, are eligible to participate in profit sharing, except for those who are in high-level managerial roles.
For non-unionized workers, it is important to note that they are only eligible for PTU if their salary does not exceed the highest salary of a unionized worker within the company.
The payable amount should be divided into two equal parts. 50% is calculated based on the number of days worked in the past year and the other 50% is based on the salary that employee should have received.
An individual’s profit bonus will be capped at the total of the employee’s three month’s salary, or the average profit received in the last three years, whichever is greater.
If an employee was transferred from one entity to another during past year due to the outsourcing ban, he or she is eligible for profit sharing from both legal entities.
Violation of the new rules could result in fines from $1,200 to $25,000, and other penalties.
Outlook: beyond the compliance, it is of paramount importance for employers to communicate the new scheme with their employees, especially those who will receive the bonus for the first time and those who might receive less than what they expect due to a workforce transition plan caused by the outsourcing ban.
Wenchao Dong
Senior Director and Leader, HR Policy Global, HR Policy Association
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