GlobalAutoTV

"The fractured state of the global automotive industry"
Graeme Maxton

global resources

Need an office somewhere in the world? Office suites, meeting rooms, virtual offices, network access

free downloads

GLOBAL: "International Joint Ventures Handbook"

GLOBAL: "International Joint Ventures Handbook". 19-page handbook by Baker & McKenzie.

proceed to download

Mexico Employment Law – Employee Profit Sharing

Employee profit sharing is a topic of great importance. Article 123 section IX of the Constitution of the United Mexican States stipulates that employees shall have a right to share in company profits (10% of taxable profits in accordance with the terms of the Income Tax Law). The Federal Labor Law is the law regulating article 123 above, which provides for employee profit sharing.

Generally speaking, all employers, whether individuals or entities, with salaried employees, have the obligation to make this payment. Only the following are exempt from such profit sharing obligation: (i) newly formed companies, during the first year of operation, It is important to note that merger, transfer or change of the company name does not result in a newly formed entity; (ii) newly formed companies dedicated to the manufacture of a new product during the first two years of operation. The determination of the novelty of a product must comply with the laws for the promotion of new industries. ; (iii) companies in the mining or extractive industry, newly formed, during the period of exploration; (iv) private charity institutions recognized by law, using privately owned resources to carry out acts for humanitarian assistance purposes, not for profit and which do not designate individual beneficiaries; (v) the Mexican Social Security Institute and public decentralized institutions with cultural, assistance or beneficial purposes; and (vi) companies with capital of less than that established by the Secretary of Labor and Welfare by industry sectors, with prior consultation with the Secretary of the Economy.

All employees providing services to a company have the right to profit sharing in accordance with the following: a).- Permanent employees, regardless of the number of days worked during the company's fiscal year; b).- Temporary employees, once they have worked at least 60 days continuously or discontinuously during the fiscal year; and c).- Former employees, as long as their right has not lapsed.

Persons excluded from profit sharing: (i) directors, administrators and general managers; (ii) individuals who are owners or co-owners of companies; (iii) technical professionals, craftsmen and others who provide their services for a fee without the existence of an employee relationship; and (iv) temporary employment, when the individual works fewer than 60 days during the company's fiscal year. Profit sharing is not computed as part of salary for purposes of severance payments that must be paid to employees.

The employer and its employees must designate representatives to form part of a Mixed Commission for Profit Sharing Distribution. Such commission is to be in charge of performing calculations to determine the share of profits that will correspond to each employee. Once this commission establishes the amount that will be subject to a profit sharing distribution, it will be divided into equal parts. The first will be shared in equal parts by employees, taking into consideration the number of days worked by each employee during the year, regardless of salary, and the second part will be distributed in proportion to the amount of salary received by each employee during the year, meaning that the corresponding share per employee will depend on their salary. Once such process has concluded, the results of the profit sharing distribution must be published at least fifteen days prior to payment on a list that must be posted in a place that is visible to all company personnel.

The distribution of profits among employees should be carried out within sixty days following the date on which the annual tax must be paid (at the latest, by May 30th of the corresponding year), even when an objection by the employees is in progress.

The amount of unclaimed profits during the year of distribution will be added to the distributable amount for the next year. Finally, it is important to note that the right of employees to participate in profit sharing does not include the ability to intervene in the management or administration of the employer.

Source: CCN Mexico - GAI

previous page

go top

search our site

Loading

Other articles from the same issue (July,  2012).

Expatriate pensions and employee commitment - designing effective international retirement plans
read on

Mexico: Skills, sites needed for auto plants
read on

Dispute Resolution in Asia - Fourth Edition (Guide)
read on

Global Expert: Doing Business in China? What You Need to Know About Health Care
read on

China – New Government Policy Goal: More Collective Bargaining in the Private Sector
read on

Negotiating a Russian Deal
read on

Spain Passes Major Labour Law Amendments that Curtail the Leverage of Works Councils and Collective Bargaining Agreements
read on

USA: Employees vs. Independent Contractors: A Benefits Perspective
read on

Going, Going, Gone: No More New H-1B Visa Petitions Accepted
read on

Canada Business Immigration Manual
read on

Potential Corruption Risks in South America
read on

Viva Brazil! Legal Pitfalls for U.S. Multinationals Seconding Expats to Brazil
read on

Asian Firms Offer More Variable Pay than Western Firms
read on

Comparative Employment Risks in the BRIC Countries
read on

Asia: When is a mooncake a bribe?
read on

Can German wage agreements help other eurozone countries?
read on

USA: Attention all employers (unionized or not!) – Does your social media policy violate the NLRA? Top 10 lessons from the NLRB in 2011
read on

USA-CANADA: Respect the Border: Best Practices for Successful Cross-Border Moves
read on

Asian education systems lacking “practice orientation”
read on

Changes Affecting the U.S. Visa Application Process in Japan
read on

Thailand: Corruption, red tape holding back growth
read on

Making The Move To: Shanghai
read on

Mexico Bribery: Cost of Doing Business?
read on

Argentina - Employment & Labour
read on

Vietnam: Guidelines on the Recruitment of and Management Over Expatriates
read on

Mexico Employment Law – Employee Profit Sharing
read on

Flexible Benefits: An Effective Prescription in China
read on

Europe's Shrinking Labor Force
read on

The Italian way to flex-security: The Monti Reform of Italian employment law
read on

Hungary's New Labour Code: Significant changes that provide more flexibility for employers
read on

Is U.S. Immigration Policy Stifling Tech Innovation? What’s Really Behind the Tech Talent Shortage?
read on

Our Free eJournals

 
   
 

subscribe to eJournals


View our blogs:

The Asian Automotive Industry Market

The Brazil Automotive Industry Market

The Chinese Automotive Market

The European Automotive Market

The Global Automotive Market (HR edition)

The Indian Automotive Market

The Mexican and Latin Automotive Market

The U.S. Automotive Market

GlobalAutoExperts

To visit GlobalAutoExperts Directory, click here.