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chola

Hi. Hope this won't be too confusing due to my lack of appropriate vocabulary....Does anyone know anything about the dispensing of a percentage of a companies annual profits to employees in Mexico. I've heard that every registered company in Mexico, where employees pay taxes, is legally obliged to pay each employee a due percentage of their profits before May 20th. Does this apply to legal foreigners as well? Any info? (Sorry, can't remember what this process is called in Spanish). Embarassed

MELEE · Posted: Thu May 04, 2006 3:39 pm Post subject:

I've heard about this on the radio. Unfortunately, or maybe fortunately, I don't work at a company that has profits! So I don't know the particulars.

grahamcito · Joined: 11 Sep 2004 Posts: 90 Location: Guadalajara

Hi Chola,

I haven�t heard of this before, but if it�s true, it won�t apply to teachers employed on a sub-contractual, pay-per-hour basis ... like us!

chola

Why not....we all pay taxes...what's the loophole for the moneygrubbers?

chola · Posted: Thu May 04, 2006 6:27 pm Post subject: some federal labor law

Workers' Right to Share in the Profits of the Employer:

Article 123(A)(IX) of the Mexican Constitution and Article 117 of the Federal Labor Law provide that all workers who have been employed for 60 days or more are entitled to share in the profits of enterprises with which they are employed in the percentage determined by the National Commission for the Sharing of Profits (Comisi�n Nacional para la Participaci�n de los Trabajadores en las Utilidades de las Empresas). (FLL Article 127(VIII)). Profit is defined as taxable income. (FLL Art. 120).

All workers who have been employed for 60 days or more have the right to participate in profits of the enterprise, although not in its management. The percentage is fixed by the Comisi�nNacional para la Participaci�n de los Trabajadores en las Utilidades de las Empresas and is determined based on the annual income tax statement filed by the corporate employer. The percentage was fixed at 10% by decree published in the Diario Oficial dated February 28, 1985.

The Commission was established on April 11, 1984. There is also a Council composed of a President, who is a representative of the government. He/she is assisted by two individuals appointed by the Department of Labor (Secretar�a de Trabajo y Previsi�n Social). The Commission is further composed of an equal number (not less than 2 nor more than 5) of representatives of workers and employers. (FLL Article 579).

The percentage is fixed by the Comisi�n Nacional para la
Participaci�n de los Trabajadores en las Utilidades de las Empresas and is determined based on the annual income tax statement filed by the corporate employer. The percentage was fixed at 10% by decree published in the Diario Oficial dated March 4, 1985. Article 25 of the Federal Tax Law provides that employers may not lower their taxable income by deducting other payments or contributions to workers. The percentage of the workers' share in the profits will be taken from the taxable income without making any deductions from the amount or differentiating between types of enterprises, in accordance with Article 586(V) of the Federal Labor Law. As a practical matter, employers rarely share profits with their workers, finding excuses allowing them to avoid paying out the profits and having to pay taxes on those profits.

Workers may file objections to the statement presented by the employer to the Secretar�a de Hacienda y Cr�dito P�blico. The employer shall provide a copy of its annual statement to the Secretar�a within 10 days from the date of the employer's submission of the statement. The annexes which accompany the statement shall be made available to the workers for inspection in the Secretar�a and in the employer's offices for the next 30 days. The workers may not reveal the information contained therein to third parties. Within the next 30 days, the "sindacato titular" of the collective agreement or the majority of the workers may present their position to the Secretar�a. The decision issued by the Secretar�a may not be appealed by the workers. Notwithstanding this provision, the workers may file an amparo petition in accordance with Articles 103 and 107 of the Constitution. There is case law tending to take jurisdiction over these disputes away from the Secretar�a, giving it to the Conciliation and Arbitration Board.

Within 30 days from the date of the decision, the employer must implement the Secretar�a's decision, regardless of whether the employer decides to challenge the decision. If the employer is successful in challenging the Secretar�a's decision, any overpayment to the workers may be deducted from their share of the profits the next fiscal year. (FLL Art. 121).

The appropriate share of profits must be distributed to the workers within 60 days following the date on which the employer must make its annual tax payment, even where there is a pending objection interposed by the workers. (FLL Art. 122).

The following employers are exempt from the profit sharing provisions of the FLL:

- new businesses, during their first year of operation

- new businesses dedicated to the development of a new product, during their first two years of operation

- new mining enterprises during the period of exploration

- private charitable institutions, recognized by law, which have serve humanitarian ends and are non- profit enterprises

- the Mexican Social Security Administration and public, decentralized institutions serving cultural or charitable ends

- Businesses which have less capital than that set by the Secretar�a del Trabajo y Previsi�n Social for certain branches of industry. (Article 126).

chola · Posted: Thu May 04, 2006 6:30 pm Post subject: profit sharing???

this is the address where I found the information.....

http://www.natlaw.com/pubs/torrient.htm

leslie · Joined: 08 Feb 2003 Posts: 235

I believe that companies do have to share their profits with their employees and this is why many multinationals have figured out how to have a Mexican company that doesn't link to their mother company.

Anyways, it's called the aginaldo , I think, or something like that (I'm too lazy to look for my last pay stub right now).

Some companies pay you with each monthly paycheck, some at the end of your contract (as is with me, I get a little extra on my last pay once each semester ends), or the company pays you at the end of the year which is often misunderstood as a Christmas bonus by foreigners, but it is by law that the companies pay up. Although I think it might be a certain percentage.

Having said the above, of course, it depends if you are being officially paid or paid under-the-table.

Any regular Mexican posters can correct me but this is what I understand to be true from talking with my businessmen student in a conversation club.

chola · Posted: Thu May 04, 2006 11:45 pm Post subject: profit sharing???

from what i've learned, alguinaldo is different than the profit sharing thing..however, it is a moot point since i have recently learned (or learnt, for you old school grammarians.,..) is that in order to receive this rarely granted sum, you must have a labour rather than civil contract....so, that's that. It was just a dream....it was just a dream...