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Profit Sharing in Mexico, Rights and Obligations
May 20, 2021

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Profit Sharing in Mexico, Rights and Obligations
 The Employees’ Participation in the Profits (PTU).
 Employees’ rights
 Employers’ obligations
 The PTU origins
 Spanish occupation during the Viceroyalty
• Sharecropping (agriculture)
• Partido (mines)

4.
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Profit Sharing in Mexico, (cont’d)
 Mexican Federal Congress of 1856
 Ignacio Ramirez. His speech marks the first precedent in Mexico regarding PTU,
considering this an employee right and not a handout.
 The first labor laws in Mexico prior to 1917
 Labor Laws on State Jurisdiction
 The State of Mexico and Nuevo Leon
• These two states were the first ones to issue labor laws that took into consideration
the occupational risk among other topics.

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Profit Sharing in Mexico, (cont’d)
 The labor law a Constitutional mistake.
 Lawmakers opposing the constitutional reform to include labor and
employment as part of the constitution.
 A Social Clash. Members that emerged from the Mexican revolution
and the high class continued to fight over labor rights at the federal
congress.

6.
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Constitutional Obligation to Pay PTU
 The existing Constitution of 1917
 This Constitution established in its title VI the article 123 regarding Labor
and Social Welfare.
 The obligation to pay PTU was established in article 123, Sections VI and
IX.
 The Constitutional Reforms of 1929
 The Federal Congress was granted the authority to issue labor laws.
 Right to receive PTU at the Constitutional level but not a single law to
exercise said right.
 Mexican Supreme Court issued resolutions in which the employees
couldn’t exercise their rights for lack of secondary laws.

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Constitutional Obligation to Pay PTU, (cont’d)
 1949, the Labor and Employment Matters are now ruled by the Federal
Government.
 Several Projects presented to include the company’s profits and force
employers to pay PTU payment.
 1951, it was ruled to use the 10% in case the CBA’s or IEA’s didn’t
mention anything about the payment of PTU.
 Also, it was ruled that the basis to pay the PTU will be the taxable profit
filed before the Mexican IRS.
 1962, is the year where the PTU is finally approved and duly regulated at
the Constitutional level but as well through the Federal Labor Law.

8.
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PTU National Commission
 The formation of the PTU National Commission.
 The main objective for this commission was and still is to determine the
percentage to be shared among the company’s employees.
 Hugo B. Margain was the first president of said commission in 1963.

9.
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PTU National Commission, (cont’d)
 Profit under the Federal Labor Law is the taxable income in accordance with
the Income Tax Law.
 Under the Income Tax Law, the PTU will be considered taxable income
minus authorized deductions that will give you a net profit. The PTU will be
10% of that Net Profit.

10.
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PTU Payment Before Outsourcing Reform
 The 10% PTU once calculated is paid to employees the following way:
 10% PTU will be paid in two equal parts
 The first payment is to be equally divided between all employees based on
the days worked in the previous calendar year by each employee
regardless of the employees’ salary

11.
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PTU Payment Before Outsourcing Reform, (cont’d)
 The second part is paid based on the amount of the employees’ earned
salary during the previous year.
 If there are PTU funds uncollected by any former employees, such funds
will be added to the PTU to be shared the following year.

12.
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PTU Payment After the Labor Reform
 Article 127, Section VIII of the Mexican Federal Labor Law
 The amount of the PTU will have a maximum limit of 3 months of the
employee’s salary or the average of the PTU paid in the past 3 years; the most
favorable amount should be paid to the employees.
 The PTU to be paid in the year 2021 corresponds to the profits obtained by the
Companies in the year 2020. Therefore, the old formula will be the one to be
applied for this year.

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PTU Payment After the Labor Reform, (cont’d)
 For PTU Payment in the year 2022
 Possible 2 ways to calculate and pay the PTU
 Historically, when a labor reform had occurred and affected the
calculations of the PTU payment, part of the payment will be made under
the old law and the other part of the payment will be made under the new
law or the reformed law.

14.
Francisco J. Peña Valdés
Partner
Cacheaux, Cavazos & Newton, L.L.P.
1401 N Main St.
McAllen, Texas 78501
C +1 (956) 369-9271
T +1 (956) 686-5883
fpena@ccn-law.com
www.ccn-law.com
Justine Cebe
Country Manager, USA
Future Manager
C +52 33 1964 0397
justine.cebe@futuremanageralliance.com
www.futuremanageralliance.com
Gerardo Macias
Managing Partner
Staffbridge
Monterrey | Mexico City | Guadalajara | Barranquilla | Houston
C +52 81 1683-8610 and 33 1942-9463
gmacias@staffbridge.com.mx
www.staffbridge.com.mx