Mexico: Profit Sharing must be Paid in spite of the COVID-19 Contingency
Employee Participation in Company Profits (PTU) will have to be paid in full, in spite of the health contingency being faced by the country, as this is an employees’ right corresponding to the company’s activities of 2019; therefore “no two ways about it, companies have to make this payment and they have until the last day of May to do it”.
This was announced by Ricardo Martínez, partner at the D&M Firm, in the: “Covid-19: Labor and social security effects in phase 3” conference, in which he explained that the recommendation is that, in the event that they don’t have the capital to make this payment, companies may reach agreements with the workers in regard to the payment of this benefit.
“This refers to reaching an agreement on whether profit sharing will be paid at a later date; nothing prevents the company and the workers from reaching an agreement for deferring; there are cases in which companies agreed to make the payment in December, but there are also cases in which the payment will be made in installments. The important thing is to reach an agreement with the workers and putting it in writing”, he stated.
Effects in face of Covid
In the conference held by the Mexican Association for Human Resources Management (Amedirh), Rojas Martínez [sic.] explained that, in the case of non-essential activities, those who are not operational on May 30 [sic.], 2020, are not under the obligation of paying salaries as of the first day of May, since, he pointed out, “the government acted under Section One of Article 427 and Article 429 of the Federal Labor Law, which state that up to a month of salary must be paid, as compensation. If there is no work, there is no salary, that is why this is called compensation; as many employers in the country cannot pay a salary, the government can’t force them to do so, as there will be those who are unable to make the payment”.
He explained that there is no obligation to pay 5% contributions to the Infonavit [National Worker’s Housing Fund Institute], since there is no work or salary; additionally “workers can request the Infonavit to defer the payments of their credit and they can also request aid from their individual account from their Afore. As of the first day of May, there is no legal principle that enforces the payment of Infonavit dues; if no salary is generated, no Infonavit payment is generated. Not rendering the worker cashless in order to pay Infonavit dues. There will be a 3-month extension, with no interest, in order to help workers”.
Partners and lawyers of De la Vega & Martinez Rojas, S.C., are at your services for any doubt or comment related to this document and/or the Resolution. For more information on these articles or any other issues involving labour and employment matters in Mexico, please contact Oscar De La Vega (Partner) of De La Vega & Martínez Rojas S.C. at odelavega@dlvmr.com.mx or visit www.dlvmr.com.
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