On April 3, 2024, the Second Chamber of the Supreme Court of Justice of the Nation resolved the constitutional appeal No. 633/2023, establishing the constitutionality of the limit for profit sharing payments under the Federal Labor Law.
The Second Chamber validated that the amount of profit sharing has a maximum limit of three months’ salary for the worker or the average of profits received over the last three years, whichever is more favorable, in accordance with Article 127, section VIII of the Federal Labor Law, which was amended in 2021 as part of the labor subcontracting reform.
Furthermore, it also resolved that for a worker with less than three years of seniority, the average amount received by the category, position, level, or job position occupied by said worker over the last three years should be taken into account.
By unanimous vote, the Second Chamber resolved that the Congress of the Union has the authority to legislate on labor matters and issue provisions on profit sharing.
While the Second Chamber’s ruling does not have a general effect, but only relative to the case it resolved, it does constitute an important precedent to uphold the legality of applying limits to profit sharing payments, whether in a judicial litigation, administrative litigation, or even in collective negotiations.
The team of professionals from the Labor, Social Security, and Immigration Practice Group of Sánchez Devanny has the knowledge and experience to assist in complying with the obligations established in the Federal Labor Law regarding Workers’ Participation in Profit Sharing.
This content was prepared by Alfredo Kupfer-Domínguez ([email protected]), Hugo Adolfo Gutierrez-Flores ([email protected]), and Santiago Fernandez-Rangel ([email protected]).
