Through Official Release No. 101/2024 dated April 03, 2024, the Supreme Court of Mexico, [in Spanish: la Suprema Corte de Justicia de la Nación], announced that the maximum limit established by the Federal Labor Law, [in Spanish: la Ley Federal de Trabajo], for the payment of profit sharing is constitutional. 

• On April 23, 2021, a decree was published that regulated the concept of labor outsourcing and the Guide for Complying with Obligations Regarding Profit Sharing, issued by the Department of Labor and Social Services [in Spanish: guía para cumplir con las Obligaciones en Materia de Reparto de Utilidades and la Secretaría del Trabajo y Previsión Social respectively].

• Pursuant to the decree, it established in the Federal Labor Law that the cap for Profit Sharing would be three months of an employee’s salary or the average of the contributions received during the last three years, and will apply to the amount that is most favorable to the employee.

• The Second Chamber of the Supreme Court certified that the amount of profit sharing have a maximum limit of three months of an employee’s salary or be the average of contributions received during the last three years, whichever is most favorable to the same.

• Regarding the three-month salary cap, it emphasized that this limit is not absolute, since it allows for the possibility that the amount paid in the category, sub-office, assignment, level or position of the employer during the last three years be taken into consideration, with the best option being most favorable to the same.

• None of the options must retroactively affect the rights of the employees, since the Federal Constitution does not establish a minimum limit as such.

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