On April 3^rd, 2024, Minister Alberto Pérez Dayán, President of the Second Chamber of the Mexican Supreme Court of Justice, issued a resolution on the review appeal 633/2023. The appeal questioned whether the profit-sharing limit set by Section VIII of Article 127 of the Mexican Federal Labor Law violated the constitutional principle of non-retroactivity by limiting the amount of the profit-sharing (PTU, per its acronym in Spanish) to three months of the employee’s salary.

In this resolution, the Minister of the Second Chamber presented the following criteria and arguments, which are relevant to the analysis of constitutionality of the above-mentioned profit-sharing limit. The Minister also declared the protection appeal against this provision inadmissible:

1. Legislative authority on labor matters: The Mexican Congress has the authority to legislate on labor matters and may take necessary measures to meet constitutional requirements. Specifically, the PTU must be determined considering the impact on the national economy. In addition, the Second Chamber argues that the profit-sharing limit provision should not be analyzed in isolation; instead, it should be considered as part of broader modifications to the labor subcontracting regime.
    
2. Non-retroactivity of the law: The limit on PTU does not violate the principle of non-retroactivity enshrined in article 14 of the Mexican Constitution, since the provisions contained in the regulation do not modify any acquired rights —a necessary condition for a rule to be considered retroactive.
    
3. Employees with less than three years of seniority: For employees with under three years of service, the PTU should be determined by averaging the last three years’ profit-sharing payments to workers of the same rank, level, category or position. This enables a comparison to determine whether the average amount is more favorable than the three-month salary cap.

In conclusion, the profit-sharing limit of PTU to three months of an employee’s salary is constitutional and does not violate the right of non-retroactivity of laws. Therefore, this limitation must be strictly applied by all taxpayers.

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