Profits Sharing Calculation According to LFT

The distributable profits are divided into two equal parts: It is equally distributed among all workers, taking into account the number of days worked for each in the year and in proportion to the amount of wages earned for the work rendered during the year.

Working days are those days on which the worker receives his wages even if he does not work, such as temporary disabilities, prenatal and post-natal periods, weekly rest, holidays, public holidays and paid leave.

The wage received by each worker on a daily basis shall be the basis for profit-sharing. It does not consider the perceptions it receives from extraordinary work. In the case of variable perceptions, the average wage corresponding to the total received during the previous year shall be taken as the daily salary. In piece work, the average wage earned for one month must be considered.

For trustworthy workers it will be taken as the maximum wage for the distribution of profits, the result of adding 20 percent to the salary of the unionized worker or higher-paid plant.

Once the above points have been clarified, in order to calculate the participation of workers in profits, these steps must be followed:

1. Determine the amount to be distributed.

2. To be divided into two equal parts: 50% according to the number of days worked during the year and another 50% in proportion to the amount of wages.

3. OCT by days Worked: This amount is divided between the total number of days worked by the eligible workers. The result of this division is multiplied by the days worked individually by the worker.

4. OCT per Salary: The other part of the amount is divided by the total sum of the daily contribution wages received by the eligible workers. The result of this division is multiplied by the total wage received individually by each worker.

5. Total Profit: Add the result of your OCT for days worked plus OCT for wages and you will get a final value.

6. With the amounts obtained, the calculation must be made for each of the workers, multiplying both by days and by wages the corresponding factor to obtain the total payment.

It is important to note that the participation of workers in the profits of companies not only has labor implications, they also have in fiscal, administrative, accounting and payroll matters.

In Bandala | Díaz | García we have extensive experience in matters: Fiscal, Mercantile, Accountant, Labor and Administrative; so, we are at your complete disposition for any doubt about it.

Finally it is important to note that, in these times of pandemic, our firm, in support of your business or activity, is giving free advice.