On March 24, 2020, the Minister of Labor issued the Ministerial Agreement No. MDT-2020-079 (the “Agreement”), which is intended to regulate the employer’s obligations regarding the payment and registration of share profits to which its workers and ex-workers are entitled.
The obligation to pay the share profit relies on the employers to their workers and ex-workers within a period of 15 days, starting from the date of settlement of the profits. The profit settlement date must be carried out until March 31st of each year.
If by force majeure the employer is unable to record the payment according to the corresponding schedule, the Agreement grants an additional period of 90 days from the date of payment, to proceed with the corresponding registration.
Calculation of the Profit Sharing
On the profits calculated based on the income tax declaration, workers and ex-workers have the right to participate in the profits generated by their employer, in a percentage of 15%. This percentage participation is divided as follows:
- 10% must be divided between all workers and former workers.
- The remaining 5% must be divided between workers and ex-workers, but in proportion to their family responsibilities1.
It must be considered that for employers in strategic sectors, the percentages determined in the Mining Law2 and in the Hydrocarbons Law3 must be observed.
Unification of Utilities
Only for purposes of profit sharing, two or more companies may be considered as one. For this purpose, the employer must request unification from the Minister of Labor, fulfilling the requirements and procedure the Agreement determines. The Minister of Labor may order the unification through a Resolution.
Profit Sharing for Companies that Provide Complementary Activities
In the case of the workers and former workers of companies that provide complementary activities, the user company must calculate the profits to be distributed. For this purpose, they must consider their own workers and former workers, as well as the workers and former workers of the company that provides complementary activities. After the calculation, the user company must make the payment of the profit share to the workers and former workers of the company of complementary activities and register the payment in the Online Salary System of the Ministry of Labor.
The lack of timely payment of the profit sharing results in sanctions to be imposed by the Ministry of Labor, which can include a fine of up to US $200,00.
1 “Family charges” means the spouse or partner living in a legally recognized de facto union; the children under 18; and, children with disabilities of any age, who are dependent on the worker or former employee.
2 Article 67 of the Mining Law mandates that 3% of the percentage of profits will be delivered to workers, while the remaining 12% must be delivered to the State and the Decentralized Autonomous Governments (DAG). In the case of small mining, 10% must be delivered to workers and the balance of 5% to the State and the DAG.
3 Article 94 of the Hydrocarbons Law mandates that 3% of the percentage of profits will be delivered to workers, while the remaining 12% must be delivered to the State and the DAG.
Disclaimer: This document is informative and does not, and is not intended to, constitute legal advice.