Within the 2021 subcontracting reform to the Federal Labor Law, a limit was established for the distribution of profits, equivalent to three months’ salary of the employee or the average participation received over the last three years, whichever is more favorable to the personnel.
Despite this, several labor sectors disagreed with this new regulation, as the Federal Labor Law also stipulates that companies are obligated to distribute the percentage of profits set by the National Commission for Worker Participation in Company Profits. This percentage has remained at 10% since 2020.
Nevertheless, despite the new caps, there were cases where companies distributed a percentage lower than 10%, as was the case in the mining industry.
A few days ago, a District Judge in Labor Matters granted the National Miners and Metallurgists “Frente” Union protection against the acts derived from the Profit Reform, allowing the non-application of the aforementioned limits, and consequently, workers are entitled to receive 10% of the Company’s Profit.
This protection could lead to a series of replicas across various business sectors, potentially causing companies to revert to the scheme prior to the 2021 Reform. However, the Legislative and Executive branches still have the opportunity to challenge this resolution in order for the Supreme Court of Justice to determine the constitutionality of the profit cap.
Undoubtedly, this is a case that deserves precise monitoring. Therefore, VGA’s labor team will provide updates on the resolutions issued in this regard, as well as the implications that may arise for employers.
