On July 7th, an agreement was published in the Official Gazette of the Federation issued by the Honorable Technical Council of the Mexican Social Security Institute, regarding the treatment that employers must give to productivity bonuses and similar payments to their employees.
The agreement highlights two important points:
- Productivity bonuses and similar payments must be included in the workers’ contribution base salary. This is a measure to combat the evasion of employer contributions through underreporting of wages.
- Payments of Workers’ Participation in company profits (PTU) that exceed the limit established in the Federal Labor Law must also be integrated into the contribution base salary. This applies only in cases where there is an excess of this resource.
While these criteria seem to aim at preventing the practice of many employers reporting a low salary to the authorities and supplementing the actual wages to the worker through other payment schemes, there is an evident excess on the part of the Technical Council, as it generalizes the use of these labor benefits under the mistaken idea that every company that pays them is using an evasion scheme for social security obligations.
Likewise, there is an impact on all those companies with PTU advance payment practices, as doing so will lose the privilege of having these amounts not integrated into the Contribution Base Salary. Companies must analyze the labor, tax, and social security treatment they give to their entire benefits scheme.
Although the legal scope of this agreement is used for the internal functioning of IMSS, these types of agreements provide greater certainty about the authority’s interpretation and the criteria they will adhere to in the future.
Therefore, it is necessary for employers to conduct an internal review to verify how they are reporting the Contribution Base Salary and the payment concepts they have, and to identify if there is any non-compliance. For this purpose, the labor team at VGA is at your service to follow up on these processes.
