On April 3, 2024, the Mexican Supreme Court of Justice (“SCJN”) ruled on the amparo in review 633/2023 (“Amparo”). This ruling determined that the limit on profit sharing to employees (“PTU”) equivalent to three months of the employee’s salary or the average of the amount received in the last three years is constitutional, whichever is more favorable to the employee.

The limit referred to in the preceding paragraph was established in the 2021 amendment to the Federal Labor Law

This amendment prohibited the practice of subcontracting, which required many employers to regularize the labor relationship with previously subcontracted workers, and in turn a significant increase in the amounts paid to employees under the concept of PTU. As a result, the Congress of the Union (“Congress”) implemented the limit in order to avoid distortions in capital intensive sectors.

One of the main issues resolved in the Amparo was whether the limit to the PTU was constitutional under article 123 of the Mexican Constitution, since this article only empowers the National Commission to establish the percentage of the PTU that workers will receive. However, the SCJN stated that Congress has the power to legislate on labor relationships.

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