Employee profit sharing is a topic of great importance. Article 123 section IX of the Constitution of the UnitedMexican States stipulates that employees shall have a right to share in company profits (10% of taxable profits inaccordance with the terms of the Income Tax Law). The Federal Labor Law is the law regulating article 123above, which provides for employee profit sharing.Generally speaking, all employers, whether individuals or entities, with salaried employees, have the obligationto make this payment. Only the following are exempt from such profit sharing obligation: (i) newly formed companies, during the first year of operation, It is important to note that merger, transfer or change of thecompany name does not result in a newly formed entity; (ii) newly formed companies dedicated to themanufacture of a new product during the first two years of operation. The determination of the novelty of aproduct must comply with the laws for the promotion of new industries. ; (iii) companies in the mining orextractive[Not sure about this word?] industry, newly formed, during the period of exploration; (iv) privatecharity institutions recognized by law, using privately owned resources to carry out acts for humanitarianassistance purposes, not for profit and which do not designate individual beneficiaries; (v) the Mexican SocialSecurity Institute and public decentralized institutions with cultural, assistance or beneficial purposes; and (vi)companies with capital of less than that established by the Secretary of Labor and Welfare by industry sectors,with prior consultation with the Secretary of the Economy.All employees providing services to a company have the right to profit sharing in accordance with the following:a).- Permanent employees, regardless of the number of days worked during the company’s fiscal year; b).-Temporary employees, once they have worked at least 60 days continuously or discontinuously during the fiscalyear; and c).- Former employees, as long as their right has not lapsed.Persons excluded from profit sharing: (i) directors, administrators and general managers; (ii) individuals who areowners or co-owners of companies; (iii) technical professionals, craftsmen and others who provide their servicesfor a fee without the existence of an employee relationship; and (iv) temporary employment, when the individualworks fewer than 60 days during the company’s fiscal year. Profit sharing is not computed as part of salary forpurposes of severance payments that must be paid to employees.The employer and its employees must designate representatives to form part of a Mixed Commission for ProfitSharing Distribution. Such commission is to be in charge of performing calculations to determine the share ofprofits that will correspond to each employee. Once this commission establishes the amount that will be subjectto a profit sharing distribution, it will be divided into equal parts. The first will be shared in equal parts byemployees, taking into consideration the number of days worked by each employee during the year, regardless ofsalary, and the second part will be distributed in proportion to the amount of salary received by each employeeduring the year, meaning that the corresponding share per employee will depend on their salary. Once suchprocess has concluded, the results of the profit sharing distribution must be published at least fifteen days prior topayment on a list that must be posted in a place that is visible to all company personnel.The distribution of profits among employees should be carried out within sixty days following the date on whichthe annual tax must be paid (at the latest, by May 30 th of the corresponding year), even when an objection by theemployees is in progress.The amount of unclaimed profits during the year of distribution will be added to the distributable amount for thenext year. Finally, it is important to note that the right of employees to participate in profit sharing does notinclude the ability to intervene in the management or administration of the employer.