Salary

July 1, 2012
Salary

Due to the importance a salary has in the workplace, the purpose of this article is to discuss the characteristicsthat a salary should have and the forms in which it may be stipulated. The Federal Labor Law defines a salary ascompensation that an employer must pay to an employee for work performed. Salary has the followingcharacteristics: (i) it should be remunerative, meaning a salary should be proportional to the quantity and qualityof work performed by the employee; (ii) it should be the same for all employees carrying out the same position,work schedule and at the same level of efficiency; (iii) its payment term may not be greater than one week forblue-collar work employees (los obreros) and fifteen days for all other employees; (iv) it should be paid in cashand in legal currency of Mexico (pesos), with payment in goods, vouchers, tokens or any other means that isintended to replace money not being permissible, although payment by means of bank deposit is permissible forsafety reasons, with the approval of the employee. When it is agreed that an employee will receive payment of the salary in a foreign currency, this payment should be made to the employee in the national currency of Mexicoat the exchange rate in pesos that is published in the Official Journal of the Federation on the date that suchpayment is made; (v) it should be sufficient to ensure a decent standard of living for the employee and his/herfamily; (vi) it should not be subject to any offset or deductions; (vii) it should be paid at the place whereemployees provide their services; and (viii) it should be paid on a business day, during work hours orimmediately after. The Federal Labor Law establishes that a salary may be stipulated in the following manners:(a) Per unit of time.- This type of salary is calculated based on the time worked by the employee, notwithstandingthe result obtained from such work. An example would be that of a secretary that is paid a certain salary for eightdaily hours of work; (b) Per unit of work.- This type of salary, also known as “by the piece” (“a destajo”) iscalculated based on work product, meaning the employee’s production. An example of this is a blue-collaremployee responsible for adhering soles to shoes, and therefore his/her salary depends on the number of solesthat he or she adheres per day; (c) By commission.- This type of salary is usually established based on apercentage of the sale price or by means of a fixed rate per unit sold. On many occasions, in addition tocommissions received by the employee, he/she receives a base salary (minimum salary) in order to ensure thathe/she has a minimum amount of money in the event that he/she is unable to sell the projected amount. Anexample of this would be an automobile salesman; and (d) Lump Sum.- This type of salary is established in caseswhere the services of an individual are used for the performance or construction of works with payment of a totalfixed amount for such works. Given the above, it is important to define the payment structure for each employeeas of the date of hire, and to obtain a letter approving payment via bank transfer in order to avoid any possiblefuture risk to the employer.

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Madrid Protocol
July 1, 2012
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