COMPENSATIONS ALMANAC From A to Z. MeXICO 2012

Transcription

1 COMPENSATIONS ALMANAC From A to Z MeXICO 2012

2 CONTENts Introduction Chapter I Guaranteed Compensation Christmas Bonus 6 Meals Allowance 9 Profit Sharing Bonus 11 Weekly Rest Period 12 Public Holidays or Mandatory Days Off 13 Savings Fund 14 Multiple Social Welfare Plan 15 Vacation Premium 18 Vacation 21 Chapter II Total Cash Compensation Performance Bonus or Pay for Results 24 Incentives or Rewards 26 Employee Profit Sharing 28 Attendance and/or Punctuality Reward or Bonus 32 Overtime / Working on Days Off 33 Chapter III Long-term Incentives Phantom Stock Options 35 Phantom Shares 35 Performance Units 36 Performance Shares / Performance Share Units 36 Restricted Stock / Restricted Stock Units 36 Stock Appreciation Rights ( SARs) 37 Stock Options 37 Chapter IV Benefits Recreation 39 Company Car 40 Allowance for Cultural and Sports-Related Expenses 42 Transportation Allowance 43 Education Scholarships or Tuition Reimbursement 44 Golf, Tennis or Sports Club for Executives 45 Car Allowance 46 Periodic Health Examination 47 Company Car Purchase Option 48 Mileage Allowance Payment / Car Expense Reimbursement 49 Pension Plan 50 Retirement Plan 54 Loans to Employees 56 Medical Service 57 Transport Service 58 Cell Phones 59 2

3 Uniform or Workwear 60 Gas Vouchers Chapter V Other Compensation Practices House Rent Allowance 63 Flexible Benefits 64 Work-Related Risks Benefits 66 Savings Account 69 House Rent Allowance due to Relocation 70 Expatriate Employees Compensation 71 Supplement to the IMSS Disability Benefit/ Disability Benefit Payouts 73 Employer Contributions to the IMSS 75 Employer Contributions to the INFONAVIT 77 FONACOT 79 Day-Care Centers 80 Flexible Work Schedules 81 Payment of Contributions to the IMSS 82 Payment of the Income Tax Levied on Employees 84 Payment in Foreign Currency / Payments from Abroad 86 Reimbursement of Medical, Dental, Hospital and Funeral 87 Home Working 88 Chapter VI Other Information Product Solutions Comp Mercer College 91 Company Car Policy Report 92 Domestic Relocation Policy 92 National Cost of Living Study 93 3

4 introduction This Mercer report is intended to provide HR executives with all the compensation-related information they need in one place. The Compensations Almanac From A to Z will provide a clear understanding of each of the employee benefits in Mexico. You as an HR executive need to clearly understand the different components of Mexican compensation. Throughout 5 chapters, you will find over 50 benefits and practices which represent the main forms of payment from a labor, tax and social security perspective. This Almanac describes the basic characteristics of each item as well as the current labor market trends. The information on market performance comes from 2012 Mexico Total Remuneration Survey (TRS). Throughout these pages, you will obtain information about the different trends and/or tables of results from Mercer s General Market survey, with 442 participant companies. The information contained in this report reflects the implications of each item in accordance with the Federal Labor Law, the Mexican Social Security Institute (IMSS*) Act, and the Income Tax Law. Note: All monetary amounts included in this report are expressed in Mexican pesos (MXN) * Instituto Mexicano del Seguro Social MONTHLY MINIMUM WAGE 2012 (LOCAL CURRENCY) AMOUNT zone A $1,869 ZonE B $1,817 ZonE C $1,772 SOURCE: NATIONAL MINIMUM WAGE COMMISSION (CONASAMI COMISIÓN NACIONAL DE LOS SALARIOS MÍNIMOS) ABOUT SALARY INCREASE The table below shows the main basis for salary increases, as well as the month when they are granted. SALARY INCREASES TYPE OF INCREASE % OF ORGANIZATIONS ONLY GENERAL 25% ONLY PERFORMANCE- 45% BASED GENERAL AND 30% PERFORMANCE-BASED SURVEY DATA FROM 2012 MEXICO TRS (BASED ON 238 COMPANIES) WHEN ARE THEY GRANTED? % OF ORGANIZATIONS JANUARY 36% FEBRUARY 27% MARCH 30% APRIL 43% MAY 18% JUNE 19% JULY 21% AUGUST 16% SEPTEMBER 17% OCTOBER 17% NOVEMBER 16% DECEMBER 16% NOT DEFINED 8% SURVEY DATA FROM 2012 MEXICO TRS (BASED ON 289 COMPANIES) 4

5 CHAPTER 1 GUARANTEED COMPENSATION 5

6 CHAPTER 1 GUARANTEED COMPENSATION CHRISTMAS BONUS description Mandatory cash payment made to all employees in December of each year. The Federal Labor Law requires that the bonus be no less than 15 days of base pay. LEGAL IMPLICATIONS A. FEDERAL LABOR LAW Section 87 provides that employees shall be entitled to an annual Christmas bonus equivalent to at least fifteen days wages, payable before December 20th. Employees with less than one year of service will receive a bonus proportional to the time worked. Although not explicitly mentioned in the Law, under Section 84, it is understood that the Christmas bonus is part of the integrated salary for purposes of calculating the indemnifications set forth in Section 89. In addition, under Section 143, it is understood that the Christmas bonus is part of the base wage for purposes of calculating the National Workers Housing Fund Institute (INFONAVIT*) contributions, as provided under Section 136. * Instituto del Fondo Nacional de la Vivienda para los Trabajadores B. SOCIAL SECURITY ACT Under Section 27, the Christmas bonus is not expressly excluded from the contribution base wage (called in Spanish salario base de cotización); therefore, it is included for such purposes. Section 28, Subsection A, provides that the contribution base wage shall consist of the total payments received by the employee for their personal work, i.e. the Christmas bonus is part of the contribution base wage. In addition, Section 58, Subsection IV, provides that those receiving a total and partial permanent disability pension (the latter with at least 50% disability), shall be entitled to an annual Christmas bonus equal to fifteen days pension. Similarly, Section 64, Subsection VI, provides an annual Christmas bonus equivalent to fifteen days pay of the pension received by: a) The insured employee s widow (Subsection II) and b) Each of the insured employee s children provided they are full orphans under sixteen years of age or up to twenty-five years of age if studying within the national education system, or if they are totally disabled as a result of a chronic disease or in case of disability due to physical, mental, intellectual, or sensory impairments, which prevents them from making a living out of their own work (Subsection VI). C. INCOME TAX LAW Section 110 provides that the Christmas bonus is a taxable income for the employee, and allows a tax deduction for the company, as it is a mandatory and indispensable expense for the purposes of their business, as provided under Section 31, Subsection I. Notwithstanding the aforementioned, Section 109, Subsection XI, provides that the bonuses to be received by employees from their employers will be exempt from income tax, up to the equivalent to the general minimum wage of the employee s geographic area up to 30 days. That is, only the amount exceeding those 30 days of minimum 6

7 CHAPTER 1 GUARANTEED COMPENSATION wage will be taxable. Finally, Section 113 of this Law and Section 142 of its Regulation list the steps to calculate the income tax withholdings on annual bonuses. These steps are as follows: A) Divide the earned income by the 365 days of the year and multiply it by B) Add the usual income earned by the employee in the applicable month and apply the procedure provided under Section 113 of this Law. working on the date the payment is made. In accordance with case law Thesis: I.6o.Volume 216 L dated May 2004, under Section 87 of the Federal Labor Law, the Christmas bonus must be paid before December 20th; therefore, payment of said benefit can be demanded from the day following the aforesaid date. In other words, the last day for payment of the Christmas bonus is December 19th of each year. C) The tax obtained from the preceding Subsection will be reduced with the tax corresponding to the usual income earned from the personal service rendered by the employed earner. D) The tax to be withheld will be that which results from applying without any deduction the rate obtained by dividing the tax established under Subsection B by the amount resulting from Subsection A. The resulting quotient will be multiplied by one hundred and the result will be expressed as a percentage. E) This percentage is applied to the Christmas bonus. CASE LAW Case law 60 dated February 1995, provides that it is not appropriate to demand payment of the Christmas bonus before December 20th, as provided under Section 87 of the Federal Labor Law. Under case law Thesis III T268L dated February 1995, an employee s disability as a consequence of a work-related risk shall be taken into account in calculating the Christmas bonus, as provided under Section 87 of the Federal Labor Law. Under case law Thesis XXVI dated August 1995, employees right to proportionally receive the Christmas bonus is not subject to their being 7

8 CHAPTER 1 GUARANTEED COMPENSATION The average amount paid for unionized employees is: CHRISTMAS BONUS DAYS PAY EMPLOYEE LEVEL 25TH PERCENTILE 3 YEARS OF SERVICE AVERAGE 75TH PERCENTILE STAFF SURVEY DATA FROM 2012 MEXICO TRS (BASED ON 442 COMPANIES) CHRISTMAS BONUS DAYS PAY EMPLOYEE LEVEL 25TH PERCENTILE 5 YEARS OF SERVICE AVERAGE 75TH PERCENTILE CEOs DIRECTORS MANAGERS SUPERVISORS / SPECIALISTS PROFESSIONAL / ADMINISTRATIVE SALES FORCE SURVEY DATA FROM 2012 MEXICO TRS (BASED ON 442 COMPANIES) Employees shall be entitled to an annual Christmas Bonus equivalent to at least fifteen days wages, payable before December 20th. 8

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