Global employers may soon be faced with significant changes to
their Mexican workforce structure as a result of proposed
legislation banning outsourcing of personnel.
Outsourced Labor Impact on Profit Sharing Targeted
One of the key drivers of the proposed legislation relates to
Mexico's law on profit sharing. In Mexico, ten percent (10%)
of a company's taxable profits are legally required to be
shared amongst its employees.
For years, it has been common practice for employers to minimize
the financial impact of this legal obligation by utilizing services
entities and contract workers. In the most common structure, there
is an operating company, which generates the business profit, and a
separate services entity that employs the workers who perform
services for the benefit of the operating company.
