We are a few days away from the deadline to distribute employee profit sharing (PTU) for the year 2022.
Many companies have already made their calculations and are ready to disperse this payroll or have already transferred it to the workers, while others are asking their payroll managers or accountants to make the calculations to comply with this employer's obligation.
For this reason, I have been asked to make the calculations or review the ones already made, but recently I was asked the following question: what are the "earned wages" mentioned in the Law to calculate the amount of PTU to be distributed?
Let us analyze this technical concept mentioned in Article 123 of the Federal Labor Law (LFT), which reads as follows:
"Article 123.- The distributable profit shall be divided into two equal parts: the first shall be distributed equally among all workers, taking into consideration the number of days worked by each one in the year, regardless of the amount of wages. The second shall be distributed in proportion to the amount of wages earned. wages earned for the work rendered duringthe year."
To begin with, we start with the definition of salary, which "is the remuneration to be paid by the employer to the employee for his work" (art. 82 LFT).
By adding the word "accrued" to this remuneration, we have a specific concept that we normally do not keep in mind because it is very theoretical.
The word accrued (much better known and used in the accounting profession than in the administrative and payroll lexicon) is the participle conjugation of the verb accrue, which means according to the dictionary of the Royal Spanish Academy: "To acquire the right to some perception or remuneration by reason of work, service or other title. To accrue salaries, costs, interest."
To accrue is to have performed the action that generates the right to receive the salary, i.e., to have already worked a day for which one has the right to receive the salary for that day.
In ancient times, wages were paid daily at the end of the workday.
Nowadays, the salary is accrued every day at the end of the workday, but the salary is paid until the end of the payroll period, for example, weekly, fortnightly, etc., therefore, the accrued salary can be said to be the salary you are entitled to receive for the days already worked, regardless of whether you have been paid or not.
When in the Law we find the indication to consider the amount of wages earned during the year to calculate the amount of PTU to be distributed, it is referring to an amount that has not necessarily been received by the employee in that year of the calculation.
Example of accrued salary
To illustrate this, I will give an example: when weekly payrolls are paid, the first and last payroll of the year contain the payment of some days worked, or accrued, from the previous year, but are paid in the following year due to the periodicity of the payrolls.
Those days that were paid in the following year should be considered for the calculation of PTU for the year in which they were worked.
The last weekly payroll of December 2021, if the weekly pay period is Monday through Sunday, paid the wages for January 1 and 2, 2022 on December 31, 2021. Although the wages for these two days were paid early in 2021, they should be considered as part of the accrued wages for profit sharing in 2022.
Another example, the wages corresponding to the days of incapacity due to maternity or labor risk, normally the employer does not pay them, although the worker does have the right to receive the wages for those days (the IMSS is the one who ends up paying the wages for those days in substitution of the employer, except in the case of maternity disability when the worker does not comply with the 30 weeks of contribution prior to the issuance of the first disability, the prenatal disability), but the salary of these disabilities is not reflected in the employer's payroll, although they must be considered in the calculation of the PTU as accrued wages.
With these examples, I want to demonstrate that it is not correct to take the amount of wages actually paid during 2022 as accrued wages, because there could be missing (or excess) days of wages that were not paid (or were paid), but were accrued during the year and, since they are accrued wages, they should be considered in the calculation of the amount to be distributed as profit sharing to each employee.
I hope that my explanation is easy to understand and that it will help you to correctly calculate the accrued wages.
Finally, I invite you to keep an eye on all our blog posts to stay up to date with the world of payroll.
See you next time!
