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TM

Nov 30, 1919, 12:00 AM

Post #1 of 6 (4739 views)

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Methods to be paid as an employee

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I've been working in Mexico for nearly 7 years, and I must admit that I'm still confused about the different methods of payment as an employee. The state university where I teach has about a dozen different kinds of contracts, and several different methods of payment . . . and nobody really seems to understand the system or at least is willing to try to explain it. I don't pay income taxes; the university takes care of that. I receive "vales" and have medical insurance during my contracted time but not between contracts (between each semester and during the month of August.) I get some paid vacation days but not all. Of course, I get the required "aguinaldo" at the end of the year. Obviously, I'm not expecting anyone here to explain the university's specific and complex system of payment. However, can someone explain the basic methods of payment (honorarios, etc.) in somewhat simple terms? Remember, I'm an English teacher, not an accountant or a lawyer.



Diane

Nov 30, 1919, 12:00 AM

Post #2 of 6 (4733 views)

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Methods to be paid as an employee

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David, I hope you can enlighten me so I can help a friend of mine. My friend is on the entertainment/activities staff of a resort in the Cancun area. It seems he just RECENTLY found out that his employers, past and present, apparently contribute to a retirement/savings-type fund. Would this be along the same lines as our Social Security system? He was also led to believe that this money could be jeopardized by changing jobs. Because his resources are limited, as well as computer access, I would love to research this for him and pass the information to him. However, where do I find this information in a format that I can read and understand?
If you could enlighten me on this I would be so grateful.
Gracias por todo!
Diane


DavidMTY

Nov 30, 1919, 12:00 AM

Post #3 of 6 (4738 views)

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an ol' college try...

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OK, I'll try not to get bogged down in technical aspects, which sometimes I think I am too good at.<p>1- You say you don't pay income tax and the University takes care of it. Well, Everyone pays income tax, the University simply prepares your tax for you. Better than H&R Block, I am sure. But Mexican ISR is generally simpler than the ol' 1040. On your bank accounts the bank takes care of paying your tax on the interest, too. Here in Mexico, people put more of an onis on the payor (them) to take care of taxes, not the payee (you).<p>Note here: Argueably, for "cultural reasons", people in Mexico pressure more than the US to receive net payments - that is the paycheck corresponds with what they are told they will be paid. In other words, after tax in US terms. Many companies and institutions simply gross-up to accomodate this. Gross up a mean sounding term that just signifies if you want 100 salary and your tax is about 10, they declare 110 and give you the 100 and you never hear about the 10 because they do your taxes.<p>2. Honorarios vs. Nómina.
Honorarios- translating basically to "fees" is not a form of payment for an employee, per se. In this case you need to be your own business, and be able to give bills for your services which are printed under control by Hacienda. Nómina is translated as payroll. An employee may use the synonym "empleado de planta" or "estoy de planta" to distinguish themself as a true employee.<p>3. Honorarios & Vales
People receiving honorarios are not employees, they are professional services and contractors, and thus are in theory prohibited from receiving any employee benefits like your "vales de dispensa" or food vouchers/coupons if I may attempt to translate. There are some jobs that give employees a gas allowance and those are given with prepaid "vales de gasolina" bought from the gas station. And there are probably other kinds of vales received as benefits. Under special cercumstances, a contractor may get vales de gasolina, but that is really a gray area as he should pay his own gas and if he bills for it, deduct it appropriately. But if the contractor doesn't feel like it and the person contracting them cooperates, they could give him vales.<p>4. Benefits (Prestaciones)
Benefits in Mexico have a legal definition in order for the company to deduct them as a business expense for tax purposes. The most common benefit is the IMSS (social security) benefit, which frequently a company pays 100%, so you might never see it deducted from your paycheck. Other benefits include Aguinaldo the famed "Christmas Bonus", even educational assistance for your family, and as you mentioned the supermarket "vales", and a savings plan, typically amounting to one month of salary in a year. The company typically pays all those, but does not "gross-up" since they are official qualifying BENEFITS received by at least 90+ percent of the employees. They are deducted from taxes directly as business expenses, and never need to enter in your paycheck, in many cases.<p>5. Temporary Employees (Eventuales)
There is yet another category of employees, which sounds like your category. These employees are sort-of "de planta", but have defined periods of time during which they can receive all the normal benefits. The difference here is they are not necessarily entitlred to any severance pay when their contract ends. But they do get IMSS, by IMSS laws, vales and all other benefits (The company must do this whether they like it or not, or the benefits will lose the qualifying status to be business tax deductions). Of course if your contract is expired and you don't have a new one, you do not have the benefit. Hence this probably explains your situation. It would be nice to be a year round full time employee with a undefined contract duration, as opposed to yours which specify dates. But that causes a severance risk for the company so if they can get away with it they will manage you by determined time contracts.<p>6. Professionals and Workers
There are further differences between Sueldo (


TM

Nov 30, 1919, 12:00 AM

Post #4 of 6 (4733 views)

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David, I actually understood it, and . . .

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David, if you aren't a teacher along with being a lawyer, you should consider it. <p>When I said I didn't pay income tax, I meant that I didn't pay income tax in person to hacienda. It's withheld from my salary, and the university takes care of the process of paying it: forms, figuring it, getting the forms and the payments to hacienda, etc.<p>The IMSS part confused me a bit, because as far as I know, all of us employed by the state university (Universidad Autónoma de Yucatán) except for those on honorarios have the university's medical insurance -- the way I understand it, instead of IMSS. Could that be possible? I don't know. Actually, I only know a few university employees who are on honorarios, and those are either very short term or very part time. I've never received anything (card, form, number, etc.) from the university that had anything to do with IMSS. The tenured teachers and/or year-round employees have university medical insurance coverage for themeselves and their family members all the time, while those of us temporary employees have it only during the times we're contracted for. (Sounds a bit ironic. I've been working there for almost 7 years and I'm still temporary, while some people who were hired long after I started aren't temporary.) By the way, one must be a tenured teacher to be a member of the university's teachers' union, so you can imagine how hard the union works for benefits and rights of us non-tenured folks.<p>Thanks, David. Your explanation helped a lot. Much appreciated.<p>~~~~~~~~~~~~~~~~~~~~+<p>
: OK, I'll try not to get bogged down in technical aspects, which sometimes I think I am too good at.<p>: 1- You say you don't pay income tax and the University takes care of it. Well, Everyone pays income tax, the University simply prepares your tax for you. Better than H&R Block, I am sure. But Mexican ISR is generally simpler than the ol' 1040. On your bank accounts the bank takes care of paying your tax on the interest, too. Here in Mexico, people put more of an onis on the payor (them) to take care of taxes, not the payee (you).<p>: Note here: Argueably, for "cultural reasons", people in Mexico pressure more than the US to receive net payments - that is the paycheck corresponds with what they are told they will be paid. In other words, after tax in US terms. Many companies and institutions simply gross-up to accomodate this. Gross up a mean sounding term that just signifies if you want 100 salary and your tax is about 10, they declare 110 and give you the 100 and you never hear about the 10 because they do your taxes.<p>: 2. Honorarios vs. Nómina.
: Honorarios- translating basically to "fees" is not a form of payment for an employee, per se. In this case you need to be your own business, and be able to give bills for your services which are printed under control by Hacienda. Nómina is translated as payroll. An employee may use the synonym "empleado de planta" or "estoy de planta" to distinguish themself as a true employee.<p>: 3. Honorarios & Vales
: People receiving honorarios are not employees, they are professional services and contractors, and thus are in theory prohibited from receiving any employee benefits like your "vales de dispensa" or food vouchers/coupons if I may attempt to translate. There are some jobs that give employees a gas allowance and those are given with prepaid "vales de gasolina" bought from the gas station. And there are probably other kinds of vales received as benefits. Under special cercumstances, a contractor may get vales de gasolina, but that is really a gray area as he should pay his own gas and if he bills for it, deduct it appropriately. But if the contractor doesn't feel like it and the person contracting them cooperates, they could give him vales.<p>: 4. Benefits (Prestaciones)
: Benefits in Mexico have a legal definition in order for the company to deduct them as a business expense for tax purposes. The most common benefit is the IMSS (social security) benefit, which frequently a company pays 100%, so you might never se


DavidMTY

Nov 30, 1919, 12:00 AM

Post #5 of 6 (4734 views)

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David, I actually understood it, and . . .

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Hi again TM,<p>Thanks for the thank you! I'm glad I could help a bit.<p>The question you had still pending in your case was whether you can have a different medical insurance - social security plan besides the one offered by IMSS. I'll give you two takes on that, the first in general, and the second which more probably applies to you.<p>Take 1: The IMSS system is widely criticized by many in the population in many parts as vastly inefficient, limited (in medications available), and with terrible orientation toward service and hours of waiting. This is a generalization, and I should add that a friends Mom just got a replacement Aortic Heart Valve in one of the finest hospitals in Monterrey for this: believe it or not - an IMSS hospital. So it is not surprising that many companies buy complementary coverages for their executive employees as an added perk. Usually you need to be making something like US $100K a year for this treatment, but not always. So that explains one type of exception. And of course those priviledged employees can still fall back on IMSS if they wanted to (yeah, ha ha:)).<p>Take 2: I mentioned in the first reply that Federal and State employees can get certain special benefits not available to the general population. I bet this is your case at the UAY. There is actually a special IMSS for government employees which I have also had the opportunity to visit the main hospital (everyone calls them clinics - they are full blown hospitals in some cases but still "clinicas" in speech) here in Monterrey. This IMSS equivalent is a completely different social security organization for government employees called ISSSTE. The Institute of Security and Social Services of the State Workers. I could check a little bit more on them for you if there is something special you would like to know, there is actually an entire body of law governing how they are run, different from the IMSS law. The concept is supposed to be separate but equal, I suppose, but the ISSSTE seemed somewhat better to me in my exposure to their operation vs. some of the IMSS clinics here. I guess we can go figure on this one. The ISSSTE covers the lawmakers and all other Federal workers and for the most part a far as I can tell, Mexican State Employees. I believe each state works out who gets the coverage. And I did find them to be generous in their prescription medicine handouts, in the cases I saw, more so than IMSS. But it still was a burocratic mess and waits are usually about an hour. That is good compared to IMSS here in Monterrey, if that is any consolation. The newspaper clocked IMSS wait times by sending reporters for treatments and the average wait was over three hours, with only one of a half dozen or more making it in under 2 hours (like 118 minutes if I recall). I am not familiar with the educational coverage, though I suspect it would also be through ISSSTE, I'll have to research that a little further...<p>Oh and regarding the tenure situation you face, how unfair. Though it certainly isn't only here in Mexico. What comes to mind is "He who has the gold makes the rules." and "Viva Self Preservation." and "I made it! Now everyone else can do all the work!" The again, I am ignorant to all the sacrifice that goes into getting tenured doing a job they love, for those lucky one who succeed. I hope you get it in your due time, which already has been quite an hefty investment...<p>Saludos...David(MTY)<p>: David, if you aren't a teacher along with being a lawyer, you should consider it. <p>: When I said I didn't pay income tax, I meant that I didn't pay income tax in person to hacienda. It's withheld from my salary, and the university takes care of the process of paying it: forms, figuring it, getting the forms and the payments to hacienda, etc.<p>: The IMSS part confused me a bit, because as far as I know, all of us employed by the state university (Universidad Autónoma de Yucatán) except for those on honorarios have the university's medical insurance -- the way I understand it, instead of IMSS. Could that be pos


David McL

Nov 30, 1919, 12:00 AM

Post #6 of 6 (4730 views)

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an ol' college try...

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Excellent Post David!!<p>Thanks.<p>If I can entice you to wordsmith this a bit and turn it into an article . . . .<p>Please email me directly.<p>Saludos y Suerte<p>David
WebJefe de todo<p>
 
 
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