Profit Sharing: what is PLR and how does it work?

Profit Sharing (PLR) is a variable benefit that companies can offer their members for the financial results achieved. It serves to engage employees and align their needs with those of the company.

Regulated by Law 10.101/2000, the company needs to know the rules and obligations applicable to the format before starting to apply the PLR or even publicize it among its members.

See below!

What is Profit Sharing?

Profit Sharing (PLR) is a variable remuneration that allows employees to share directly in the profits or results achieved by the organization.

This format of remuneration is governed by Law 10.101, of 2000, and the PLR must be established through collective agreements or conventions between the organization and its employees, clearly defining the rules, objectives and evaluation criteria.

Thus, this payment method aims to unite the wishes of the workers with those of the company, encouraging increased productivity and improved corporate results.

It is also important to remember that PLR:

• is not a right, but a non-mandatory benefit;
• does not form part of salary-related labor calculations;
• should not be paid more than twice a year;
• is not guaranteed and is an occasional form of remuneration, since the benefit is linked to the amount of profit generated or not generated by the company.

How does PLR work?

The PLR benefit works as a variable remuneration system in which employees receive a share of the profits or results obtained. This means that certain factors must be met in order for it to be legally offered to company members, such as:

• collective agreement: the PLR is determined through a collective agreement or convention between the organization and the employees, with the participation of the union;
• setting targets: the targets and objectives that determine the PLR payment must be clear, objective and measurable;
• evaluation of results: at the end of the agreed period, the performance of the company and its employees in relation to the established goals is evaluated;
• distribution: if the targets are met, the PLR is distributed to employees according to the criteria previously defined in the agreement.

What are the advantages of offering Profit Sharing?

As it is a benefit regulated by legislation , which requires productivity indicators , targets and results to be used for it to be offered, the main advantages of PLR are:

• increased productivity and efficiency;
• improved employee motivation and engagement;
• strengthening the culture of results;
• promoting a more collaborative working environment;
• alignment between individual objectives and the company's strategic objectives.

This is because, unlike other benefits, PLR establishes a win-win relationship between company members and the organization itself. In this way, when the company generates profitability, employees can be rewarded for their efforts. This even makes PLR one of the benefits most desired by employees.

In addition, for real profit companies, the legislation also establishes that the organization can deduct the value of the PLR as an operating expense, resulting in a lower incidence of taxes.

What is the difference between PLR and PPR?

The Profit Sharing Program (PPR) is a mechanism used by companies to encourage their employees to achieve specific operational performance targets, which may or may not be directly linked to profits.

Unlike the PLR, which focuses on the distribution of company profits, the PPR is associated with the achievement of previously determined operational or performance objectives, promoting improvement in specific areas of the organization.

In the same vein, while the PLR has its own legislation, the PPR has a more flexible application. This system allows for greater versatility in defining the criteria for evaluating and distributing the results achieved.

How to calculate Profit Sharing?

Each company can define the value of its employees' PLR, taking into account factors such as:

• fixed amount for all: all employees receive the same amount;
• based on individual or group productivity: the value varies according to individual or team performance;
• proportional to salaries, positions or similar: the amount or percentage is distributed on the basis of salary, position or similar criteria.

To give a simplified example, consider a company that sets the PLR at 5% of annual net profit, distributed equally, which in this example is R$2,000,000.00. If the company decides to distribute it equally among 100 employees, the calculation would be:

• Total PLR available: 5% of R$ 2,000,000.00 = R$ 100,000.00.
• Value per employee: R$ 100,000.00 / 100 = R$ 1,000.00 per employee.

The PLR serves as an incentive and a reflection of the company's transparency and commitment to its employees. Understanding how to calculate the benefit is fundamental to aligning employees' expectations with the company's financial objectives.

To find out about the benefits that are guaranteed by the CLT, check out our content!

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