Companies looking to do business and hire workers in Peru must
be aware of the particularities of the local payroll rules. Our
local expert explains one of the payroll cycles that companies need
to manage to remain compliant.
Peru's Working Compensation or Compensation for Length of
Service (CTS by its acronym in Spanish) is a legal benefit given to
workers for their time spent working for a company. In other
jurisdictions this benefit is known as the "settlement
payment" which is made at the time of retirement. The
difference is that, after finding irregularities in the time of
payment, the Peruvian government decided to create the CTS fund. It
means that instead of doing one payment at retirement, companies
pay on a semi-annual basis. This social benefit allows the worker
to mitigate the risk of losing an income in cases of termination of
employment.
