In Peru, “CTS” refers to Compensacin por Tiempo de Servicios, a labor benefit mandated by law. It’s a form of severance pay designed to provide financial security for employees upon termination. Determining this benefit involves a calculation based on the employee’s salary and length of service. For example, an employee earning a set monthly wage accrues a portion of that wage towards their CTS balance each month.
This mandatory benefit plays a vital role in protecting Peruvian workers, offering a safety net in times of unemployment and promoting economic stability. Its historical context lies in providing a buffer against potential financial hardship following job loss. It represents a significant component of an employee’s total compensation package and serves as a crucial social safety net.