Employers in the private sector have until May 15 to make the payment of the Compensation for Time of Service (CTS), a social benefit that aims to protect the worker from contingencies that may arise as a result of cessation of work.
“The CTS is equivalent –on average– to an annual remuneration, which must be deposited by the employer in favor of the worker in 50%, both in the month of May of each year and in November. This, having as maximum date to make the payment, in both months, the 15th″, indicated Mauricio Matos, Associate Partner of the Labor Area of EY Peru.
He added that, as a general rule, it is an intangible benefit, since it can only be released by the worker at the time of termination.
In this sense, EY Peru referred to the most important aspects regarding the CTS.
Which workers receive CTS?
- Workers of the private regime who work on average, at least, a minimum daily shift of four hours.
- Small business workers, but at a rate of 15 daily wages per full year of services with a maximum of 90 daily wages.
- Microenterprise workers are not included in the benefit.
- In the case of workers in the agrarian regime, the CTS is included in the daily remuneration at a rate of 9.72% of the basic salary; however, the collaborator can choose to be paid differently and semi-annually, as in the common labor regime.
In addition to this, it should be noted that, with the modifications introduced by the Domestic Workers Law of 2020 (Law No. 31047), the CTS must also be paid to them under the same conditions as the common labor regime.
“For this, it is necessary for domestic workers to inform the employer in writing about the entity of the financial or banking system to which the deposit must be made. If not, the employer can make the deposit in any of the institutions, under the fixed-term modality, for the longest period allowed.”, he indicated.
Does paternity or maternity leave affect the calculation of the CTS?
Matos said no. “Both the days of pre- and post-natal rest and suspension of the employment relationship with payment of wages by the employer are computed for the calculation of the CTS”, he narrowed down.
what concepts are not part of the calculation base of the CTS?
Those benefits that a worker could receive, but that are not considered remuneration, such as extraordinary bonuses; any form of profit sharing; mobility subject to attendance at the workplace, allowances for education, birthdays, marriage, birth of children, death.
Nor the goods that the company grants to its workers, of its own production; and working conditions.
How is the CTS calculated in case the worker receives a variable salary?
- If the worker has an imprecise or variable main remuneration, the CTS will be the result of the average of what the worker received between the months of November of the previous year and April (for the May CTS) or from May to October (for the November CTS).
- If the worker receives a fixed remuneration, but has an imprecise or variable complementary salary (for example, overtime), these amounts will be included in the calculation as long as they have been three or more times in the period from November of the year prior to April. (for the CTS of May) or in the period from May to October (for the CTS of November), in which case the concepts are added and divided by six.
How do I verify that my CTS has been correctly calculated and disbursed?
The employer is required to grant a CTS calculation settlement to each worker, as well as to credit the deposit in the financial system account chosen by the worker.
For this calculation, the remuneration received by the worker as of April 30 or October 30 is taken as a reference, depending on whether it is the May deposit or the November deposit, respectively.
The specialist stated that in both cases, the CTS to be deposited is equal to 50% of said amount each time.
Likewise, he mentioned that 1/6 of the bonus for the corresponding period should also be included.
In this sense, for the May CTS, for example, 1/6 of the December 2021 bonus must be included. This is because it is a remuneration to which the worker is subject by law.
What are the penalties in case the payment is not made?
Not depositing the CTS in full and on time, or not making the payment, is considered a serious infraction that can be sanctioned with a fine ranging from S/ 6,908 to S/ 114,928, depending on the number of workers affected.
It should be noted that this obligation, which falls on the employer, must be made by means of a deposit in the account of the financial or banking system that the worker has chosen and communicated.
“Currently, a worker can only withdraw up to 100% of the surplus of four gross remunerations. If you have a lower amount in his account, he will not be able to make any withdrawals”said the spokesperson for EY Peru.
