Employer of Record in Peru

Businesses can only operate smoothly in Peru if they comply with local labor laws including drafting compliant employment contract agreements and meeting taxation and payroll obligations. Learn more about the employment laws and regulations in Peru below, to avoid any compliance issues.

Employment Contract Requirements

When hiring employeesin Peru, businesses must provide a written employment contract in both the local language and English. There are two types of contracts: fixed-term and indefinite-term. Most employers in Peru prefer indefinite-term contracts. The contract should include details like:

• Employer and employee details
• Compensation and payroll cycle
• Job responsibilities
• Termination clauses and notice periods

Onboarding Process

We can help you get a new employee started in Peru quickly, with a minimum onboarding time of just 1-2 working days. The timeline starts once the employee submits all required information onto the Playroll platform and completes any necessary local authority registrations.

For non-nationals, the Right to Work assessment (if applicable) may add up to three extra days. Additional time may be needed for follow-ups on this assessment. Please note, payroll cut-off dates can impact the actual start date. Playroll's payroll cut-off date is the 10th of each month unless otherwise specified.

Working Hours in Peru

Regular working hours in Peru involve working 8 hours per day and 48 hours per week.

Overtime in Peru

Overtime payment is mandatory for employees with working hours specified in the employment agreement. The payment for additional hours is structured as follows:

• The first two hours: 125% of the hourly rate
• Subsequent hours: 135% of the hourly rate

Probation Period in Peru

The probationary period in Peru is three months. It can be extended to six months for managerial or specialized skill positions or even a year in exceptional cases.

Fiscal Year in Peru

1 January- 31 December is the 12-month accounting period that businesses in Peru use for financial and tax reporting purposes.

Payroll Cycle in Peru

The payroll cycle in Peru is usually monthly, with employees being paid by the last working day of the month.

Minimum Wage in Peru

The minimum wage for employees in Peru is typically 5.34 PEN per hour, amounting to ~1,025 PEN per month for a typical 48 hour work week.

Bonus Payments in Peru

It is mandatory for employers to provide 13th-month and 14th-month payments. Employees receive an additional month's salary twice a year. The first payment occurs in July (payable by 15 July), around Peru's Independence Day, and the second payment is made at the end of the year (payable by 15 December), around Christmas.

Employer Tax Contributions

Employer payroll contributions are generally estimated at an additional 9% on top of the employee salary in Peru.

Employee Payroll Tax Contributions

In Peru , the typical estimation for employee payroll contributions cost is around 12.50% to 13.00%.

Individual Income Tax Contributions

The income tax rates are applied on a progressive scale expressed in UITs (Tax Units). The value of one UIT is set by the government at the beginning of each year. The current value of 1 tax unit is 5 150 PEN.

Pension in Peru

The national pension system is funded through mandatory employee contributions. Employers are required to make monthly withholdings for pension fund contributions, which are equal to 13% to 12.5% of the compensation received by the employee

Mandatory Leave Entitlement in Peru

The annual leave entitlement in Peru is 30 days for a full time worker. These can include public holidays on top of that or within those days, which would otherwise be unpaid.

Public Holidays In Peru

Peru observes a total of 10 national holidays, along with additional regional holidays that vary based on the employee's location.

Paid Time Off in Peru

Employees in Peru are entitled to 30 days of paid annual leave. Employees are eligible for annual leave after 12 months of work. Part-time employees, on the other hand, are entitled to six calendar days of paid leave per year.

Maternity Leave In Peru

Female employees are entitled to 98 days of fully paid maternity leave, with the period split into 49 days before and 49 days after delivery. This can be extended by an additional 30 days in the cases of multiple births. Maternity benefits, equivalent to the mother's full wages, are provided by the social security agency (employer continues to pay the salary but is then reimbursed by Social Security).

Paternity Leave In Peru

Employees are entitled to a paid paternity leave of 10 consecutive calendar days in the case of natural or cesarean birth. If the birth is premature or involves multiple births, the entitlement increases to 20 days of leave.

Sick Leave In Peru

Employees are entitled to 365 days of paid sick leave per year. The employer covers the compensation for the initial 20 days of sickness, while the remaining 245 days are covered by social security. Sick leave requires the submission of a medical certificate.

Parental Leave In Peru

Peru does not have a separate shared parental leave policy.

Adoption Leave

Adoptive parents are eligible for 30 days of paid leave for each child adopted below the age of 12.

Civil Duty Leave

Firefighters and military personnel are entitled to paid leave if they are called up for service.

Termination Process in Peru

The termination of employment varies depending on the terms outlined in the employment agreement and collective agreement. It is influenced by the type of contract and the reason for termination. Compliant terminations may occur through:

• Mutual Agreement
• Expiration of the Contract
• Objective Grounds
• Disciplinary Dismissal

Notice Period in Peru

Employers are required to provide a notice period of 6 to 30 days, depending on the reason for dismissal.

Severance in Peru

There is no statutory severance entitlement but an indemnity is payable in the event of an unfair dismissal (where company does not have described legal grounds to dismiss employee). In the event of unfair dismissal, employees are entitled to receive a legal indemnity of (total may not exceed in both cases, 12 months salaries):

• 1.5 times their monthly remuneration for each year of service, if the employee is on an indefinite employment contract. Periods of time less than 1 year must be paid proportionally.
• 1.5 times their monthly remuneration for each month remaining until the end of the fixed-term contract, if applicable.