Peru PEO & Employer of Record

WeHG provides an International PEO and vglobal Employer of Record service in Peru to companies willing to enter the Peru market or recruit local/expat employees in this country.

Traditional approach requires establishing a subsidiary in Peru.  Meanwhile, our solution allows you to start the operations in Peru within days hence save time and money.  WeHG would hire candidates on your behalf while you maintain full operational control of their work. So legally they would be our employees, on our local payroll, 100% compliant but will work on your behalf. 

Peru fast facts

Population, million: 32,971,854
Land area, sq. km: 1.285 million km²
Capital: Lima
Local currency: Sol (PEN)

GDP per capita:$ 5,844.69
GDP in currency:$ 199 billion
Economic growth percentage: 7.29%
Inflation rate (consumer prices): 1.87%
Volume of export: $ 4650 million
Import of goods and services: $ 52031582417
Total population: 32,971,854
Population of working age (15-64): 91.96%

Peru has a variety of climates, a large territorial extension with important natural resources and its citizens have great skills and high academic standards. Nowadays, Peru is considered one of the world’s leading emerging countries with a solid economic and industrial background. 

Hiring, Negotiating and Doing Business in Peru

Necessity of written employment contract

Employment contract must be in writing and should determinants of recruitment and other conditions of employment. An employer is required to create it in triplicate, one copy for each party and third copy is submitted to the Labour Administrative Authority within 15 days of its inclusion. An employer is required to provide a copy of employment contract to a worker within 3 days of its submission to the Authority. Indefinite term contracts may be executed either orally or in writing. Contracts subject to special conditions must be executed in writing. Part-time contracts must be executed in writing and may be either for an indefinite term or subject to conditions. Employers must provide written information about recommendations on health and safety at work, information on pension schemes, and Internal Work Regulations.

Peru Employment Contract

Types of employment agreements

Employment contract may be for an indefinite duration, for a fixed term or for certain work. Peruvian Labour Law prohibits hiring fixed term contract workers for tasks of permanent nature. The Law on Productivity and Labour Competitiveness lists the valid reasons for use of fixed term contracts and divides these in three categories. Temporary reasons: commencement of new activity (maximum duration: 3 years); increase in market demand (maximum duration: 5 years); restructuring of enterprise due to technological change (maximum duration: 2 years) Incidental reasons: temporary needs (maximum duration: 06 months in a year); replacement of a worker (maximum duration: 5 years); and unforeseen event and force majeure (maximum duration: 5 years) Specific piece of work or service: performance of specific work or service (maximum duration: 5 years; intermittent service contract (maximum duration: 5 years); and seasonal contract (maximum duration: 5 years) Maximum duration of a fixed term contract including renewals is 5 years. Law does not limit on the number of successive fixed term contracts as long as the total duration of a fixed term contract does not exceed 5 years. 

Peru working hours

In accordance with the Political Constitution, the normal working hours are 8 hours a day and 48 hours per week.

The normal working hours limit is not applicable to managers or employees who are not subject to direct supervision, those who perform intermittent work or security and custodial work. The 8 hour daily limit can be exceeded on some days provided that the average hours worked in a week do not exceed the 48 hour weekly limit. There is no defined limit to the maximum working hours after including overtime hours.

Overtime

If a worker works beyond the stipulated working hours, i.e., 8 hours a day and 48 hours a week, he/she is entitled to an overtime pay at the following rates:

• 125% of normal hourly rate for the first 2 hours of overtime.

• 135% of normal hourly rate for the subsequent hours of overtime.

• 200% of the normal hourly rate if worker was forced to do overtime work hours.

Vacation leave in Peru

Employees are entitled to 30 days per year. A minimum of 15 days must be taken and the other 15 can be cashed out.

Sick Leave: The first 20 days are paid by the employer, the following days are paid by the state (ESSALUD).

Peru Maternity Leave

Maternity leave: Mothers are entitled to 98 days of fully paid leave paid by ESSALUD through the company.

Maternity leave may be extended up to 120 days in the case of multiple births. The 49 day post-natal leave is obligatory; however if a woman so desires prenatal leave can be deferred, either totally or partially, and added to the post-natal leave. The employee must provide a medical certificate indicating that postponing the prenatal leave might not affect the mother or the child.

Paternity Leave: The paternity leave law has been amended by Law No. 30807 of 2018 which raises the paternity leave from 4 days to 10 consecutive calendar days. The following provisions are also found in the law: 

1. 20 consecutive calendar days for premature and multiple births; 
2. 30 consecutive calendar days for birth with terminal congenital disease or severe disability; 
3. 30 consecutive calendar days due to serious complications in mother’s health Paternity leave can start from the date of birth of child, from the date of mother and/or child’s discharge from the hospital, and from third day prior to the probable date of delivery. 

A worker wishing to take paternity leave must inform the employer at least 15 days before the probable date of delivery. Prior to this reform, law provides for 4 days paid paternity leave on the birth of a child. The paternity leave benefit is paid on any day between the days of confinement and the day mother and/or child are discharged from the medical centre.

Peru Severance Laws

Termination Process

Employees may be terminated on objective grounds or for cause, with documentation.  In general, employees should get a minimum of six calendar days of written notice so that the employee can respond in writing or 30 calendar days to prove his/her capability. The dismissal decision and reason should also be provided in writing to the trade union and the employee. Employees which are dismissed without cause are generally entitled to severance pay for up to 12 months.

• Temporary employment termination must be according to the expiration of the contract.
• Permanent employment termination must either be voluntary resignation or dismissal for a justified cause.

Notice Period

When resigning employees must give at least 30 days’ notice.

Generally, an employer must provide an employee a minimum of six calendar days of notice so that the employee can present a written defense to any charges against him or her, or 30 calendar days to prove the employee’s performance capability or to correct any error.  There is no need for notice if the employee has exhibited serious misconduct under which it would be unreasonable to require the employer to continue the employment relationship.

Severance Pay

Generally, severance is not required in cases of separation due to their conduct or capacity.

An employee terminated without cause is generally entitled to severance payments for a period of up to twelve months, depending upon the circumstances of the former worker’s employment history.

There is no specific redundancy pay required under Peruvian law.

If a court determines a dismissal to be unlawful because the employer has not provided a valid reason to the worker, or the reason cannot be legally substantiated, the employee usually will be entitled to a payment equal to the average monthly compensation for each year of service, up to a maximum of twelve months.

Peru Tax

Employee Income Tax

1 Tax Unit (UIT) = 4,300 Peruvian soles (PEN)

Up to 5 UIT – 8%

From 5 UIT to 20 UIT – 14%

From 20 UIT to 35 UIT – 17%

From 35 UIT to 45 UIT – 20%

More than 45 UIT – 30%

Health contributions

Employers are obligated to make monthly health contribution payments equal to 9% of the total compensation paid to the employee.

Employees must choose affiliation with either the National Health System (EsSalud) or the Private Health System (Entidades Promotoras de Salud or EPS). 25% of the amount paid to the EPS may be used as a credit against EsSalud contributions.

Pension funds contributions

Employers must apply monthly withholdings for pension funds contributions equal to 13% of the compensation received by the employee in cases where the employee is affiliated with the National Pension System or approximately 12.5% in cases where the employee is affiliated with the Private Pension System (in this case, 10% corresponds to their personal pension account and almost 2.5% to insurance and commissions for managing the fund).

Should a foreign individual’s labour contract end and the individual leaves Peru, the pension funds deposited in the Private Pension System (the aforementioned 10%) can be transferred to their pension fund abroad or wired to an account of the employee in a foreign bank if no individual pension fund abroad is available.

Health Insurance Benefits in Peru

Additional Benefits in Peru

The 13th and 14th salaries are paid in July and December.

In accordance with the law, the pregnant woman and the new born baby are entitled to complete medical care during pre-natal, confinement and post-natal period.

Peru Holidays

• New Year’s Day
• Maundy Thursday
• Good Friday
• Easter
• Labor Day
• Saint Peter & Saint Paul
• Peruvian Independence Day (2 day holiday)
• Saint Rose of Lima
• Battle of Angamos
• All Saints Day
• Immaculate Conception
• Christmas

Why Choose WeHireGlobally

WeHG takes care of all the onboarding hurdles, payroll, compensation and benefits, tax filing, and termination of employment. Our Employer of Record solution allows you to manage your overseas teams efficiently while minimizing cost and risk.