Using an Employer of Record in Peru

Companies that want to hire and pay employees in Peru need to navigate local labor laws, payroll rules, tax obligations, and statutory benefits. Managing these requirements without local expertise can be time-consuming and difficult, especially for companies expanding into a new market.

Using an Employer of Record (EOR) in Peru, like Payoneer Workforce Management, helps streamline the process. An Employer of Record in Peru acts as the legal employer on your behalf, managing payroll, employment contracts, benefits administration, and labor law requirements, while you retain full control over day-to-day work.

Learn more about Payoneer Workforce Management, or keep reading to see how an Employer of Record in Peru can support your business.

How to hire employees in Peru

To hire employees in Peru, companies have three main options: 

1. Establishing a local entity: This provides full operational control but comes with high setup costs and ongoing obligations. Businesses must register locally, manage payroll, taxes, and benefits, and maintain legal representation.

2. Hiring independent contractors: This option is suitable for short-term or project-based work, but contractor misclassification can result in penalties, including back taxes and benefit payments.

3. Using an Employer of Record: Hiring through an EOR in Peru allows companies to access local talent without establishing a legal entity. The EOR helps manage payroll, taxes, benefits, and support with labor law compliance.

Payoneer Workforce Management acts as an Employer of Record in Peru, and can assist you in onboarding, paying and managing local talent without setting up a local entity.

How to onboard employees in Peru

Onboarding employees in Peru involves issuing a compliant employment contract, collecting documentation, setting up payroll, and enrolling employees in benefits where applicable.

Typical onboarding process when hiring Peru includes:

• Payroll and benefits activation: Make sure local employees are fully set up in the payroll system and enrolled in all mandatory benefits according to regional employment laws.
• Equipment delivery and onboarding setup: Provide the local hire with the necessary hardware and ensure all devices are configured so they can begin work without delays.
• Initial orientation session: Host a company introduction during the hire’s first week to walk them through organizational guidelines, onboarding steps, and the expectations tied to their new position.
• Team integration: Organize dedicated time for the new employee to meet their immediate team as well as key colleagues across the broader business.

Payoneer Workforce Management enables companies to compliantly engage talent across borders through its technology platform.

Pay employees in Peru

Peru payroll must follow local rules around currency, pay schedules, statutory bonuses, taxes, and benefits.

Peru payroll basics

Employers must pay employees in Peruvian sol (PEN) at least the minimum wage of PEN 1,025 per month. Salaries are paid on the last working day of the month.

Employees are also entitled to 2 mandatory annual bonuses, a July bonus for Independence Day, and a December bonus for Christmas

Income tax

Peru applies a progressive income tax system, with rates ranging from 8% to 30%, depending on income level.

Payroll contributions and social security

Social security contributions are mandatory for both employers and employees. Contributions fund pensions, healthcare, and social assistance programs.

Health and life insurance

Life insurance is mandatory in Peru and must be in place from the start of the employment relationship. It is usually covered through the social security system.

Working with an EOR in Peru, like Payoneer Workforce Management, is a streamlined way to pay employees. Our unified, all-in-one platform gives you a single dashboard to manage the entire global workforce and enables you to pay contractors in just a few clicks.

Employment laws in Peru

Employers hiring in Peru must comply with labor laws that regulate working hours, overtime, probation, and notice requirements.

Working hours and overtime

Working hours must not exceed 8 hours per day or 48 hours per week.

Hours worked beyond 48 hours per week are considered overtime and must be compensated as follows:

Overtime period	Overtime pay
First 2 hours	25% above hourly rate
3 hours onward	35% above hourly rate

Probation

Probation periods in Peru vary by role as follows:

• 3 months for standard employees
• 6 months for executive roles

During probation, employment may be terminated up to 1 day before the probation period ends.

Stay compliant with local labor laws using Payoneer Workforce Management’s infrastructure.

Minimum wage in Peru

As of January 2025, the minimum wage in Peru is PEN 1,025 per month. It’s important to regularly check government resources for any changes to the minimum wage.

Employment contracts in Peru

Employment contracts in Peru are legally binding and must include key terms and conditions. 

These usually include the following information:

• Company and employee information
• Start date and term of employment (e.g., permanent, fixed term)
• Job title and description
• Base salary and benefits
• Working hours, overtime pay, and leave entitlements
• Probationary period details
• Termination details

It’s a good idea to check government resources regularly to make sure you’re compliant with local employment contract laws and regulations.

Payoneer Workforce Management allows you to onboard talent quickly and securely with localized contracts and payroll.

Leave policy in Peru

Employers in Peru must provide statutory leave covering vacation time, public holidays, sick leave, and parental leave.

Public holidays and vacation time

Peru observes 16 public holidays each year.

Employees are entitled to 30 days of paid annual vacation. Unused vacation may be carried forward for up to 2 years.

Parental leave

Employees in Peru are entitled to 14 weeks of maternity leave. Payment is covered by the Social Security (EsSalud) or the Private Health System (EPS) with a minimum requirement of 3 months of service in the 6 months before leave is utilized.

An extension may of 30 days may be provided in case of multiple births or complications.

Fathers are entitled to 10 calendar days of paternity leave. This can be extended in specific situations as follows:

• 20 consecutive days for premature or multiple births
• 30 consecutive days for births involving severe disability or terminal illness

Sick leave

Employees in Peru can take up to 365 sick days per year. Days 1 through 20 are paid by the employer. From day 21 onward, payments are managed by social security.

Work permit in Peru

Work permit rules in Peru vary by the employee’s country of origin and the type of work performed. Employers and employees should consult official government resources for the most accurate and up-to-date information.

Background check in Peru

Employers in Peru may want to carry out background checks before hiring, but should make sure any checks comply with local data protection and labor regulations.

Background checks may include criminal record checks, employment history verification, education verification, and, in some cases, social media checks. The scope of checks should be relevant to the role and conducted in a non-discriminatory manner.

Employers generally need the employee’s prior consent before performing any background checks. Candidates must also be informed about which checks will be conducted and how the information will be used.

Check local regulations before conducting any pre-employment checks.

Employment termination in Peru

Employment termination in Peru must be based on valid grounds. Termination without justification may lead to legal consequences.

Valid termination scenarios

In Peru, valid grounds for termination include:

• Employee resignation
• Mutual agreement between the employee and the employer
• Termination during the probationary period
• Termination by the employer due to misconduct, performance issues, absence without leave, redundancy, etc

Notice period and severance pay

Employees must give 30 days’ notice when resigning.

Severance pay applies only in cases of unjustified dismissal and is calculated as:

• 1.5 times the employee’s monthly salary for every year worked
• Pro-rated for partial years of service

Termination payments may also include accrued vacation leave and accrued bonuses.

Compensation for length of service (CTS)

Compensation for length of service (CTS) is a legal benefit given to workers based on their time at a company (sometimes known as a settlement payment in other countries).

Instead of making a single payment at retirement, companies pay CTS 2 times per year; 50% in May and 50% in November. This social benefit serves as income protection in the event of termination.

Company registration in Peru

Businesses may want to register a business in Peru to establish a long-term local presence. Details on company registration can be found on government websites. 

However, it’s often simpler and quicker for companies to hire employees using an Employer of Record in Peru. 

Payoneer Workforce Management enables compliant onboarding and engagement of talent in 160+ countries without having to set up a legal entity.

PEO in Peru

A Professional Employer Organization (PEO) in Peru can support HR and payroll functions, but requires you to have a legal entity in-country. 

On the other hand, an Employer of Record in Peru does not require a legal entity and instead serves as the legal employer for the local team. This often makes it the better choice for companies new to the Peruvian market.

Payoneer Workforce Management’s Employer of Record services in Peru

Payoneer Workforce Management helps growing companies onboard, pay, and manage employees in Peru without setting up a local entity. 

As your EOR in Peru, we offer assistance with employment contracts, benefits administration, taxes, and payroll, while you retain control over daily operations.

Book a demo to learn more about Payoneer Workforce Management.

FAQs

1. What is an Employer of Record in Peru?

An Employer of Record in Peru is a third-party organization that legally employs workers on your behalf and manages payroll, taxes, and employment contracts, so you can hire without a local entity.

2. How much does it cost to hire talent in Peru?

The employer cost is approximately 44% on an annual salary of USD 60,000, but this can vary depending on the employee’s salary and other local factors. Use our employee cost calculator for an employment cost estimate.

3. Why should you hire talent through an EOR in Peru?

Working with an EOR in Peru can help simplify the hiring process. Payoneer Workforce Management allows you to onboard and pay independent contractors and employees across the globe in 70+ currencies. We offer a transparent pricing structure, speak with us for more information.