Your guide to payroll in Peru

Getting Peru payroll right is more than just cutting paychecks on time. Between progressive income tax brackets, mandatory bonus payments in July and December, a severance fund, and a mandatory life insurance levy, the rules around them are specific. 

Peru’s tax authority, SUNAT, administers the system nationally, so there are no regional or provincial tax variations to worry about. But what SUNAT lacks in complexity on that front, it more than makes up for in reporting requirements.

This guide walks through how Peru payroll processing works in practice: what you owe, what you withhold, when it’s all due, and where companies tend to trip up. 

We’ll also cover how Payoneer Workforce Management can help streamline the process when you’re managing international employees.

Peru payroll: Wages and other payments

Global organizations, like US companies engaging talent in Peru, will need to factor in the following: 

Payroll cycle in Peru

Most employers in Peru run payroll monthly, with salaries landing on the last working day of the month. 

Payments must be made in Peruvian Sol (PEN). The fiscal year runs January 1 through December 31, and monthly payroll declarations are filed through SUNAT’s electronic system. 

Minimum wage in Peru

The minimum wage in Peru sits at PEN 1,025 per month. This rate, called the Remuneración Mínima Vital (RMV), applies uniformly across all industries and regions. 

The government sets it through the National Labor Council, though it can act unilaterally if no consensus is reached.

Overtime pay

Peru caps the standard workweek at 48 hours. 

13th and 14th month salary (Gratificaciones)

This is a big one for budgeting. Peruvian employees are entitled to two additional salary payments per year, one in July (for Independence Day) and one in December (for Christmas). Each bonus equals one full month’s pay.

Maternity pay

Mothers are entitled to 14 weeks of maternity leave, covered in full by EsSalud (Peru’s social security system). This is typically taken as 49 days pre-birth and 49 days post-birth, though the entire period may be taken after delivery if preferred.

Paternity pay

Fathers are entitled to 10 calendar days of paid paternity leave, fully funded by the employer. 

This extends to 20 consecutive calendar days for premature or multiple births, and 30 consecutive calendar days where the child is born with a terminal congenital disease or severe disability.

Severance pay

Upon unjustified dismissal, employees are entitled to 1.5 monthly salaries for each year of service, with any remaining months and days prorated accordingly. Total compensation is capped at 12 monthly salaries regardless of tenure.

Payroll in Peru: Contributions and deductions

Here’s where employer taxes in Peru and employee withholdings get detailed. 

Employers are accountable for the following contributions:

• EsSalud (Health Insurance)
• Severance Accrual
• Gratificaciones
• Life Insurance

Employee deductions usually include:

• Pension (ONP or AFP)
• Income Tax

Income tax in Peru

Peru’s salary tax in Peru uses a progressive bracket system tied to UIT (Unidad Impositiva Tributaria), a reference unit that the government adjusts annually. 

The tax rate ranges from 8% to 30%.

Social security contributions in Peru

This is a mandatory contribution in Peru and accounts for various benefits like healthcare, pension, and other assistance programs. 

In the case of public health insurance programs, there are two:

• Seguro Integral de Salud (SIS): A subsidized program for low-income families.
• EsSalud: A social security program that provides health insurance to workers in the formal sector and their dependents.

The pension system is typically picked by the employee when hired, i.e., ONP (public, managed by the government) or AFP (private, managed by investment firms). 

Employers register all of this through SUNAT’s T-Registro system and submit pension payments via AFPnet. Missing a deadline or underreporting can trigger audits, interest charges, and fines from SUNAFIL.

Other employee benefits

Beyond the core payroll obligations, Peruvian law requires several additional benefits that factor into total employment costs in Peru:

• Paid vacation: 30 calendar days per year 
• Sick leave: Employees get 365 days of sick leave. However, the employer covers the first 20 days.
• Paternity leave: Ten consecutive calendar days, paid by the employer. Increases to 20 days for multiple births and 30 days in cases of terminal congenital disease or severe disability.
• Public holidays: 16 paid holidays per year. 

Many employers also offer optional perks like private health insurance, meal vouchers, and transportation allowances to stay competitive in Lima’s tight labor market.

Peru payroll compliance best practices

Staying on the right side of payroll compliance in Peru comes down to a few non-negotiables:

1. File PLAME on time, every time: The monthly electronic payroll declaration (Planilla Mensual de Pagos) is typically due between the last 2-3 weeks of the following month. Late filing means penalties and interest.
2. Get CTS deposits right: These are non-negotiable deadlines. Missing a CTS deposit creates immediate legal exposure.
3. Track the UIT annually: The tax unit changes each year and affects income tax brackets, deductions, and family allowances. If your system doesn’t update automatically, you’ll miscalculate withholdings.
4. Classify workers correctly: Misclassifying an employee as a contractor can lead to SUNAFIL fines. The distinction matters for payroll, benefits, and tax purposes.
5. Issue compliant payslips: Peruvian payslip requirements in Peru mandate that employees receive a detailed breakdown of gross pay, all deductions, employer contributions, and net pay each period.
6. Keep records for audits: SUNAT and SUNAFIL both conduct inspections. Maintain payroll records, employment contracts, and proof of all filings and payments.

Your options for payroll services in Peru

If you’re a foreign company looking to onboard and pay employees in Peru, you have three main routes:

1. Run payroll through your own entity: This means registering with SUNAT, EsSalud, and the pension system, then handling all calculations, filings, and payments internally. It works if you have a dedicated finance team and plan to be in Peru long-term. 
2. Outsource to a local payroll provider or PEO: A Peru-based payroll firm handles the math, filings, and compliance monitoring. You still need a local entity, but you offload the month-to-month administrative work.
3. Use an Employer of Record (EOR): An EOR like Payoneer Workforce Management acts as the legal employer in Peru, managing Peru payroll processing, tax withholding, benefits, and compliance through their existing entity. You don’t need to incorporate. This is one of the fastest paths for companies hiring a small team or testing the market.

Payoneer Workforce Management offers a unified platform for onboarding, payroll, and compliance across 160+ countries. 

Whether you’re seeking EOR services, contractor management, or Agent of Record support, the platform scales with your needs.

Book a demo today to see how Payoneer Workforce Management can help.

FAQs

1. How often are employees paid in Peru?

Monthly is the norm. Most employers pay on the last working day of the month. Peruvian law may permit other cycles like weekly or bi-weekly pay, but the vast majority of companies stick with monthly. Whatever frequency you choose, it needs to be spelled out in the employment contract and followed consistently.

2. What is the employer’s total cost of hiring in Peru?

Expect total employment costs in Peru to land around 40–44% on top of the base salary. That covers EsSalud, CTS, two Gratificaciones with the extraordinary bonus, and other statutory obligations. The exact figure shifts based on the employee’s salary level, whether they have dependents, and any industry-specific levies like SENATI or SCTR.

For a detailed breakdown of employment costs, use our employee cost calculator.

3. What taxes are withheld from employee salaries in Peru?

Two main deductions come off the top: pension contributions (into either ONP or AFP) and income tax (progressive rates from 8% to 30%). The employer withholds both and remits them to the respective authorities: pension through AFPnet, income tax through SUNAT’s electronic system.

4) Are 13th and 14th-month salaries mandatory in Peru?

They absolutely are. Every employee gets two extra salary payments per year: one in July and one in December, each equal to a full month’s pay. These Gratificaciones are governed by Law 27735 and are a non-negotiable part of the Peruvian payroll. On top of each bonus, you also owe an extraordinary bonus paid directly to the employee.

5) What is CTS, and how does it work?

CTS stands for Compensación por Tiempo de Servicios; essentially, a mandatory savings fund. Employers accrue 14th-month salary as part of CTS. The money belongs to the employee and becomes fully accessible when they leave the company.