Employment laws in Peru

With a large population, Peru boasts a rich and skilled labor pool to fuel this economic growth.

But for foreign organizations looking to expand in the region, all this economic promise comes with a legal framework that requires attention. 

Peru does not permit at-will employment. Termination requires cause and justification. Two annual bonus payments are mandated. Regular auditing is conducted by SUNAFIL, Peru’s national labor inspection body.

This guide covers what matters for labor law compliance in Peru when you are building or managing a local team.

Payoneer Workforce Management can help you streamline processes such as onboarding, payroll, benefits, local compliance, offboarding, and more.

Key employment laws in Peru

Peru’s employment framework is not contained in a single code. It is spread across multiple statutes, decrees, and regulations. 

These are the labor laws in Peru that employers should typically be aware of:

• Legislative Decree No. 728 (Labor Productivity and Competitiveness Law or LPCL): Governs employment contracts, working conditions, statutory benefits, and dismissal procedures for the private sector.
• Law No. 27735: Establishes the right to Gratificaciones, the two mandatory annual bonus payments (July and December).
• Supreme Decree No. 001-97-TR: Regulates the CTS (Compensación por Tiempo de Servicios), a mandatory severance savings fund deposited semi-annually.
• Legislative Decree No. 713: Sets the rules for paid vacation leave, including the 30-day entitlement, carry-forward limits, and penalties for non-compliance.
• Law No. 29783: The Occupational Safety and Health at Work Law. Places prevention duties on employers and inspection responsibilities on the state.
• Legislative Decree No. 689 + Supreme Decree No. 014-92-TR: Regulates the hiring of foreign workers, including the 20% headcount cap and 30% payroll cap.
• Law No. 29981: Created SUNAFIL, the National Superintendency of Labor Inspection, which enforces compliance through audits and fines.
• Law No. 28806: The General Law on Labor Inspection. Defines the scope, procedures, and penalty framework for labor violations.

Contract employment laws in Peru

Typically, every employment relationship is presumed indefinite unless documented otherwise. 

The employer may have to bear the burden of proving that a role is temporary. That single rule shapes how all contract types work in Peru.

Types of contracts

1. Indefinite-term: This type is the default and has no end date. It can be established verbally, though a written contract is a far safer choice. Employees hired under indefinite agreements receive the strongest stability protections under Peruvian law.
2. Fixed-term: Only valid when the role is genuinely temporary. The contract has to spell out the specific cause and duration. Peruvian regulations recognize several sub-types of fixed-term agreements, including contracts for the beginning of activities, market needs, business reconversion, seasonal work, and specific projects.
3. Part-time: Applies to employees averaging fewer than four hours per day. Must be written and registered with the Ministry of Labor. Part-time workers are entitled to most statutory benefits, but not to CTS (the severance savings fund), protection against arbitrary dismissal, or the full 30 days of annual leave. They receive six business days of vacation instead.

Essential contract terms

As standard practice, employment contracts in Peru, typically created in Spanish and English, need to include these elements:

• The full name and identification of both parties. 
• Type of contract (indefinite, fixed-term, or part-time). 
• A job title and a clear description of duties. 
• The agreed salary, broken down by components, if there is variable pay. 
• Working hours, the weekly schedule, and which day counts as the rest day. 
• Vacation entitlement and leave policies. 
• The physical workplace location, or remote work terms, if applicable. 
• Conditions under which either party can end the contract, including notice requirements.

When you are drafting a fixed-term contract, you have to follow some extra requirements. You must explain the objective cause that justifies the temporary nature of the role and include both start and end dates.

Peru also requires employers to register all employees through the T-Registro system (part of the Electronic Payroll) and file monthly declarations through PLAME with SUNAT.

Minimum wage in Peru

Peru’s minimum wage, called the Remuneracion Minima Vital (RMV), is PEN 1,025 per month. That translates to roughly US$280 at current rates.

The National Labor Council reviews the figure periodically, but when employers and workers cannot agree, the government typically steps in unilaterally. 

Working hours in Peru

The daily limit is eight hours. The weekly limit is 48 hours, which is spread across a maximum of six working days. 

Overtime laws in Peru require a minimum surcharge of 25% on the employee’s hourly rate for the first two extra hours. 

From the third hour onward, the surcharge goes up to at least 35%. 

Mandatory benefits

Peru’s statutory benefits package is extensive. Employee rights in Peru include the following:

• Social security: Employers contribute a percentage of each employee’s gross monthly salary to EsSalud for public health insurance. Employees also contribute to the pension fund, either via the public system (ONP) or a private administrator (AFP).
• Bonus payments: Two bonus payments per year are mandatory and are called Gratificaciones. One falls in July (Independence Day) and the other in December (Christmas). 
• Severance accrual: Then there is the CTS, or Compensación por Tiempo de Servicios. It works like a mandatory savings fund tied to employment tenure. You must deposit approximately 8.33% of the monthly salary into a bank account designated by the employee. The employee can access the full balance upon leaving the company.
• Annual leave: 30 calendar days of paid annual leave after one year of service. 
• Public holidays: 16 paid public holidays per year. 
• Sick leave: Up to 365 days of sick leave, with the employer covering the first 20 days and EsSalud providing a subsidy from day 21 onward. 
• Parental leave: Maternity leave of 14 weeks (98 days), split 49 days before and 49 after delivery, paid through social security. Paternity leave of 10 consecutive calendar days, funded by the employer. That number rises to 20 days for premature or multiple births, and 30 days when the newborn has a terminal congenital condition or severe disability.

Termination

Peru’s labor code does not recognize at-will employment. Once probation ends, dismissing someone requires a valid legal ground. 

The termination laws in Peru allow the employment relationship to end through several paths: 

• Mutual agreement
• The employee’s resignation
• Completion of a fixed-term contract
• Employer-initiated dismissal for cause

Justified causes for dismissal include serious misconduct (violence, threats, intentional property damage), disclosure of trade secrets, repeated unjustified absences, working under the influence of alcohol or drugs, and lack of qualifications that the employee claimed during hiring (however, only valid within the first 30 days).

The process is just as important as the reason: 

• The employer must deliver a written notice explaining the specific grounds. 
• The employee may get a few days to submit a written defense. 
• For performance-related cases, the notice period in Peru extends to 30 days so the employee can demonstrate improvement. 
• Employees who resign must also provide 30 calendar days of written notice. 

Severance pay 

Severance pay in Peru is only applicable in cases of unjustified dismissal. Employees are entitled to compensation equivalent to 1.5 months’ salary for each year of service, prorated for any additional months and days worked.

In addition, the final settlement includes accrued but unused vacation leave, along with proportional payments for the 13th and 14th salaries. 

While the 14th salary (CTS) is often included in the final payout, it is not technically part of severance but rather a separate statutory benefit settled during full and final (FnF) calculations.

Navigate employment laws in Peru with Payoneer Workforce Management

Between contract registration through T-Registro, monthly PLAME filings, semi-annual CTS deposits, two Gratificacion cycles, pension enrollment, and the strict dismissal procedures outlined above, keeping up with Peru’s labor framework is a real operational commitment. For companies managing this from another country, the margin for error is slim.

Payoneer Workforce Management assists companies with onboarding, payroll, benefits, and labor law compliance in Peru across 160+ countries. 

Through its Employer of Record model, the platform helps you manage compliant employment contracts, navigate payroll processing, tax filings, benefits administration, and offboarding. 

Depending on what you need, there are options for EOR services in Peru, contractor management, and Agent of Record support.

Book a demo today to learn how Payoneer Workforce Management fits your expansion operations in Peru.

FAQs

1. What does the labor law in Peru cover?

The local labor laws in Peru govern private sector employment. It covers employment contracts, wages, working conditions, statutory benefits, and dismissal rules. SUNAFIL enforces compliance through inspections and can impose fines on employers who fall short.

2. How long is the probation period in Peru?

Regular employees go through three months. For positions of trust, employers can extend that window to six months. During this time, the employer can end the contract without paying severance or providing cause.

3. What is the current minimum wage in Peru?

The minimum wage in Peru is PEN 1,025 per month. This rate is typically uniform across all sectors and regions. Overtime workers who earn the RMV receive an additional 25% for the first 2 hours and 35% from the 3rd hour.

4. Can an employer dismiss without cause in Peru?

Not without financial consequences. Peru does not permit at-will dismissal after probation. If no just cause is documented, the employer owes 1.5 monthly salaries per year worked as severance. The employee may also reject the payout and seek court-ordered reinstatement.

5. What benefits must employers provide in Peru?

EsSalud health contributions, pension enrollment, two Gratificaciones per year, CTS deposits, 30 days of paid vacation, 16 public holidays, sick leave of up to 365 days, 14 weeks of maternity leave, and 10 days of paternity leave.