Employment Laws In Peru

Contractual Agreements 

The labor laws of Peru are primarily governed by 

• The Constitution
• The Law of Productivity and Labor Competitiveness
• The Procedural Labor Law
• The Law on Collective Labor Relations
• The Law on Days of Work, Hours, and Overtime, and
• The Regulations on Safety and Health in the Workplace, among others. 

Contractual agreements in Peru must be in writing and in three copies. These contracts should clearly specify the duration of the agreements, the reason for the agreements, and any other conditions arising from the labor relationship.

Additionally, under the contract employment law in Peru, employers must submit a copy of the employment contract to the Labor Administrative Authority within 15 days of their signature. 

Types of employment contracts 

Under the labor law in Peru, employers may utilize four main types of contracts. 

Fixed-term contracts

• This type of contact specifies a predetermined duration for the employment relationship. 

Temporary contracts

• A temporary contract is used for short-term employment needs and typically has a fixed duration.
• These have three sub-types: contracts for beginning or launching a new activity, contracts to meet new demands, and contracts for restructuring an enterprise. 

Incidental contracts

• An incidental contract has three main types: casual, replacement, and emergency. 
• Casual contracts are limited to a maximum duration of six months within a single year.
• Emergency contracts are valid only for the duration of the emergency situation. 

Contracts for a specific piece of work/service

• These contracts are defined as agreements between an employer and worker to complete a particular task or service within a specified period. 
• Contracts for a specific work/service comprise intermittent and seasonal contracts.

Obligations and rights for both parties

Employers and employees must follow all the guidelines mentioned in the labor laws of Peru. This includes regulations related to working conditions, overtime compensation, and anti-discrimination prohibitions, among others.

Working Hours and Overtime

The Law on Days of Work, Hours, and Overtime of 2002 primarily governs working hours and overtime in Peru. 

Regular working hours

• Under the labor law in Peru, a regular workweek comprises 48 hours, which can be distributed over six days (eight hours per day).

Overtime regulations and compensation

• Overtime compensation is stipulated in the employment contract or collective agreements.
• The compensation rate for the first two hours of overtime must be at least 25.00% of the total remuneration of workers.
• The compensation rate is 35.00% per hour for each additional hour of overtime beyond the initial two hours.
• Managers, on-call workers, supervisors, and non-supervised workers may be exempt from receiving overtime pay at the specified rates.

Minimum Wage and Compensation

The National Labor and Employment Promotion Council primarily determines the minimum wage in Peru.

The minimum wage rate in 2024

• Under the Peru labor law, the current minimum wage is 1,025 PEN per month.

Factors affecting wage determination

Some of the factors that influence wage determination in Peru include:

• Needs of workers and their families
• Economic development in the country
• Productivity 
• Capacity of the employer
• Inflation rate

Employee Benefits and Social Security

Let’s look at some of the crucial aspects of employee benefits and social security programs in Peru.

Statutory benefits

13th and 14th month pay

• Under the labor laws of Peru, payments for both the 13th and 14th month are compulsory.
• Employers are also required to provide an extra month’s salary twice annually, once at the end of July and the second at the end of the year.

Public health insurance

• Peru has two public health insurance programs: Seguro Integral de Salud (SIS) and EsSalud (Social Security Health Insurance System).

Old-age pension

• Under the labor law in Peru, employees aged 65 with at least 20 years of service are eligible for pension benefits. 
• Employees can also avail themselves of the early pension, provided they are at least 55 years of age and have made a minimum of 30 years of contribution. 

Dependents’/Survivors’ benefits

• It comprises several benefits, such as a spouse’s pension, an orphan’s pension, and a dependent parent’s pension. 
• The maximum aggregate survivor pension is capped at 100% of the deceased’s social insurance, old-age or disability pension, or 893 soles monthly, whichever is lower.

Sickness and maternity benefits

• Following a one-day waiting period, insured individuals under sickness benefits receive payment equivalent to 100% of their average daily earnings over the last four months. 
• Expectant mothers receive payment equal to 100% of their average daily earnings over the preceding four months for 98 days.
• In cases of multiple births or the birth of a child with a disability, the maternity benefit may be extended for up to an additional 30 days.

Work injury benefits

• If the assessed degree of disability reaches or exceeds 66.7%, the insured individual is entitled to receive a pension equivalent to 70% of their earnings.
• Individuals with a disability assessed between 50% and 66.66% receive a reduced permanent disability pension.
• For those with a disability assessed at least 20% but less than 50%, a lump-sum payment equivalent to two years of permanent disability pension is disbursed.

Additional perks and benefits

• Nursing Allowance
• Funeral grant
• Death grant

Social security contributions and requirements

• For health contributions, employers must allocate 9% of the total compensation paid to employees.
• Employees must select affiliation with the National Health Insurance System or the Private Health System.
• 20% of the amount allocated to the Private Health System can be used as credits against the National Health System contributions.
• Employers must deduct a portion of the employee’s compensation for monthly pension fund contributions.
• The deduction amounts to 13% for employees affiliated with the National Pension System.
• For those affiliated with the Private Pension System, the deduction is 12.5%.
• Under the Private Pension System, 10% is designated for the employee’s personal pension account, while the remaining 2.5% covers insurance and commissions associated with fund management.

Vacations and Paid Time-Off

Here is a detailed overview of the paid and unpaid leave policies mandated by Peru labor laws.

Annual leave entitlement

• Under the labor laws of Peru, employees are entitled to 30 calendar days of annual leave for each year of service.
• 15 calendar days can be taken continuously or split into seven and eight uninterrupted days.
• The remaining vacation period can be divided into shorter periods, including those lasting less than seven calendar days, with a minimum of one calendar day.

Public holidays and special leaves

There are 15 public holidays in Peru, which include

• New Year’s Day
• Maundy Thursday
• Good Friday
• Easter
• Labor Day
• Feast of St. Peter and St.
• Independence Day
• Independence Day Holiday
• Battle of Junin
• Santa Rosa de Lima
• Battle of Angamos
• All Saints’ Day
• Immaculate Conception
• Battle of Ayacucho
• Christmas Day

Sick leave

• Under the labor law in Peru, employees are granted 365 days of paid sick leave.
• Initially, the employer covers the first 20 days of sickness at full salary, while the employer compensates the subsequent 245 days at a rate of 70-80%.

Maternity leave

• The Peru labor law mandates 98 days of paid maternity leave for every female employee.
• This consists of 49 days before the birth and 49 days following the delivery of the child.

Paternity leave

• Employees get 10 days of paid paternity leave in Peru.
• However, in complicated or premature birth cases, the entitlement increases to 20 days of leave.

Termination and Severance

The termination process in Peru is quite complicated and needs to be handled on a case-to-case basis. Mentioned below are its crucial aspects.

Grounds for termination

An employer can terminate the employment contract based on the following grounds.

During probation period

• Poor performance
• Bad behavior
• Role misfit
• Persistent absence from work

Due to poor performance

• Unsatisfactory performance
• Employee’s performance threatens the safety of other workers
• Employee’s performance leads to significant disruption to the employer’s business
• Absent from work due to illness or absconding

Termination with cause

• Substance abuse
• Dishonesty
• Serious misconduct
• Gross negligence 
• Breaching established regulations set forth by the employer
• Failure to obey lawful instructions
• Found guilty of a criminal offense
• Physical or mental incapacity

Due to business redundancy

• Layoffs
• Reorganization
• Closing operations in the region
• Cash crunch 

Notice period and severance pay

• There is no statutory requirement for a notice period during the probation period in Peru.
• Upon completing the probation period, the notice period varies from six to 30 days, contingent upon the grounds for dismissal.
• If an employee decides to resign, they must give the employer a minimum of 30 days' notice. 
• In cases of arbitrary dismissal, severance pay is calculated at 1.5 monthly salaries per full year of service, capped at a maximum of 12 monthly wages.
• Employees also receive special compensation (Compensación por Tiempo de Servicio) upon termination, regardless of the reason or cause. It equates to one monthly average salary per year of service.

Discrimination and Equal Opportunity

The Constitution of Peru upholds the right to equality before the law for all individuals and explicitly prohibits discrimination based on factors such as language, religion, sex, and national origin. 

Employers must ensure compliance to ensure a safe and healthy workplace and avoid legal consequences.

Prohibitions against workplace discrimination

• The Law Against Acts of Discrimination of 2000 specifically prohibits any requirements in job offers or access to educational training that may discriminate against individuals.
• The Productivity and Labor Competitiveness Law also prohibits discrimination based on sex, religion, language, and race.

Health and Safety Regulations

• The Health and Safety Act at Work lays down the duties of employers and employees to ensure a healthy and safe environment at the workplace.

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FAQs

Q1: What is the notice period in Peru?

A1: Under the labor laws of Peru, the notice period generally ranges from six to 30 days, depending on the reason for dismissal.

Q2: What is the probationary period in Peru?

A2: According to the Peru labor law, the probationary period generally lasts three months.

Q3: What is the maximum working hours in Peru?

A3: The employment laws in Peru mandate 48 work weeks and eight hours per day as the statutory working hours.

Q4: How much notice do I need to give my employer in Peru?

A4: When an employee resigns, they must give the employer a notice period of 30 days.