Introduction to Payroll in Peru
If you’re working with a remote team in Peru, you need to carefully consider the local labor laws to ensure that your payments are timely, accurate, and compliant. Staying on top of local employment legislation across multiple countries can be a challenge.
With in-country expertise and support, Skuad, a trusted Peru payroll company, can keep track of:
- Employee compensation
- Benefits like healthcare
- Contributions and withholding
- Holiday and vacation leave
- Payroll tax in Peru
- Other Peru payroll requirements
If you are building a remote team in Peru, you could get help from Skuad to stay compliant with laws involving labor regulations, local tax codes, benefits, and other legislation.
Payroll Process in Peru
Payroll staff needs to keep accurate records of employee hours worked. They also need to be observant of changes in legislation and rules involving deductions to stay compliant. The payroll process in Peru includes three main phases: pre-payroll, payroll calculations, and post-payroll.
During the pre-payroll period, you'll need to focus on gathering documentation, confirming HR policies, and ensuring your business is ready to pay employees while staying compliant.
Setting up the organization
Initially, you need to set up your organization to be able to pay remote employees, set policies in place, such as leave policies, pay frequency, and attendance.
Your company should have a registered business number associated with your PAN and TAN, which will be needed to send out documents like tax forms and payslips.
Even if the locations are all in the same country, requirements can differ locally or regionally. Each workplace should have its own set of policies.
Make clear policies about leave. Employees are legally entitled to some categories of leave in Peru, including parental leave, sick leave, and paid holidays. Every employee in Peru is entitled to 30 paid days off per year for all employees who have worked at least a year at the same company in addition to public holidays. Peru has 11 public holidays for which employees must be paid and take off.
Biometric devices can help keep track of hours worked. You'll need to document timesheets, doctor’s notices for sick leave, and supervisor permission for requested time off.
Account for all statutory payroll components such as income tax deductions, contributions to social security and health insurance, benefits, and everything you need to pay or provide your employees by law.
When structuring compensation packages, make sure to be compliant with Peruvian labor laws, such as minimum wage. Flexible benefits plans can be offered based on a policy that you set. A payroll provider in Peru such as Skuad can ensure compliance.
The payroll frequency in Peru is monthly. Employers must pay a 13 and 14month salary in addition to the regular salary, paid once at the end of July and again by Christmas for a total of two bonus months’ salary.
Gather information like employees’ DOJ, designation, department, job titles, and how they’ll receive their pay.
Payroll Calculation Phase
The main component of the process is the Peru payroll calculation phase. Data from the pre-payroll phase is now input into a system to calculate each employee's paycheck. The result is the salary paid after considering deductions, withholding, and taxes. Partnering with a payroll provider in Peru with an automated system can make this process much easier.
Once payroll calculation is complete, you can send your bank advice to your corporate bank for salary disbursements. This is when employees will be paid.
After payments have been sent out, make sure to balance the accounts and keep track of total payroll funds spent for your records.
Payroll reporting and compliance
Deductions such as employee and employer contributions to social security must be withdrawn and remitted to the respective government agency. Due dates may vary depending on the agency. To ensure full compliance with laws and that your payroll is taken care of, get a Skuad demo today.
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Payroll Management in Peru
Payroll management means keeping accurate financial records for payroll, paying employees, generating payslips, and obeying labor laws. A payroll provider in Peru like Skuad can automate payroll to ensure timely payment to employees, as well as automatic deductions like social security and remittance to the relevant government agency. This way, your company will be fully compliant.
Payroll Compliance in Peru
Part of the process of managing payroll is making sure you are compliant with labor laws and benefits regulations such as taxes, minimum wage, leave entitlements, and other laws. If you partner with a payroll company in Peru like Skuad, all of the compliance is taken care of to make sure you are fully in line with both foreign and domestic labor laws.
Payroll Processing in Peru
If you’re looking to payroll outsource in Peru, contact Skuad to access our services and make payroll processing easier for you.
Payroll Components in Peru
If you partner with payroll outsourcing in Peru, you can be sure all components will be handled by one of the Peru payroll providers.
The minimum wage in Peru as of 2022 is 1025 PEN (Peruvian sol). As of May 2022, 1 Peruvian sol is $0.27 USD.
The working week in Peru is generally no more than 48 hours and eight hours per day.
For the first two hours worked over the regular working week, an employee must be paid a surcharge of no less than 25% in addition to their regular salary. For hours worked beyond that, a surcharge of no less than 35% must be paid.
Payroll Taxes in Peru
Taxes are a big part of payroll costs in Peru. Some taxes are deducted from employee pay, such as income tax, while others are paid by both the employee and the company, such as social security.
The Peru corporate tax rate is 29.5%.
For employees, the income tax rate in Peru is a progressive rate based on brackets of income.
1 tax unit is equal to 4600 PEN.
- 5 to 20 tax units: 14%
- 20 to 35: 17%
- 35 to 45: 20%
- Over 45: 30%
Health and Social Security
Employers must contribute to health payments equal to 9% of the employee’s salary. Contributions from employers and employees must be paid into a pension fund of 13% each. Employees can choose between the public pension fund and the private pension fund.
Employees in Peru are entitled to 20 days of paid sick leave per year, paid by the employer. The employee is entitled to Temporary Disability Insurance after the 21 day of sick leave for a maximum of 11 months and 10 consecutive days as long as they do no paid work.
Maternity leave, paid by social security, is 49 days of paid prenatal leave and 49 days of paid postnatal leave. For multiple births, leave is extended to an additional 30 days. If the child is born with a disability, the postnatal leave can be extended an additional 30 days.
After the postnatal period, employees have the right to one paid hour of breastfeeding time per day.
Employees are entitled to paternity leave:
- 10 consecutive paid days off must be given to fathers of a child born naturally or cesarean birth.
- 20 consecutive paid days off must be given to fathers of a prematurely born baby or multiple births.
- 30 consecutive paid days off must be given to fathers of a child born with a congenital illness or severe disability.
- 30 consecutive paid days off must be given to fathers if the mother suffers serious complications from the delivery.
There are 11 national holidays in a year in Peru for which employees must be given paid time off, in addition to 30 paid days off annual leave:
- January 1: New Year's Day
- Thursday before Easter: Maundy Thursday
- Friday before Easter: Good Friday
- May 1: Worker’s Day
- June 29: Saint Pedro and Saint Pablo’s Day
- July 28 and 29: Fiestas Patrias
- August 30: Santa Rosa de Lima
- October 8: Angamos Fight
- November 1: All Saints Day
- December 8: Imaculada Concepción
- December 25: Christmas Day
If an employee works on a non-working holiday without an extra day of rest to compensate for it, that employee must be paid the regular rate plus a 100% surcharge.
A written notice of six days must be given to terminated employees and the trade union. The employee can respond to attempt to prove their capacity to continue the relationship. For resigning employees, a notice of 30 days should be given to the employer.
In Peru, severance pay is paid to employees dismissed without cause. This payment could be up to 12 months’ salary.
Payroll Company in Peru
Using a payroll company in Peru can help you with all of these payroll components.
Begin Payroll Services in Peru
Paying independent contractors and employees in Peru can be easy with the right management system. If you are ready to hire someone and pay them with one-click payroll services in Peru, stay compliant, and save time and money, contact Skuad and ask for a demo today.