Peru Labor Law Guide for Hiring Employees and Contractors
Peru, with a population of around 34 million people as of 2023, is one of the fastest-growing economies in Latin America.
The country’s GDP reached approximately $240 billion in 2023, driven by major sectors such as mining (copper, gold, and silver), agriculture (coffee, asparagus, and avocados), and manufacturing (textiles and chemicals). Additionally, tourism and fishing are significant contributors to the economy.
The official currency of Peru is the Peruvian Sol (PEN).
Minimum Wage
PEN 1,025 per month
Overtime Wage
125% of the regular hourly rate for the first 2 hours, 135% thereafter
Meal Breaks
45 minutes
Rest Breaks
15 minutes
Working hours
8 hours/day, 48 hours/week
Salary Payment Cycle
Monthly
Payroll Taxes
Essalud
Paid Vacation
30 days
Overtime Hours
After 8 hours per day or 48 hours per week
Night Shift Hours
135% of the regular hourly rate
Holidays
12 holidays
No Work Days
Sunday
In Peru, businesses must register locally to hire employees, which typically involves establishing a legal entity. The cost of setting up a business entity varies, but it generally ranges from $1,500 to $4,000. The incorporation process takes between 30 to 45 days.
Employment contracts in Peru must be in writing and should include essential details such as job description, salary, working hours, and termination conditions. The contract must also outline the terms of probation, if applicable. Peruvian labor law distinguishes between employees and independent contractors, with different obligations and benefits for each group. Employers must be cautious when drafting contracts to avoid misclassification, which could lead to legal penalties.
Peru enforces a national minimum wage, which as of 2024 is PEN 1,200 per month. This minimum wage applies to all sectors across the country, with no regional variations. There are no exceptions to the minimum wage law; all workers are entitled to this wage unless they are explicitly exempted by law (e.g., interns). Employers are required to pay holiday pay to employees for any public holidays.
The standard working hours in Peru are 8 hours per day, totaling 48 hours per week. Overtime is paid at 125% of the regular hourly rate for the first two hours and 135% for any additional hours. Night shift work, typically occurring between 10 PM and 6 AM, is compensated at 135% of the regular hourly rate.
The minimum age for employment is 14 years, and strict regulations are in place to prevent child labor, particularly in hazardous industries.
Employers in Peru are required to make several payroll deductions, including a 9% contribution to Essalud, the national health insurance program. Employers must also withhold income tax from employees’ salaries, which is progressive based on income levels.
The Peruvian income tax rates for 2024 are as follows:
Income Level (PEN) | Tax Rate |
0 – 28,350 | 8% |
28,351 – 106,150 | 14% |
106,151 – 424,600 | 17% |
424,601 – 850,800 | 20% |
850,801 and above | 30% |
Peruvian law mandates several types of leave for employees:
Paid Vacation: Employees are entitled to 30 days of paid vacation after completing one year of service.
Maternity Leave: 98 days, typically divided into 49 days before and 49 days after childbirth.
Paternity Leave: 10 consecutive days following the birth of a child.
Sick Leave: Paid sick leave is available with a medical certificate, with the first 20 days covered by the employer.
Adoption Leave: Similar to maternity leave, applicable for the adoption of a child under one year old.
Mandated Holidays: Peru observes 12 public holidays each year.
Holiday | Date |
New Year’s Day | January 1 |
Holy Thursday | April |
Good Friday | April |
Labor Day | May 1 |
Independence Day | July 28-29 |
Christmas Day | December 25 |
And others… | Various Dates |
Employers in Peru must provide a range of benefits, including social security (Essalud), which covers healthcare and pensions. Additionally, employees are entitled to a bonus equivalent to one month’s salary in July and December, known as “Gratificación.”
Employers are also required to pay compensation for time of service (CTS), which is a form of severance pay deposited semi-annually into a special account.
Peru does not follow At-Will Employment laws. Employers must have a valid reason for terminating an employee, such as misconduct, breach of contract, or redundancy.
The termination process typically requires a notice period of 30 days. Employees are entitled to severance pay, depending on the length of service and the reason for termination. In cases of unjust dismissal, employees can seek legal recourse, and the employer may be required to pay additional compensation or reinstate the employee.
Employers can legally terminate an employee under specific conditions, such as the completion of a fixed-term contract, mutual agreement, or severe misconduct. However, terminations must be carefully documented to avoid legal disputes.