Workers’ Rights and Employment Regulations in Peru 2024

For entrepreneurs looking to establish a presence in Peru, understanding the key steps of company formation is essential to ensure a smooth and successful process. Additionally, the complexities of its legal and administrative frameworks requires careful planning and adherence to local regulations, that is why this guide will help you understand the necessary steps to establish your business in Peru, providing clarity and confidence to achieve your entrepreneurial goals. 

Overview of Employment Regulations in Peru

Peru has a comprehensive legal framework designed to protect workers' rights and regulate employment relationships. The primary legislation governing labor in Peru includes the Peruvian Constitution, the Labor Code, and various laws and decrees issued by the Ministry of Labor and Employment Promotion. Key areas covered include employment contracts, working hours, wages, social security, and occupational health and safety.

Employment Contracts

In Peru, employment contracts can be either fixed-term or indefinite. Fixed-term contracts are used for specific projects or temporary needs and must be justified under the conditions outlined in the Labor Code. Indefinite contracts, on the other hand, are the standard form of employment and offer greater job security. All employment contracts must be in writing and include essential details such as the nature of the job, salary, working hours, and duration (if applicable).

Working Hours and Overtime

The standard working week in Peru is 48 hours, typically distributed over six days with an eight-hour workday. However, variations can exist depending on the industry and specific job roles. Overtime is compensated at a rate of at least 25% above the regular hourly wage for the first two hours and 35% thereafter. Employers must ensure that overtime work is voluntary and within the legal limits to avoid penalties.

Minimum Wage and Benefits

As of 2024, the minimum wage in Peru is PEN 1,200 per month. Employers are also required to provide various mandatory benefits, including:

• Gratifications: Employees are entitled to two bonus payments per year, one in July and one in December, equivalent to one month's salary each.
• CTS (Compensation for Time of Service): This benefit is equivalent to approximately one month's salary per year and is paid into a designated account to provide financial support in case of unemployment.
• Vacations: Employees are entitled to 30 calendar days of paid vacation after completing one year of service.

Social Security and Healthcare

Peruvian labor law mandates that employers contribute to social security systems, which include health insurance (EsSalud) and pensions (either through the National Pension System or a private pension fund). Employers must contribute 9% of the employee’s monthly salary to EsSalud and a variable percentage to the pension system, ensuring employees have access to healthcare and retirement benefits.

Occupational Health and Safety

Peru has stringent occupational health and safety regulations to ensure a safe working environment. Employers are required to implement comprehensive health and safety programs, conduct regular risk assessments, and provide necessary training to employees. Failure to comply with these regulations can result in significant fines and legal consequences.

Termination and Severance Pay

Termination of employment in Peru must be justified by valid reasons as stipulated in the Labor Code, such as misconduct, redundancy, or incapacity. In the case of unjustified dismissal, employees are entitled to severance pay, which varies based on the length of service and the terms of the employment contract. Severance pay typically ranges from one to two months' salary for each year of service.