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Workers’ Rights and Employment Regulations in Peru 2024

Written by Ongresso - Business Beyond Borders | July 31, 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.

Ongresso, Your Trusted Partner

Ongresso's team of seasoned corporate specialists possesses in-depth experience guiding foreign investors through the complexities of employment regulations in Peru. We offer a comprehensive suite of services, ensuring your business adheres to all local labor laws and operates smoothly:

  • Legal Support: Our experts navigate the legal landscape for you, ensuring full compliance with Peru's workers' rights and employment regulations.
  • Human Resources: We assist you in managing your workforce, from recruitment to compliance with labor laws.
  • Compliance Consulting: Stay up-to-date with the latest employment regulations and ensure your business operations are fully compliant.

Establishing a business in Peru involves understanding the intricate details of local employment laws. This includes:

  • Adhering to labor contracts and minimum wage regulations
  • Implementing mandatory employee benefits and social security contributions
  • Ensuring workplace safety and health compliance

Ongresso's team stays current on the latest regulations and can guide you through each step of the process.

The Benefit of Working with Ongresso

  • Experience You Can Trust: Ongresso has a proven track record of success in assisting international clients with navigating employment regulations in Peru.
  • Multilingual Team: Our team members are fluent in multiple languages, ensuring clear communication throughout the entire process.
  • Streamlined Approach: We handle all the complexities, allowing you to focus on your core business activities.
  • Local Expertise: Our deep understanding of the Peruvian market ensures efficient and compliant business operations.

Ready to take the next step?

Contact Ongresso today to discuss your specific needs and learn more about how we can help you build a successful and compliant business in Peru. We look forward to partnering with you and making your Peruvian experience a breeze!