A Peru Employer of Record (EOR) plays a crucial role in simplifying the hiring process and ensuring compliance with labor laws. By partnering with an EOR, businesses can concentrate on their core operations while delegating HR tasks, payroll management, and statutory employment requirements. This collaboration offers a cost-effective solution for employers to hire and expand into new markets without the need to set up a legal entity, 

‍

Businesses mainly partner with an Peru Employer of Record (EOR) or Professional Employer Organization (PEO) to hire in foreign territory without a local entity and to stay compliant in the hiring country. 

This is because starting a new entity in Peru involves consulting with legal experts, accounting costs, bank account setup. Collectively, this costs you several thousand dollars and can set your hiring and expansion plans by several months. Partnering with an EOR can help you skip these hassles and start hiring immediately. 

Secondly, Peruvian labor laws have some unique aspects that even experienced employers may tend to miss. For example, in July (for Fiestas Patrias) and December (for Christmas), workers are entitled to an extra salary, known as "gratification." Another unique law is that companies operating with more than 20 employees in specific economic sectors (like mining or telecommunications) are required to distribute a portion of their annual pre-tax profits among their employees. The percentage varies by sector.

Partnering with an EOR with deep knowledge of the local business landscape, cultural nuances, and regulations, empowers businesses to achieve rapid growth and success in Peru's market.

‍

‍

The pricing for Peru Employer of Record (EOR) or Professional Employer Organization (PEO) services can vary depending on factors like the number of employees, scope of services, and project complexity. Generally, Peru EOR/PEO services are offered at a monthly fee per employee or as a percentage of their salary. Additional charges might apply for personalized solutions or specialized services tailored to specific business needs. When considering the overall cost and benefits of partnering with a Peru EOR/PEO, companies should carefully evaluate these factors to make an informed decision.

‍

‍

‍

Key Metrics For Foreign Employers 

‍

The table below depicts key indicators from the Global Talent Competitiveness Report for employers wishing to hire from Peru.

‍

‍

Source: The Global Talent Competitiveness Index 2023

‍

Through the Gloroots’ Recrew platform, you can discover amazing talent in Peru.

‍

Misclassifying employees in Peru can lead to legal and financial risks, including claims for unpaid wages and benefits. Partnering with a PEO/EOR ensures proper employee classification, compliance with labor laws, accurate payroll processing, and access to comprehensive benefits, mitigating potential liabilities and allowing businesses to focus on core operations.

The Unified Text of Legislative Decree No. 728, Labor Productivity and Competitiveness Law is the source for all employment laws in Peru. This law consolidates and establishes the general framework for most labor relations in the country.

‍

Partner with a Peru PEO or EOR to stay compliant with these hiring laws.

‍

Employment contract

‍

The employment contract, specifically, is governed by Legislative Decree N° 728 Labour Productivity and Competitiveness Law (LPCL), which in its Titles I and II establishes the rules covering hiring mechanisms for an indefinite term as a rule and for a fixed or determined term as an exception.

‍

Employment agreements for permanent employees can be written or oral. However, contracts for part-time and fixed-term employees must be in written form. Fixed-term contracts can extend up to five years and should include additional details, such as their intended duration and the reasons for their conclusion.

‍

Employment contract must contain the following details: 

‍

• Identification of both parties
• Commencement date (and employment duration for temporary contracts).
• Workplace.
• Job description, duties, and responsibilities.
• Basic salary and other compensation or benefits.
• Working hours.
• Total number of holidays.
• Notice periods for employment termination.
• Probation period.
• Reasons for choosing a fixed-term contract (if applicable).
• Health and safety obligations.
• Data protection obligations.

‍

It's important for employers to understand the intricacies of these programs before making a hire. This might sound overwhelming, but it doesn't have to be. A solution like Gloroots eliminates the barriers for you. With Gloroots' Peru Employer of Record offering, hiring and managing employees globally is a piece of cake.

‍

Get an overview of what you need to know when hiring in Peru. Contact us.

‍

Working Hour

‍

The standard working hours for full-time employment are 8 hours per day, amounting to a total of 48 hours per week.

‍

Overtime

‍

Any hours worked beyond the standard 48-hour week are considered overtime and are compensated at a rate specified in the employment contract or collective agreements. The initial two hours of overtime must be paid at a rate not lower than 25.00% of the employee's total remuneration. Subsequent overtime hours should receive a surcharge of no less than 35.00% per hour. Some exceptions may apply to certain job roles, including managers, supervisors, on-call workers, and non-supervised workers.

‍

Minimum Wage

‍

The mandated minimum wage in Peru stands at 1,025 PEN per month.

‍

Sick Pay

‍

In Peru, employees are granted 365 days of paid sick leave. During the first 20 days of sickness, the employer pays 100% of the employee's salary. For the subsequent 245 days, the employer initially covers 70-80% of the salary. Employers can reimburse this amount from the social security agency.

‍

Maternity leave 

‍

Female employees in Peru are entitled to 98 days of paid maternity leave, with 49 days granted before the child's birth and 49 days after delivery. In cases of multiple or complicated births, the leave can be extended by 30 days.

‍

Maternity leave is compensated by the National Health System (EsSalud) or the Private Health System (Entidades Promotoras de Salud or EPS). 

‍

To qualify for maternity benefits, the employee must have completed three months of service within the six months before taking the leave.

‍

In case of adoption, mothers in Peru receive 30 days of paid adoption leave. However, this leave can be availed only until the child is 12 years old.

‍

Annual leave 

‍

After completing one year of employment with the employer, employees in Peru are granted 30 calendar days of paid annual leave.

‍

INCOME TAX

Employee Income Tax

‍

‍

Employer Payroll Contributions

‍

‍

Employee Payroll Contributions

‍

Termination Process

‍

The termination process in Peru depends on the employment agreement, collective agreement, contract type, and reason for termination. Employees should receive a written notice of at least six days, allowing them to respond or demonstrate their capabilities within the company. The employer is required to provide written termination to both the employee and the trade union.

‍

In cases of dismissal without cause, employees are generally entitled to receive severance pay, which can be up to 12 months' worth of compensation.

‍

Severance Pay

‍

There is no mandated severance entitlement, but in cases of unfair dismissal (when the company lacks a valid legal reason to terminate employees), an indemnity is payable.

‍

For unfair dismissal on an indefinite employment contract, employees are entitled to receive a legal indemnity equivalent to 1.5 times their monthly remuneration for each year of service. If the employee is on a fixed-term contract, periods less than one year will be paid proportionally at 1.5 times their monthly remuneration for each month remaining until the end of the contract, if applicable. The indemnity in both cases cannot exceed 12 monthly salaries.

‍

Notice Periods

‍

Employers are required to provide notice of 6 to 30 days, depending on the reason for dismissal. Conversely, if an employee decides to resign, they must give the employer a minimum of 30 days' notice.

‍

Probation Periods

‍

In Peru, employment contracts specify probation periods, which typically last for three months. However, for skilled workers or employees in positions of trust, the probationary period can be extended to six months, and for managerial roles, it may last up to one year.

‍

When hiring globally, ensuring compliance comes with its own set of battles. Employers must ensure all hiring and onboarding activities adhere to employment laws, payroll procedures, DE&I compliance, GDPR and similar data protection, etc. If you think it is hard to set up local entities and start hiring, keeping up with a dynamic compliance landscape is far harder. 

‍

Gloroots helps you minimize all these efforts by providing a single window to manage all these tasks. Our in-house experts fully shield you from cross-border employment and payroll compliance risks. We do this by helping you with generating employment contracts, on-time payments, compliant benefits, while you focus only on screening talent. 

‍

Our promise is a stress-free global employment experience for both you and your employee.

‍

Contact our experts today to kickstart your global hiring campaign.

‍

Expanding your team in Peru requires navigating the complexities of local employment regulations and effectively managing compliance, payroll, tax, and benefits.

‍

With Gloroots' Peru Employer of Record (EoR) service, you can confidently delegate the intricacies of payroll, tax, benefits, and compliance to our experienced team. This enables you to focus on your core business operations, empowering your workforce and driving business growth. Our Peru EoR & PEO ensures strict adherence to all local laws and regulations, providing a seamless and efficient solution for successful team expansion in the country. With access to a diverse pool of exceptional talent and our market expertise, Gloroots' Recrew platform makes recruiting in Peru a seamless and rewarding experience, contributing to your company's success and development.

‍