Effortless Hiring in Peru

Employment Contracts

• Employment contracts in Peru must be in writing and should include essential terms such as:
• Job responsibilities.
• Compensation.
• Working hours.
• Other pertinent conditions.
• The Labour Proclamation No. 1156/2019 governs employment relationships, emphasizing the importance of clear terms to prevent disputes. While oral contracts are permissible, written agreements are highly recommended.

Probationary Period

• A probationary period is permissible, typically lasting up to three months. This period can be extended to six months for skilled workers or managerial roles. During this time, either party can terminate the employment with a minimum notice period of five working days.

Payroll Frequency

• Employees are generally paid on a monthly basis, with specific pay dates agreed upon in the employment contract. Employers are required to provide itemized pay statements detailing wages and any deductions.

Minimum Wage

• As of 2022, the national minimum wage is set at 1,025 Peruvian Soles (PEN) per month. For specific sectors, such as industrial parks, the minimum wage may be higher.

Overtime

• Standard working hours are typically 8 hours per day and 48 hours per week. Overtime is compensated at:
• 125% of the regular hourly rate for the first two hours.
• 135% for subsequent hours.

Employee Contributions

1. Pension Fund: Employees contribute between 12.5% and 13% of their gross salary to either the National Pension System or a Private Pension System.

Employer Contributions

1. Health Insurance: Employers contribute approximately 9% of the employee's gross salary to the National Health System (EsSalud).
2. Pension Fund: Employers also contribute to the pension scheme at similar rates as employees.

Income Tax

• Peru employs a progressive income tax system with rates ranging from 8% to 30% depending on income levels. Employers are responsible for withholding the appropriate amount from employees' salaries and remitting it to the Ethiopian Revenue and Customs Authority (ERCA).

Types of Leave in Peru

1. Annual Leave

• Employees are entitled to 30 calendar days of paid annual leave after completing one year of continuous service.

2. Public Holidays

• Peru observes 12 national public holidays each year. If an employee is required to work on a public holiday, they are entitled to additional compensation as specified in their employment contract or collective agreement.

3. Sick Leave

• Employees are entitled to a maximum of 365 days of paid sick leave per year. The employer compensates the first 20 days at 100% pay; thereafter, sick pay is covered by social security at a rate of 70% to 80% of the salary.

4. Maternity Leave

• Female employees are entitled to 98 days of maternity leave, divided into 30 days antenatal and 68 days postnatal. The social security system provides benefits during this period.

5. Paternity Leave

• Male employees are entitled to 10 consecutive days of paid paternity leave following the birth of their child.

Mandatory Bonuses

• Employees receive two statutory bonuses per year, each equivalent to one month's salary, paid in July (Independence Day) and December (Christmas).

Severance Pay (CTS)

• This benefit aims to protect employees upon termination and is equivalent to approximately 1.16 months' salary per year. Deposits are made biannually in May and November.

Profit Sharing

• Companies with more than 20 employees must distribute a percentage of their pre-tax profits among employees, varying by industry from 5% to 10%.

Family Allowance

• Employees with dependent children under 18 years old (or up to 24 if pursuing higher education) are entitled to a family allowance equivalent to 10% of the minimum wage.

Notice Period

• For employee resignations, a notice period of at least 30 calendar days is typically required. For employer-initiated terminations, notice periods range from 6 to 30 days depending on the reason for dismissal.

Severance Pay

• Employees dismissed without cause may be entitled to severance pay amounting up to 12 months' salary based on length of service.

Dismissal Procedures

• Employers must have valid grounds for termination, such as misconduct or economic necessity. The process must comply with the Labour Proclamation, including providing written notice and settling all dues.