Peru PEO & Employer of Record Services
Global PEO Services (GPS) helps companies hire employees in Peru without establishing a legal entity. All human resources, benefits, payroll, and tax needs for the employees are managed by the Global PEO, while the new hires and headquarter teams focus on your business goals.
When hiring employees in Peru, establishing a subsidiary or branch office is not always the best route, as it’s often a lengthy and expensive process. Hiring via a Professional Employer Organization (PEO), or Employer of Record (EOR), is a faster and often more effective option – especially when starting up in a new country.
Global PEO Services hires the employees on your behalf, legally contracting them through our subsidiary in accordance with Peru labor laws. As a result, the burden of compliance is on us and the employees can begin work for your company in a matter of days. PEOs/EORs provide you with a streamlined option for hiring employees, testing markets, and responding to growing business needs in Peru. With Global PEO Services, you get control without taking on legal entity liabilities, contractor risks, or sacrificing on talent or speed to market.
Peru - Country Overview
Peru, a representative democratic republic in Western South America, is one of the fastest growing economies in the world and classified as “upper middle” income country by the World Bank. The Peruvian economy is diversified, with exports such as gold, copper, zinc, chemicals, textiles, machinery, services, and pharmaceuticals contributing significantly to its steady economic growth. A healthy mix of conducive business environment, structural reforms, and sound macroeconomic policies has created a stable foundation for low inflation and sustainable growth.
Semi-presidential Representative Democratic Republic
Arequipa, Callao, La Libertad, Lambayeque
Employment Contracts in Peru
Employees can enter into either a fixed term or an indefinite term employment contract. Fixed-term contracts, which must be in writing, cannot exceed five years and must be filed with the Ministry of Labor. Otherwise, they are treated as indefinite-term contracts. Employment contracts for foreign employees must be in Spanish and approved by the Ministry of Labor. Probationary periods generally last 3 months, after which employees have the right to protection against wrongful dismissal. The probationary period can be extended if the nature of work demands it or the employee requires additional training, but only when both parties agree.
Working Hours in Peru
The constitution limits regular work schedule to 8 hours per day and 48 per week and provides a compulsory 1 day rest per week. Typical work days don’t exceed 48 hours in a week. Shorter work hours can be established by agreement, law, or an employer’s unilateral decision. A weekly day of rest is mandated and an unpaid daily mealbreak of at least 45 minutes.
Employee Leave in Peru
Paid holidays in Peru are:
- Jan. 1: New Year’s Day
- Maundy Thursday (Thursday before Easter)
- Good Friday
- May 1: Labor Day
- June 29: Feast of Saints Peter and Paul
- July 28 – 29: Independence Day
- Aug. 30: Saint Rosa of Lima Day
- Oct. 8: Naval Battle of Angamos
- Nov. 1: All Saints’ Day
- Dec. 8: Immaculate Conception
- Dec. 25: Christmas Day
An annual decree is issued by the president of the Council of Ministers fixing the dates of annual holidays that can be incorporated into the civil service.
Women employees can take 49 days of maternity leave before the expected date of delivery and 49 days afterward. If the birth takes place after the expected date, leave during the intervening days are considered paid sick leave. Employees may choose to postpone prenatal leave and take the entire leave post-birth.
Women get maternity benefit equal to 100% of their regular wages over the 4-month period before the childbirth. The benefit is paid by the Social Security Insurance Program (EsSalud) and is subject to a ceiling.
Employees can take 4 days paid paternity leave when their companion or spouse gives birth. Employees are required to notify their employer a minimum of 15 days before the expected date of delivery to claim this benefit.
Employees who made contributions to social security for a minimum of 3 continuous months or 4 months out of the 6 months before the injury or illness began are entitled to paid sick leave. This benefit is paid at the rate of 100% of employees’ average wages during the last 4 months and for a maximum of 18 months after a waiting period of 20 days. Employees are entitled to full salary during the waiting period.
Employees who adopt a child aged 12 or less are entitled to 30 days of leave.
Employee Benefits in Peru
The social security system in Peru has 2 programs:
- Social Insurance System (SNP)
- Individual Account System (SPP)
Employees are required to enter either of them, and SNP members can switch to SPP, and can again switch back under special circumstances. Both employers and employees contribute to these programs. Pension reforms introduced in 2012 have resulted in extensive coverage, greater competition among insurance providers, and more investment choices.
Old-age Pensions, SNP
Employees who have made contributions for at least 20 years are entitled to a pension at the age of 65. Individuals who contribute for a minimum of 30 years can start receiving the pension at the age of 55 while women who have contributed for a minimum of 25 years can begin receiving a pension at the age of 50. During a mass layoff, employees aged 55 who have contributed for a minimum of 20 years, qualify for an early pension.
Old-age Pensions, SPP
Employees can start receiving a pension at the age of 65 or any other age if their account has assets that can replace a minimum of 50% of their average indexed earnings in the last 10 years. The pension amount is based on the contributions made to the individual account and the earnings accrued.
Permanent Disability Benefits (SNP)
The disability pension is paid at the rate of 50% of the average wages over the past 12 months including an additional 1.5% for each year of contribution after initial 3 years of contributions. The disability pension amount is decreased if total earnings including pension exceed the insured employee’s average earnings.
Permanent Disability Benefits (SPP)
The amount of disability pension is based on an employee’s average monthly wages and the assessed degree of disability. Disability insurance supplements the capital accrued in the individual account in case the balance is below the minimum amount required to finance the disability pension.
Survivors’ Benefits (SNP)
Survivors’ pension is provided if the employee was a pensioner or qualified to receive pension at the time of death. In case the deceased has a dependent widower or a widow aged more than 60, the survivors’ pension is paid at 50%. The pension ceases when a disabled widower is assessed capable of working or the surviving spouse remarries.
Survivors’ Benefits (SPP)
The pension for orphans, surviving spouse, and dependent parents is determined based on the deceased’s average monthly wages. The amount of pension is calculated on the basis of the deceased’s average monthly earnings. Life insurance supplements the capital accrued in the individual account in case the balance is below the minimum amount required to finance the survivor pension. Life insurance can also help tide over the costs associated with funeral grants.