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Home - Labor Regime in Peru

Labor Regime in Peru

Employers in Peru can hire workers under: (i) an open-ended contract or (ii) a fixed term contract. The latter will depend on the circumstances of the hiring and the nature of the position. Fixed-term contracts must be executed in writing and may only last for a period of up to five years in total, depending on what it is established for each of the nine (09) types of fixed-term contracts recognized by Peruvian Law. Also, part-time contracts may be entered into for jobs with work weeks of 20 hours or less.


  • Vacations: 30 calendar days a year.
  • Awards: 2 monthly salaries a year (Paid in July and December, respectively).
  • Compensation for the length of service: 1 monthly salary a year (Paid to a financial institution of the worker’s choice, 50% in the month of May and 50% in the month of November).
  • Profit Sharing: Between 5% and 10% of the company’s income before tax, according to the activity and if there are more than 20 workers.
  • Family Allowance: 10% of the minimum wage (which is set at S/. 850.00 as of today)
  • Severance for Arbitrary Dismissal: Protection against arbitrary dismissal is acquired after passing the qualification/trial period Depending on the type of contract is:
    • Open-ended Contracts: 1 ½ monthly salary per year of service and proportional by the months and days up to a maximum of 12 salaries.
    • Fixed-term contracts: 1 ½ monthly salary  per missing month of service until the end of the contract, up to a maximum of 12 salaries


  • Social Health Care (EsSalud): 9% of the value of the monthly salary.
  • Life Insurance, for workers with more than 4 years of service in the company. This insurance is contracted with private insurance companies.
  • Workers Comp (if the activity requires it, according to the current legislation), which is contracted with private insurance companies.


  • Pension Fund System (the equivalent of the Registered Retirement Saving Plan – RRSP of Canada) payments are made by the employee; however, the employer withholds and pays a said contribution, calculated on the monthly salary (approximately 13%). This amount is contributed to the National Pension Fund System or the Private Pension Fund System.
  • Income tax paid by the employee. The employer calculates the tax based on the projection of the worker’s annual work income and pays the tax on their account according to the progressive rate for income tax brackets, after deducting 7 Tax Units (UIT) from the projected annual income. Progressive rates range from 8% up to 5 UIT, 14% on the 5 UIT to 20 UIT bracket, 17% on the 20 UIT to 35 UIT bracket, 20% on the 35 UIT to 45 UIT bracket, and 30 % for the bracket exceeding 45 UIT.

As of the 2017 financial year, taxpayers may deduct, in addition to the 7 UITs referred to in the Income Tax Law, an amount equivalent to 3 UITs for expenses incurred in the payment of services provided by professionals and/or other concepts that have been established by law.

Lastly, employers are subject to the inspection of the supervisory body SUNAFIL- National Labor Inspection Superintendence, in regard to compliance with labour standards, social security, and occupational safety and health.

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