Peru is a country in South America that is bordered by Ecuador, Colombia, Bolivia, Brazil, Chile, and the Pacific Ocean. The workforce of Peru is vast, sitting at 18.9 million people in 2024, and Peru has a GDP of 267.6 billion US dollars as of 2023.

The economy of Peru is highly diversified, relying on a range of industries such as agriculture, mining, services, and tourism. It’s popular among countries looking to expand into South America due to its stable economy, openness to trade, and free trade agreements with countries such as the USA and China, as well as the European Union and the Pacific Alliance.

Companies looking to hire in Peru to expand their business should familiarize themselves with local labor laws, ensuring compliance with employee benefit entitlement at all stages of the hiring process. This help guide will give you an overview of Peruvian labor laws, the mandatory employee benefits companies must offer, and some ways Remote People can help streamline hiring in Peru.

The Employment Law in Peru

Labor law in Peru is primarily explained in the Labor Productivity and Competitiveness Law (Legislation Decree No. 728, including aspects such as employment contracts, rules around terminations, and working conditions.

Other acts that contribute to Peruvian labor laws include:

  • Collective Labor Relations Act
  • Work Time and Overtime Act
  • Seniority Pay Severance Act
  • Maternity and Paternity Leave Act

When employing people in Peru, employers should liaise with legal experts to ensure detailed compliance. This is to confirm that employment practices comply with the latest legislation set by local Peruvian labor laws.

Mandatory Employee Benefits in Peru

There are a number of different mandatory employee benefits in Peru, including those detailed in the below sections.

Social Security Contributions

Peru has a Social Security System that collects contributions from employers and employees to fund specific departments and financial support in the event of health issues, retirement, disability, or unemployment.

Employers must make monthly contributions of 9% of the total amount paid to an employee, which goes towards the health system. They must also make monthly contributions at the rate of 13% towards an employee’s pension.

Employees must choose between affiliating themselves with either the National Health System or the Private Health System.

Paid Annual Leave

Workers in Peru are entitled to take 30 days of paid annual leave per year. This is provided once an employee has spent a minimum of 1 year working continuously for the same employer.

15 days of annual leave per year is compulsory, but the remaining 15 days may be exchanged for cash.

There are at least 12 public holidays each year, which are considered paid days off for employees and not part of their annual leave entitlement.

Working Hours

The typical working week in Peru is 48 hours long, with employees working around 8 hours per day.

Employees must receive a 45-minute meal break when working an 8-hour shift, and at least 1 rest day per week.

Night work is considered any hours worked between the times of 10 pm and 6 am, and should be compensated at an additional 35% of an employee’s regular wages.

Overtime Pay

Overtime hours in Peru are any hours worked above an employee’s standard contracted amount, typically 48 hours per week.

Overtime is voluntary and must be mutually agreed upon between the employer and the employee.

The first 2 hours of overtime worked should be paid at the rate of 125% of an employee’s normal wage, with any further hours being paid at the rate of 135%. 

Overtime worked on holidays or rest days must be paid at twice the amount of an employee’s normal wage.

There is no legal cap on overtime hours worked. Overtime hours must be recorded and logged properly to ensure overtime regulations are complied with.

Paid Public Holidays

There are several public holidays in Peru that are considered paid days off for workers and separate from annual leave entitlement. The Peru public holidays are as follows:

  • New Year’s Day (1 January)
  • Maundy Thursday (2 April) (movable date)
  • Good Friday (3 April) (movable date)
  • Labor Day / May Day (1 May)
  • Public Sector Holiday (2 May)
  • Battle of Arica (7 June)
  • St Peter and St Paul (29 June)
  • Peruvian Air Force Day (23 July)
  • Independence Day (28 July)
  • Independence Day (day 2) (29 July)
  • Battle of Junín (6 August)
  • Santa Rosa De Lima (30 August)
  • Battle of Angamos (8 October)
  • All Saints’ Day (1 November)
  • Feast of the Immaculate Conception (8 December)
  • Battle of Ayacucho (9 December)
  • Christmas Day (25 December)

Sick Leave

Workers in Peru are entitled to 11 days of sick leave per year. 

This is paid at the full rate of an employee’s pay for the first 4 days, with subsequent days being paid at half pay.

If employees are on sick leave on a long-term basis, this is usually compensated by the Social Security System for up to 245 days.

To be eligible for sick leave, employees must provide their employer with a medical certificate from a certified medical professional.

Maternity Leave

Mothers in Peru who are working are entitled to 98 days of maternity leave when they have a baby.

This is usually taken as 49 days before birth and 49 days after birth. Maternity leave is funded by the Social Security System and may be extended by an additional 30 days in the event of illness or complications.

Paternity Leave

Fathers in Peru are entitled to 10 days of paid paternity leave. This is granted after the child is born, and may be extended to 20 days of paid leave in the event of premature or multiple births.

There may also be an extension available up to 30 days for births associated with terminal congenital diseases, complications for the mother, or severe disability.

The employer is responsible for paying paternity leave payments, and employees must notify their employer of their intention to take paternity leave no later than 15 days before the due date of the birth.

Pensions

The pension system in Peru consists of three pillars.

These include the Social Pension, which can be claimed at age 25, the Public Funded Defined Benefit (private sector workers), and the Private Funded Defined Contribution (private sector workers).

There are also voluntary contribution pension plans available in the private system for workers to raise additional funds for retirement.

Severance Pay

Employees who are terminated without due cause or illegally may be eligible for severance pay.

Severance pay is usually calculated as 1.5 times an employee’s normal salary for each year of service, to a maximum of 12 months’ worth of salary.

Fractions of years worked should be paid proportionally.

Supplementary Employee Benefits in Peru

It’s strongly advised that employers consider offering their employees supplementary employee benefits to attract new employees to job vacancies and increase staff retention rates. A few supplementary employee benefits that we’d recommend include the following:

  • Performance bonuses
  • Transport, housing, or food expenses
  • Company car
  • Flexible working
  • Advanced training schemes
  • Private pension
  • Additional holiday time

Optimize Employee Benefits with Remote People

Remote People can help you hire top talent in Peru while ensuring full compliance with local labor laws and mandatory employee benefits.

Through our Employer of Record (EOR) services, we take on the legal responsibilities of hiring in Peru—eliminating the need for your company to set up a local entity and saving you from significant administrative and financial burdens.

EORs can handle a whole range of employment responsibilities, including employment contracts, payroll, benefits administration, and tax compliance. They are well-experienced in Peruvian labor laws and will ensure that your company is adhering to these laws at all times.

Contact Remote People today to learn how we can help with doing business in Peru.