Hiring employees in Peru can be an attractive prospect for companies expanding into new markets, thanks to its strong trade agreements, competitive wages, and skilled workforce.

This help guide will provide you with the information you need to hire in Peru, from an overview of Peruvian labor laws to a 9-step process to hiring new workers. We’ll also explain the mandatory benefits that employees are entitled to and how Remote People can help companies doing business in Peru.

Why Expand Your Business to Peru

Strategic Advantages of the Peruvian Market

Peru’s economy is one of the fastest-growing in Latin America, with its average GDP expanding year on year and inflation rates remaining low.

The agriculture, fishing, and manufacturing sectors are particularly prominent in Peru, and the country has an abundance of natural resources that support its core industries. 

Importance of Being Aware of Peru's Labor Laws

Understanding Peru’s labor laws is crucial for companies looking to hire in this country.  

Peruvian labor laws are predominantly determined in the Labor Productivity and Competitiveness Law (Legislation Decree No. 728), which explains aspects of employment law such as contracts, wages, working hours, and overtime rates.

Some other key legislation that informs Peru’s labor laws includes the following acts:

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

Start hiring with a Peru EOR

Let us handle the complexities of hiring, compliance, and payroll in Peru while you focus on growing your team.

  • Hire employees in Peru with a Peru EOR
  • No local entity is needed
  • Pricing starts at USD 199 per employee
  • Remote People can also help you find the best talent in Peru
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Step 1: Define Your Hiring Needs

You should start the hiring process by clearly outlining the roles you need to fill within your company.

Think about how many employees you need to hire, and how each job role aligns with the future goals of your company. If you’re looking to ultimately build a local sales team, for example, ideally you should hire locally rather than from further afield.

You should also consider whether the roles you’re hiring are permanent positions or whether you have short-term needs in terms of employing new staff members.

Step 2: Familiarize Yourself with Compliance Requirements

Hiring in Peru comes with various compliance requirements as per their local labor laws. Employers must ensure that workers receive all mandatory benefits that they’re entitled to, including the right to a minimum wage, overtime compensation, and enrollment in a pension scheme.

Tax obligations and social security contributions are also important elements that companies must familiarize themselves with before hiring new workers.

Step 3: Choose Your Hiring Method

There are three main ways of hiring employees in Peru:

Establishing a Legal Entity

Setting up a legal entity in Peru gives companies full control of hiring and operations. However, it’s worth considering that there will be significant financial and administrative work involved in this process.

Companies must register with the Peruvian tax authorities (SUNAT), the Social Security System, and open local company bank accounts as part of establishing a legal entity in Peru.

Using an Employer of Record (EOR)

Using an Employer of Record can allow you to hire employees in another country without establishing a legal entity. The EOR would act as the legal employer for new workers, handling responsibilities around benefit compliance, payroll, and even HR.

This can be a good option for companies looking to test the market, and is often cheaper than establishing a legal entity.

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Hiring Independent Contractors

Companies looking to hire flexibly or for short-term/project-based work should consider hiring independent contractors.

However, it’s important to ensure that contractors are correctly classified to avoid any legal issues with misclassification.

Step 4: Develop a Recruitment Strategy

Establishing a clear recruitment strategy involves drafting your job adverts and knowing the best places to post them to achieve high numbers of applications.

When drafting your adverts, make sure they include detailed job descriptions with all relevant information/requirements, and that these adhere to up-to-date Peruvian antidiscrimination laws.

Consider the best local job boards to post your adverts, including online platforms and professional networks such as the following:

Step 5: Conduct Interviews and Assessments

When interviewing potential candidates, be mindful of local cultural norms to set a good first impression.

Personal rapport is important in a work setting, and face-to-face interviews are commonplace. You should also clearly communicate your expectations of new workers, ensuring that your applicants are a good fit for your business.

Step 6: Know the Legal Limitations of Background Checks

It’s normal to carry out background checks when hiring in Peru. However, these are only permitted when relevant to the role and must adhere to the latest data protection laws.

Applicants must provide consent before you issue background checks, and the collection of personal data around political beliefs, religious affiliation, or health history is discouraged unless strictly necessary.

Step 7: Draft Employment Contracts

Putting together your employment contracts must be done carefully to ensure they follow Peruvian labor laws. We’d recommend having your contracts reviewed by a legal expert to ensure full compliance and reduce the risk of legal issues.

Some elements to include within your employment contracts include:

Step 8: Register with Authorities and Set Up Payroll

Once your employment contracts are together and signed, you need to register with the local tax authorities and social security systems.

This will also involve setting up tax ID numbers and making sure your new workers are signed up to make regular social insurance contributions.

Payroll systems need to be set up, and pension funds need to be put into place along with any health insurance programs you’re running. 

Step 9: Onboard Your New Employees

A structured onboarding process for new employees can ensure your workers receive the best first impression of your company, and people are integrated into your workforce efficiently.

Make sure all recruits have access to the resources they need and receive training to enable them to complete their jobs to the best of their abilities. You should also take this time to explain relevant company policies and procedures to new workers.

Key Employment Laws and Regulations

The Peru Labor Code

Peru’s labor code is primarily governed by the Labor Productivity and Competitiveness Law (Legislation Decree No. 728). 

It outlines the legal framework for working relationships, including the rights and obligations of employers/employees, explaining key factors such as working hours, paid leave, and termination rules.

Compliance with these regulations is strictly enforced in Peru and should be followed to avoid any penalties/legal issues for your company.

Social Security Regulations

The Social Security system in Peru is managed by EsSalud, which administers social security funds and aims to provide health, economic, and social benefits to workers in Peru.

Employers must make contributions of 9% of monthly payroll, which is allocated to the health system, plus 13% of monthly payroll towards employee pensions.

Employees must choose between the national and private health systems and pay the following rates:

  • National Pension System: 13%
  • Private Pensions: Between 12.5% – 15%

Employment Standards and Employee Rights

Unions and Works Council

Labor unions are an important part of Peru’s labor sector, with employees having the right by law to join/form a union.

Work councils are not legally mandated in Peru; however, larger companies are often expected to encourage good communication between employees and managerial staff members to promote fair and safe working conditions.

Types of Employment Contracts

There are two key types of employment contracts in Peru:

Indefinite-term Contracts

The most common type of employment contract, which is used for permanent roles with no set end date.

Fixed-term Contracts

Conducting background checks, drafting legally compliant contracts, and smoothing out the hiring process is a task PEOs can handle. From onboarding recruitment to offboarding, PEOs handle everything while complying with Canadian employment laws.

Working Hours and Overtime

Standard Working Hours

Typical working hours in Peru are 48 hours per week or 8 hours per day.

Work carried out between 10 pm and 6 am is considered night work and must be paid at an additional 35% of an employee’s wages.

Overtime Regulations

If an employee works over 48 hours per week (or the set hours stipulated in their employment contract), these hours count as overtime.

Overtime must be paid at the rate of 125% of an employee’s normal wage for the first 2 hours worked, with extra hours being paid at the rate of 135%. If overtime hours are worked on a public holiday or rest day, they should be paid at a rate of 200% of their normal wages.

There are no legal limits on overtime in Peru.

Leave Entitlements

Annual Leave

Workers in Peru are permitted to take paid annual leave, which consists of 30 days of paid leave in total, once they have carried out 1 year of continuous service with their employer.

15 days of leave are compulsory; however, the remaining 15 days may be exchanged for cash.

Peru also holds at least 12 public holidays per year, which are considered separate from employees’ leave entitlement and are generally paid days off in most industries. 

Sick Leave

If employees are too unwell to work, they may be eligible for sick leave.

Sick leave consists of 11 days of paid leave, with the first 4 days being paid in full and the remaining 7 days being paid at the rate of half pay.

The Social Security System of Peru may step in to compensate employees if they are on sick leave on a long-term basis.

Maternity and Paternity Leave

Maternity leave in Peru consists of 98 days of paid leave.

49 days are generally taken before birth, with the remaining 49 days being taken postpartum. It may be extended by 30 days if illness or complications occur for the mother/baby.

Fathers are eligible for 10 days of paid paternity leave when their child is born, which may be extended to 20 days in the event of premature birth/twins.

Termination and Severance

Notice Periods

Notice periods in Peru vary depending on the reason for termination and the type of employment contract.

Employers are not required to give a set notice period when terminating a contract without just cause – this is where severance pay would come in.

For termination with cause, employers should provide written notice with a 6-day response window for employees to respond to the claims made.

If an employee resigns from a job position, they are typically required to give 30 days’ calendar notice.

Severance Pay

If an employee’s contract is terminated without a reason of employee misconduct, they may be paid severance pay.

This is calculated at 1.5 times a worker’s salary for each year of service, with a maximum severance payment of 12 months’ salary.

Mandatory Contributions

Social Security Contributions

Employers and employees must make contributions towards the social security system to be eligible for financial assistance in the event of illness/retirement. These rates are as follows:

Contribution TypeRate
Employers – Healthcare9%
Employers – Pensions13%
Employees – Pensions12.5% to 15% (varies by national or private pension choice)

Health Insurance and Pension

Employers must register their employees with EsSalud, which is the national public health insurance system, and contribute 9% of employees’ salaries towards health insurance.

Employees can choose between a public or private pension and make contributions accordingly.

The standard retirement age in Peru is 65 for both men and women.

Optional Benefits

Many Peruvian employers offer their workers supplementary benefits to attract talent and increase staff retention rates. Some common examples of optional benefits companies could offer include:

  • Food, transport, or housing allowances
  • Enhanced annual leave entitlement
  • Performance bonuses
  • Flexible working hours
  • Access to a private pension

How to Hire Employees in Peru — Our Take

Expanding your business into Peru comes with important regulatory and operational considerations, especially if you’re unfamiliar with the local landscape. Partnering with the right EOR or PEO can make that transition far smoother by guiding you through Peruvian labor laws, handling compliance, and serving as your primary support throughout the process.

Remote People provides that level of clarity and structure. Whether you need full employment support through our EOR services or broader operational assistance through our PEO solutions, we streamline onboarding, manage payroll in Peruvian soles, and help ensure every requirement is met accurately. With these essentials handled, you can focus on strengthening your strategy and establishing your presence in Peru.

If you’re exploring EOR or PEO options for your expansion, we’re here to help you move forward with confidence. Let’s make your growth in Peru both efficient and sustainable.