Employment Law in Peru – Lima’s estimated population is 9,751,71 putting the capital center stage for GDP growth. Peru has a population of approximately 32 million people and is the fourth largest country in South America, after Brazil, Colombia, and Argentina. If you are interested in hiring a workforce in Peru, continue reading to learn about the important employment laws. The population between the ages of 15 and 64 stands at 20 million and represents the number of people legally allowed to work in the country. Those between the ages of 15 and 18 must have parental permission and approval from the Ministry of Labour to work.
Since several free trade agreements have been signed in Peru, the national poverty rate has decreased from 58.7 percent to 21.8 percent. This is due to President Pedro Pablo Kuczynski’s focus on economic reforms and free-market policies to boost investment in the country. Peru has become an attractive emerging market for foreign investors and expats. To start a business or apply for a working visa in Peru, a profound understanding of the labor law is essential. The Peruvian government places great importance on protecting the rights of local employees, so it is crucial to know the restrictions for employing foreign employees.
Employment Laws in Peru: General Rules
Below are some essential regulations regarding employment laws in Peru:
– The minimum wage for 2017 is PEN850 (Peruvian Soles).
– The maximum working days allowed per week is 6 days, with either 8 hours of work per day or a maximum of 48 hours per week.
– Employees have the right to a minimum break of 45 minutes for lunch.
– Overtime surcharges must be agreed upon between the employee and employer. The first 2 hours cannot be less than 25% of the total remuneration, and for every extra hour, the surcharge cannot be less than 35% per hour.
– Employees have the right to a 24-hour rest time per week, usually on Sundays. If an employee works seven days a week, the employer must pay an extra 100% of the daily salary for the extra day worked.
– Night shifts officially begin at 10:00 p.m. and end at 6:00 a.m. Employees working during this time must receive a surcharge of 35%.
– Regular staff members have a trial period of three months, which can be extended for an additional three months. Trusted or qualified employees can be contracted on a trial basis for up to 6 months, and up to 12 months for management positions.
– Part-time employees usually work less than four hours a day, with a maximum of 24 hours per week on six days. If there are five working days per week, the working hours must be less than 20 hours per week.
– Employees can choose to join either the National Pension System (SNP) or the Private Pension System (SPP). The applicable rate is approximately 13% and will be paid by the employer, deducted from the employee’s salary, and paid directly to the pension administrator.
Laws in Favor of Employees
Peruvian Employment Laws also include laws that favor employees:
– Employees have the right to 30 calendar days of paid vacation per year, with the wage equivalent to their monthly salary. Employees of small and micro companies have the right to 15 calendar days of paid vacation per year.
– Employees receive two bonuses per year, one on Independence Day of Peru (July 1st) and the second on Christmas, with the bonus wage equivalent to their monthly salary.
– Employees and their family members are statutory affiliates to the public health service (ESSALUD), with the employer paying a contribution of 9% of the monthly wage to the public health system.
– Compensation for Time of Service (CTS) is a social benefit that protects employees after the termination of employment. Employers must deposit the CTS twice a year to a bank account elected by the employee, with 1/12 of the wage deposited each month.
– Employees who have one or more children under the age of 18 receive an additional monthly payment of 10% of the monthly minimum wage. This includes children above the age of 18 who are pursuing higher education until the age of 24.
– Companies with more than 20 employees are required to share their annual pre-tax profits with their employees. The percentage of profit sharing depends on the industry.
– Maternity leave is a total of 98 days, with 49 days for prenatal leave and 49 days for postnatal leave. This can be extended for another 30 calendar days in certain circumstances. After the official leave period, the lactation period begins, allowing the mother to be away from the workspace for 1 hour per day to breastfeed the child.
Reasons for Dismissal
In general, there must be a lawful reason to end an employment contract in Peru, which can be proven by the employer. Reasons for dismissal can include repeated attendance at work under the influence of alcohol or drugs, deliberate damage to employer or company property, acts of violence or serious breaches of discipline, failure to fulfill obligations under the employment contract, misconduct, and more.
Foreign Employees Laws in Peru
When hiring a foreign employee, several laws must be considered. The working contract for foreign employees has a maximum term of 3 years, which can be extended for a similar period. The labor contract must be approved
