Employer of Record in Peru

Expanding your business operations into Peru offers access to a dynamic economy and a growing talent pool, but it requires a clear understanding of local employment regulations. Successfully hiring employees in Peru involves navigating specific labor laws, social security contributions, and tax obligations, which can be complex for foreign companies. It is crucial to establish a compliant framework from the outset to avoid potential legal and financial challenges.

When looking to hire in Peru, companies generally have a few primary options for engaging local talent:

• Establishing a local legal entity: This traditional approach involves setting up a subsidiary or branch, which can be a time-consuming and costly process involving significant administrative overhead.
• Utilizing an Employer of Record (EOR): Partnering with a third-party service like Rivermate allows companies to hire employees in Peru without needing to establish their own local entity, with the EOR handling all legal employment responsibilities.
• Hiring independent contractors: This offers flexibility but requires careful attention to worker classification to avoid misclassification risks and ensure compliance with Peruvian civil and tax laws, as independent contractors do not fall under labor law protections.

How an EOR Works in Peru

An Employer of Record (EOR) acts as the legal employer for your workforce in Peru, taking on the full responsibility for employment compliance on your behalf. This arrangement allows your company to manage the day-to-day work and responsibilities of your employees while the EOR handles the intricate administrative and legal aspects of employment. Specifically, an EOR in Peru takes care of:

• Payroll processing and ensuring timely salary payments in Peruvian Sol.
• Tax withholding and filing, including income tax and social security contributions (EsSalud, ONP/AFP).
• Compliance with Peruvian labor laws regarding employment contracts, working hours, and termination procedures.
• Benefits administration, such as mandatory vacation, bonuses, and social security.
• HR support, including drafting compliant employment contracts and managing local onboarding.

Benefits of Using an EOR in Peru

For companies looking to hire in Peru without the significant investment and complexities of establishing a local entity, an EOR service provides numerous advantages:

• Speed to market: Onboard employees quickly, often within days, without waiting months for entity registration.
• Reduced compliance risk: Ensure full adherence to Peru's evolving labor laws, tax regulations, and social security obligations, mitigating potential penalties.
• Elimination of entity setup: Avoid the substantial costs, time, and administrative burden associated with creating and maintaining a legal presence.
• Access to talent: Secure top Peruvian talent regardless of your company's physical presence or legal standing in the country.
• Simplified HR administration: Outsource complex payroll, benefits, and HR tasks, freeing up internal resources to focus on strategic business growth.

Rivermate's transparent pricing model eliminates complexity with a single, competitive monthly fee per employee. Unlike traditional PEO providers, our pricing in Peru includes comprehensive HR support, benefits administration, compliance management, and access to our proprietary dashboard for real-time workforce analytics. No hidden costs, no setup fees—just straightforward pricing that scales with your business needs while ensuring full legal compliance in Peru.

Peru's tax system, overseen by SUNAT, imposes various obligations on employers, including social security contributions and income tax withholding. Employers must contribute 9% of employee gross salary to EsSalud, 13% for pension contributions (ONP or AFP), and potentially 0.75% to SENATI if in manufacturing. Although the FONAVI housing fund was dissolved, some legal interpretations suggest ongoing contributions. Employers are also responsible for withholding income tax based on progressive rates, with brackets up to 30% for income exceeding 45 UIT (S/ 26,250 in 2025).

Employers must file monthly declarations (Form 601) and an annual reconciliation, adhering to deadlines typically within the first two weeks of the following month. They are required to register as withholding agents and issue certificates for tax withheld. Employees benefit from deductions such as 7 UIT (S/ 36,050) and expenses like rent and health insurance, provided proper documentation is maintained. Foreign workers' tax obligations depend on residency status, with possible treaty benefits and specific rules for expatriate allowances and transfer pricing.

Peru's salary landscape varies by industry, role, and region, with Lima generally offering higher wages. Key salary ranges in PEN per month include:

The statutory minimum wage in 2025 is PEN 1,025, applicable to most private sector employees. Employers must comply with this baseline, but higher wages are common for skilled roles. Compensation packages often include mandatory bonuses: two annual bonuses of one month's salary each (July and December), paid vacations, family allowances, transportation, food allowances, and profit sharing for companies with over 20 employees. These benefits enhance total compensation and are critical for attracting talent in Peru's diverse labor market.

Peru's labor law mandates a minimum of 30 calendar days of paid vacation after one year of continuous employment, with vacation pay due before leave begins. Vacation can be split with mutual agreement, but at least 15 days must be consecutive, and employees may sell up to 15 days of their entitlement. Public holidays are paid days off, with double pay applicable if employees work on these days.

Employees are entitled to up to 20 days of paid sick leave annually through EsSalud, with medical certification required. Maternity leave totals 98 days (49 days pre- and post-natal), paid by EsSalud, with extensions possible for complications. Paternity leave is 10 days paid, extendable to 20 or 30 days under certain conditions. Additional leave types include bereavement, marriage, and voting leave, with some optional or employer-specific benefits.

Peru's labor laws mandate essential employee benefits, including a minimum monthly salary of PEN 1,025 (2025), 30 days of paid vacation after one year, and two statutory bonuses annually (each equivalent to one month's salary). Employers must also share profits (5-10%), contribute 9% of salaries to social security (EsSalud), deposit CTS (severance fund) twice yearly, and provide family allowances (10% of minimum wage) for employees with children under 18. Additionally, mandatory life insurance is available after four years of service.

Beyond legal requirements, many employers offer optional benefits such as private health insurance, dental/vision coverage, meal and transportation allowances, education assistance, and wellness programs to attract talent. Large companies tend to provide comprehensive packages, including private health and life insurance, while smaller firms mainly cover mandatory benefits. The benefit offerings vary by industry and company size, as summarized below:

Employers should tailor benefits to remain competitive, considering legal obligations and industry standards.

Employment agreements in Peru are essential for defining the legal relationship between employers and employees, ensuring clarity on rights, responsibilities, and obligations. They must comply with Peruvian labor law, which recognizes two main contract types: fixed-term and indefinite-term contracts. Proper drafting, including key clauses, probation periods, confidentiality, and non-compete terms, is crucial to maintain legal compliance and prevent disputes.

Fixed-term contracts are limited to a maximum of two years; beyond this, they automatically convert into indefinite contracts. Employers should carefully manage contract modifications and terminations to adhere to legal standards and avoid liabilities.

Peru is experiencing a significant shift towards remote and flexible work arrangements, driven by legal reforms and technological advancements. The legal framework, primarily Law No. 31572, mandates that employers provide necessary equipment, ensure safety, and respect employees' rights to disconnect. Remote work agreements must be formalized in writing, covering working hours, performance, and communication protocols, while complying with labor laws on wages, social security, and occupational safety.

Employers are adopting various flexible options such as flextime, compressed workweeks, telecommuting, job sharing, and part-time work. Successful implementation requires clear policies, open communication, manager training, access to technology, and performance metrics suited for remote settings. Data protection is critical, with employers needing to follow Law No. 29733 by implementing security measures, privacy policies, breach protocols, and employee training. Equipment provision and expense reimbursement policies should be documented, considering tax implications, with reliable internet, communication tools, cybersecurity, and technical support essential for effective remote work.

In Peru, employment termination laws prioritize employee protection, requiring employers to follow strict procedural steps to avoid legal risks. Notice periods vary based on contract type and length of service, with indefinite-term employees entitled to between 15 and 90 days' notice, or payment in lieu. Severance pay for indefinite-term contracts is calculated as 1/12 of the monthly salary per year of service, capped at 12 months, and is payable when employees are dismissed without just cause.

Termination must be for just cause (e.g., misconduct, incapacity) or without cause, with the latter requiring severance and adherence to procedural norms. Employers must provide written notice, allow employee defense, document the process, and settle all entitlements within 48 hours. Wrongful dismissal protections include judicial review, potential reinstatement, and additional damages, especially for pregnant employees and union members.

Failure to comply with these legal requirements can result in nullified dismissals, reinstatement orders, or penalties, emphasizing the importance of procedural accuracy and employee protections in Peruvian employment law.

Peru's economy is increasingly dependent on flexible work arrangements, with independent contractors and freelancers playing vital roles across various sectors. This model provides businesses with agility and access to specialized skills without long-term commitments, while offering individuals autonomy and diverse project opportunities. Understanding the legal framework is crucial for both companies and contractors to ensure compliance and avoid misclassification, which can lead to significant penalties.

Peruvian labor law distinguishes between employees and independent contractors based on factors like subordination, personal service, remuneration, integration, and exclusivity. Misclassifying an employee as a contractor can result in legal and financial repercussions. Independent contractor relationships are formalized through a Service Agreement, which should include clear terms on scope of work, remuneration, intellectual property rights, and tax obligations. Contractors are responsible for their own taxes and social security, with specific obligations such as registering with SUNAT and issuing electronic receipts.

Independent contractors are prevalent in sectors like technology, creative industries, consulting, and professional services. Key roles include software developers, graphic designers, business consultants, and translators. Companies must ensure these relationships are correctly classified and managed according to Peruvian law to mitigate risks. Here is a summary of common sectors and roles:

Peru requires foreign nationals to obtain appropriate visas and work permits before employment. Key visa types include Business, Worker, Designated Worker, Independent Professional, and Investor visas, each suited to different employment scenarios. Employers play a vital role in sponsoring and supporting the application process, which involves submitting documents such as a job offer, educational credentials, passport, background check, medical certificate, and proof of company registration.

The application process is managed by the Superintendencia Nacional de Migraciones, with processing times ranging from several weeks to months. Fees vary depending on the visa type. Once employed, foreign workers can qualify for permanent residency after at least two years of continuous residence and work. Family members may also apply for dependent visas, typically requiring proof of relationship.

Employers must ensure compliance with immigration laws by verifying visa validity and reporting employment changes, while employees must adhere to visa conditions and maintain valid documentation. Non-compliance can lead to penalties, fines, or deportation.