Employer of Record in Peru: how to hire compliantly without an entity.
Employ full-time employees in Peru without setting up an entity. Locally compliant contracts, monthly payroll, statutory benefits, taxes. Below: what the law actually requires, in plain English.
- Country
- Peru
- Local name
- Perú
- ISO code
- PE
- Region
- South America
- Phone code
- +51
- Employ Latam coverage
- Full EOR + contractor payments
Last updated July 2026
Overview
Overview: hiring in Peru
Peru has a structured labor market built around Legislative Decree 728, the Productivity and Competitiveness Law. The rules are clear and consistently applied. If you follow them, hiring here is straightforward.
Indefinite-term contracts are the default. Fixed-term contracts are allowed, but only for specific justified reasons (new activity, project scope, restructuring) and must be registered with the Ministry of Labor within 15 days of signing. Maximum duration for a fixed-term contract is five years.
The minimum wage is PEN 1,200 per month as of 2024. On top of base salary, employers must account for two annual gratifications (paid in July and December, one month's salary each), plus CTS deposits, which function as a mandatory severance fund. Think of CTS like Brazil's FGTS: the employer deposits roughly 8.33% of salary twice a year into an individual account the worker can access on termination or retirement.
Employees are entitled to 30 calendar days of paid vacation after one year of service. Maternity leave runs 98 days; paternity leave is 10 days. Public holidays total around 12 days per year.
Termination of an indefinite contract requires just cause. Without it, severance is 1.5 months' pay per year worked, plus any outstanding CTS balance.
Country at a glance
| Currency | Peruvian sol (PEN) |
| Working week | Monday to Friday |
| Standard workday | 8 hours (48-hour weekly maximum) |
| Probation period | Up to 3 months (standard); up to 6 months for trusted roles; up to 1 year for senior management |
| Notice period | No statutory minimum; just-cause process or payment in lieu applies |
| Gratifications | Two per year: July and December, one month's salary each |
| Payroll cycle | Monthly |
Foreign nationals need a sponsored work visa through Peruvian immigration (Migraciones). Processing typically takes one to three months and requires a signed contract, police clearance, and a health certificate. There are no EOR-specific exemptions to this process.
With an EOR, you skip the entity setup entirely. Employ Latam issues a locally compliant employment contract, runs payroll in soles, handles statutory contributions (including CTS and gratifications), and can have your hire onboarded in as little as 72 hours. Pricing starts from $349 per employee per month.
Employment contracts and worker types
Peruvian labor law defaults to the indefinite-term contract. Fixed-term arrangements exist but are exceptions, not the norm. Each type carries distinct obligations, so picking the right one from day one matters.
Contract types at a glance
| Contract type | Typical use | Max duration | Probation allowed |
|---|---|---|---|
| Indefinite-term | Ongoing roles with no fixed end date | No limit | 3 months (6 months for qualified roles; 1 year for managerial) |
| Fixed-term | Specific project, new activity, or business restructuring | 5 years total | 3 months |
| Incidental (casual) | Occasional or non-regular work | 6 months per calendar year | Not standard |
| Seasonal | Work tied to a recurring season or cycle | Duration of season | Not standard |
| Part-time | Fewer than 4 hours per day | Indefinite or fixed | 3 months |
Fixed-term contracts must be in writing, justified under one of the categories permitted by Legislative Decree 728, and registered with the Ministry of Labor within 15 days of signing. Miss that window and the contract may be treated as indefinite by default.
What each contract covers
All written contracts must specify:
- Role and responsibilities
- Monthly salary in Peruvian soles
- Work schedule and location
- Duration (if fixed-term)
- Termination conditions
Verbal contracts are technically valid for indefinite roles, but written contracts in Spanish are standard practice and the only defensible option for foreign employers.
Indefinite vs. fixed-term: the practical difference
Indefinite contracts require just cause to terminate. Without it, you owe severance of 1.5 months' pay per year worked, plus any outstanding CTS (the employer-funded severance reserve, deposited at roughly 8.33% of salary twice a year). Fixed-term contracts end automatically at the agreed date with no severance owed. End one early without cause, though, and you pay the remaining salary for the contract period plus penalties.
Probation periods apply to both types. During probation, the employer can terminate without cause and without severance.
Worker classification risk
Misclassifying an employee as an independent contractor is a real exposure in Peru. If the work is continuous, directed by the company, and performed on company premises or equipment, Peruvian labor authorities will likely treat the relationship as employment. That triggers back-payment of social contributions, CTS deposits, gratifications, and vacation accrual.
When you hire through Employ Latam, the worker gets a locally compliant employment contract from day one. Statutory contributions are handled, payroll runs in Peruvian soles, and onboarding goes live in 72 hours. You focus on the work.
Pricing starts from $349 per employee per month, varying by country and team size.
Payroll, taxes, and the 13th-month salary
Peru runs monthly payroll in Peruvian soles (PEN). The minimum wage is PEN 1,025/month as of 2025. On top of base salary, two mandatory bonus payments and a severance fund make the total employer cost meaningfully higher than the headline salary figure.
Gratifications: Peru's version of the 13th and 14th month
Peru does not use the term "aguinaldo," but the effect is similar. Employers must pay two gratifications per year, each equal to one full month's gross salary:
- July gratification: paid by 15 July (for the national holidays period)
- December gratification: paid by 15 December (for Christmas)
These are not discretionary bonuses. They are statutory obligations under Peruvian labor law, and they apply from the first year of employment on a pro-rated basis.
CTS: the severance fund
The Compensación por Tiempo de Servicios (CTS) works similarly to Brazil's FGTS. Employers deposit roughly 8.33% of monthly gross salary into a dedicated bank account in the employee's name, twice a year (May and November). This totals approximately one month's salary annually. The employee can access these funds upon termination, resignation after one year, or retirement. It is not a bonus; it is a mandatory employer-funded reserve.
Employer and employee contribution rates
| Contribution | Employer rate | Employee rate |
|---|---|---|
| EsSalud (health insurance) | 9% | 0% |
| ONP pension (public system) | 0% | 13% |
| AFP pension (private system, alternative to ONP) | 0% | ~12.5% (varies by fund) |
| CTS (severance fund) | ~8.33% (deposited biannually) | 0% |
| Occupational risk insurance (SCTR) | 0.5% to 2% (sector-dependent) | 0% |
| Income tax withholding | 0% | Progressive, up to 30% |
Employees choose between ONP (public) and AFP (private pension fund). The employer withholds and remits whichever applies. Income tax is withheld at source on a progressive scale; salaries above roughly PEN 60,000 per year reach the higher brackets.
What this means for total employer cost
Adding EsSalud (9%), CTS (~8.33%), two gratifications (~16.67% annualized), and SCTR (~1%), the employer's true cost runs roughly 35% above gross salary before any supplementary benefits. Factor this into headcount budgets from the start.
Employ Latam handles payroll calculation, statutory deposits, and contribution remittances each cycle. Onboarding goes live in 72 hours. Pricing starts from $349 per employee per month.
Mandatory benefits, vacation, and parental leave
Peru's labor law is employee-friendly. Mandatory benefits go well beyond base salary, and the cost of getting them wrong adds up fast. Here is what every employer needs to account for before making an offer.
Statutory leave entitlements
| Leave type | Entitlement | Paid by |
|---|---|---|
| Annual leave | 30 calendar days after 12 months of service | Employer |
| Sick leave | First 20 days paid by employer; days 21 to 60 covered at ~60% via EsSalud | Employer, then EsSalud |
| Maternity leave | 98 days total (49 pre-natal, 49 post-natal; extendable in some cases) | EsSalud |
| Paternity leave | 10 calendar days | Employer |
| Public holidays | 12 days per year | Employer |
Gratifications (the Peruvian bonus cycle)
Peru does not use a single 13th-month payment. Instead, employers pay two gratifications per year, each equal to one full month's salary:
- July (Fiestas Patrias, paid by the 15th)
- December (Christmas, paid by the 15th)
These are statutory, not discretionary. Budget for them from day one.
CTS: the severance reserve
CTS (Compensación por Tiempo de Servicios) is Peru's mandatory severance fund, similar in purpose to Brazil's FGTS. The employer deposits roughly 8.33% of monthly salary twice a year (May and November), totaling approximately one month's salary annually. The money sits in a bank account in the employee's name and becomes fully accessible on termination, resignation after one year, or retirement.
Missing CTS deposits triggers penalties and interest. An EOR handles the schedule and deposits automatically.
Health and pension contributions
Employees contribute to either the public pension system (ONP) or a private fund (AFP), plus health insurance through EsSalud. Employer contributions cover health insurance at 9% of salary. The combined statutory burden on the employer side, including CTS and gratifications, typically lands between 40% and 50% above base salary depending on the pension scheme and any occupational risk insurance required.
Minimum wage
The national minimum wage is PEN 1,200 per month as of 2024. Any offer must clear this floor before benefits are layered on.
What Employ Latam handles
When you hire through Employ Latam, we issue a locally compliant employment contract, run payroll in Peruvian soles, and manage all statutory contributions including CTS deposits, gratification payments, and EsSalud. Onboarding is live in 72 hours. Pricing starts from $349 per employee per month.
Severance, termination, and notice periods
Peru's termination rules are strict. Indefinite contracts (the default) require just cause to end employment without triggering severance. "At will" termination does not exist here.
How termination works
For indefinite-term employees, the employer must document a valid cause: misconduct, repeated poor performance after written warnings, or a legally recognized operational reason. Without that cause, the employee is owed severance calculated at 1.5 months' salary per year worked, pro-rated for partial years.
Fixed-term contracts end automatically at the agreed date. If you end one early without cause, you owe the remaining salary for the contract period plus applicable penalties.
Employees can resign at any time without penalty.
The CTS fund
Peru requires employers to deposit roughly 8.33% of monthly salary into a CTS (Compensación por Tiempo de Servicios) account twice a year, in May and November. This accumulates to approximately one month's salary annually. Think of it as a mandatory severance reserve, similar in purpose to Brazil's FGTS. On termination without cause, the employee accesses the full CTS balance. If deposits are short, the employer owes the gap plus 50% of any outstanding amount.
Severance and notice reference table
| Tenure | Notice period | Severance owed (termination without cause) |
|---|---|---|
| Under 1 year | No statutory minimum; just cause process applies | 1.5 months' salary per year worked, pro-rated |
| 1 to 3 years | No statutory minimum notice period | 1.5 months' salary per year worked, pro-rated |
| 3 to 5 years | No statutory minimum notice period | 1.5 months' salary per year worked, pro-rated |
| 5+ years | No statutory minimum notice period | 1.5 months' salary per year worked, pro-rated |
Peru sets no fixed statutory notice period under Legislative Decree 728. In practice, contracts often include a notice clause (commonly 30 days), and employers may pay in lieu of notice. Always specify this in the employment contract.
What Employ Latam handles
When you hire through us, the locally compliant employment contract includes termination clauses that match Peruvian law. We track CTS deposit schedules, calculate severance accurately on exit, and process final payroll in Peruvian soles. You do not need to monitor Ministry of Labor deadlines yourself.
Employ Latam EOR service starts from $349 per employee per month.
Recent regulatory changes
Peru's labor framework has been stable over the past two years. Legislative Decree 728, the Productivity and Labor Competitiveness Law, remains the backbone of employment regulation. No sweeping reforms have passed, but several targeted updates affect payroll costs, remote work obligations, and minimum wage floors. Employers hiring now should account for these specifics rather than relying on older guides.
Key changes: May 2024 to May 2026
| Date | Change | Impact on employers |
|---|---|---|
| May 2024 | Minimum wage raised to PEN 1,200/month | Sets the floor for all payroll calculations, including CTS and gratification deposits |
| August 2024 | Ministry of Labor tightened registration deadlines for fixed-term contracts | Contracts must be registered within 15 days of signing; late registration risks nullification of the fixed-term status |
| October 2024 | Remote work regulations clarified under Law 31572 | Employers must document equipment provision, connectivity costs, and right-to-disconnect terms in writing for any remote arrangement |
| March 2025 | EsSalud contribution rate confirmed at 9% of gross salary | No change to rate, but enforcement audits increased; late deposits now attract faster penalty notices |
| September 2025 | Micro and small enterprise (MYPE) regime thresholds reviewed | Annual revenue caps adjusted; companies near the boundary should verify whether reduced-benefit rules still apply to their headcount |
| January 2026 | Gig economy classification guidance issued by SUNAFIL | Platform workers performing exclusive, subordinate work may now be reclassified as employees; affects companies using contractor arrangements for ongoing roles |
A few practical points worth noting:
- The PEN 1,200 minimum wage feeds directly into gratification calculations (paid in July and December) and CTS deposits (made each May and November). A wage floor increase raises all three costs at once.
- The remote work documentation requirement is not optional. Audits by SUNAFIL (the labor inspectorate) have increased, and missing written agreements on equipment and connectivity is a common finding.
- The MYPE regime gives smaller businesses reduced severance and probation terms. If your Peruvian entity or EOR arrangement sits near the revenue threshold, confirm your classification before each payroll year.
- The gig reclassification guidance is the most significant development for companies using independent contractors for regular, directed work. If the relationship looks like employment, SUNAFIL is now more likely to treat it as one.
No changes to the core severance formula (1.5 months per year worked), pension contribution rates, or the standard 30-day vacation entitlement have been enacted in this period.
Frequently asked questions
- Do I need a local legal entity to hire someone in Peru?
- No. An employer of record lets you hire in Peru without registering a company there. Employ Latam acts as the legal employer on record, handles the employment contract, payroll, and statutory contributions, and keeps you compliant with Peruvian labor law. You manage the work; we handle the rest.
- What is the most common employment contract in Peru?
- The indefinite-term contract is the default under Peruvian law and the most widely used arrangement for ongoing roles. Fixed-term contracts are permitted but must meet specific legal criteria and be registered with the Ministry of Labor. If a fixed-term contract does not meet those requirements, authorities can reclassify it as indefinite, which changes your termination and severance obligations significantly.
- What is the total employer cost on top of gross salary in Peru?
- Expect roughly 35% above gross salary when you add EsSalud (9%), the CTS severance fund deposit (~8.33% annualized), and the two mandatory gratifications (~16.67% annualized). Occupational risk insurance adds another 0.5% to 2% depending on the industry. These figures apply to standard indefinite-term employees; micro and small enterprise registrations may carry different rates under specific government programs.
- How many vacation days are employees in Peru entitled to?
- Employees in Peru are entitled to 30 calendar days of paid vacation after completing 12 months of continuous service with the same employer. This is a statutory minimum and applies regardless of contract type. Unused leave can be carried over or compensated in cash under specific conditions, but it cannot simply be forfeited.
- How much severance is owed for terminating an employee without cause in Peru?
- The statutory amount is 1.5 months' salary for each full year worked, with partial years pro-rated. On top of that, the employee receives their full CTS balance, and if employer deposits were incomplete, an additional 50% surcharge on the shortfall applies. There is no statutory cap on total severance, so costs rise significantly for long-tenured employees.
- What is the most important recent labor law change for employers hiring in Peru right now?
- The January 2026 SUNAFIL guidance on gig worker classification is the change with the broadest immediate risk. If you use contractors for ongoing, supervised work, those arrangements may now be treated as employment relationships, triggering back-payment of social contributions, CTS deposits, and gratifications. Review any contractor engagements before they become a compliance liability.
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