Labor Law Compliance Guide for Peru

Peru, with a population of around 34 million people, is one of the fastest-growing economies in Latin America. GDP growth reached 3.4% in 2025, with projections of 2.5-2.7% for 2026 (World Bank, OECD, IMF).

Category	Details
Minimum Wage	PEN 1,130 per month (effective January 1, 2025)
Overtime Wage	125% of the regular hourly rate for the first 2 hours, 135% thereafter
Meal Breaks	45 minutes
Rest Breaks	15 minutes
Working hours	8 hours/day, 48 hours/week
Salary Payment Cycle	Monthly
Payroll Taxes	EsSalud (9%), CTS, Gratificaciones (13th and 14th month salary)
Paid Vacation	30 days
Overtime Hours	After 8 hours per day or 48 hours per week
Night Shift Hours	135% of the regular hourly rate (10 PM to 6 AM)
Holidays	16 national holidays
No Work Days	Sunday
Minimum Wage	Peru enforces a national minimum wage of PEN 1,130 per month (effective January 2025). This minimum wage applies uniformly across all sectors and regions. There are no exceptions to the minimum wage law; all workers are entitled to this wage unless they are explicitly exempted by law (e.g., interns). Employers are required to pay holiday pay to employees for any public holidays.

The country's economy is driven by major sectors such as mining (copper, gold, and silver), agriculture (coffee, asparagus, and avocados), and manufacturing (textiles and chemicals). Additionally, tourism and fishing are significant contributors. Inflation remains within the central bank's 1-3% target range.

The official currency of Peru is the Peruvian Sol (PEN).

Hiring Laws

In Peru, businesses must register locally to hire employees, which typically involves establishing a legal entity. The cost of setting up a business entity varies, but it generally ranges from $1,500 to $4,000. The incorporation process takes between 30 to 45 days. Employment contracts in Peru must be in writing and should include essential details such as job description, salary, working hours, and termination conditions. The contract must also outline the terms of probation, if applicable. Peruvian labor law distinguishes between employees and independent contractors, with different obligations and benefits for each group. Employers must be cautious when drafting contracts to avoid misclassification, which could lead to legal penalties.

Working Hours

The standard working hours in Peru are 8 hours per day, totaling 48 hours per week. Overtime is paid at 125% of the regular hourly rate for the first two hours and 135% for any additional hours. Night shift work, typically occurring between 10 PM and 6 AM, is compensated at 135% of the regular hourly rate.

The minimum age for employment is 14 years, and strict regulations are in place to prevent child labor, particularly in hazardous industries.

Payroll and Taxes

Employers in Peru are required to make several payroll deductions and contributions:

• EsSalud (health insurance): 9% of monthly remuneration, paid by the employer
• ONP (National Pension System): 13% of monthly salary, paid by the employee (if employee chooses public pension)
• AFP (Private Pension System): ~12-13% of salary, paid by the employee (if employee chooses private pension; exact rate varies by AFP provider)
• CTS (severance fund): ~9.72% of annual salary, deposited in May and November
• Gratificaciones (bonuses): Two extra monthly salaries per year (July and December), effectively a 13th and 14th month salary
• Extraordinary bonus: 9% of each gratificacion paid to the employee

Employers must also withhold income tax from employees' salaries, which is progressive based on income levels.

The first 7 UIT (PEN 38,500 in 2026, based on UIT of PEN 5,500) of annual income is tax-exempt. The Peruvian income tax rates for 2026 on taxable income above the exemption are:

Income Bracket	PEN Range (2026)	Tax Rate
Up to 5 UIT	0 – 27,500	8%
5 to 20 UIT	27,501 – 110,000	14%
20 to 35 UIT	110,001 – 192,500	17%
35 to 45 UIT	192,501 – 247,500	20%
Over 45 UIT	247,501+	30%

Non-residents are subject to a flat 30% withholding on gross Peruvian-source income with no exemptions.

Statutory Leave Policies

Peruvian law mandates several types of leave for employees:

• Paid Vacation: Employees are entitled to 30 days of paid vacation after completing one year of service.

• Maternity Leave: 98 days, typically divided into 49 days before and 49 days after childbirth.

• Paternity Leave: 10 consecutive days following the birth of a child.

• Sick Leave: Paid sick leave is available with a medical certificate, with the first 20 days covered by the employer.

• Adoption Leave: Similar to maternity leave, applicable for the adoption of a child under one year old.

• Mandated Holidays: Peru observes 16 national public holidays each year.

Holiday	Date (2026)
New Year’s Day (Ano Nuevo)	January 1
Holy Thursday (Jueves Santo)	April 2
Good Friday (Viernes Santo)	April 3
Labour Day (Dia del Trabajo)	May 1
Battle of Arica / Flag Day	June 7
Saint Peter and Saint Paul	June 29
Peru Air Force Day	July 23
Independence Day (Fiestas Patrias)	July 28
Independence Day (Fiestas Patrias)	July 29
Battle of Junin	August 6
Santa Rosa de Lima	August 30
Battle of Angamos	October 8
All Saints’ Day	November 1
Immaculate Conception	December 8
Battle of Ayacucho	December 9
Christmas Day	December 25

Employee Benefits

Employers in Peru must provide a range of benefits, including social security (EsSalud at 9% of salary), which covers healthcare. For pensions, employees choose between the public system (ONP at 13%) or a private AFP fund (~12-13%). Additionally, employees are entitled to two bonus payments equivalent to one month's salary each, paid in July and December, known as "Gratificacion" (13th and 14th month salary). An extraordinary bonus of 9% of each gratificacion is also paid to the employee.

Employers are also required to pay compensation for time of service (CTS), which is a form of severance fund deposited semi-annually (May and November) into a special account, equivalent to approximately 9.72% of annual salary.

Employee Termination

Peru does not follow At-Will Employment laws. Employers must have a valid reason for terminating an employee, such as misconduct, breach of contract, or redundancy.

The termination process typically requires a notice period of 30 days. Employees are entitled to severance pay, depending on the length of service and the reason for termination. In cases of unjust dismissal, employees can seek legal recourse, and the employer may be required to pay additional compensation or reinstate the employee.

Employers can legally terminate an employee under specific conditions, such as the completion of a fixed-term contract, mutual agreement, or severe misconduct. However, terminations must be carefully documented to avoid legal disputes.