Hire employees in Peru using an Employer of Record

One employee in Peru means 6 government registrations, quarterly tax filings, and 14-month salary calculations. Most companies don't find out until they're already non-compliant.

Peru's labor laws heavily favor employees. The penalties for getting it wrong aren't trivial either. Miss the mandatory profit-sharing payments and you'll face fines starting at $3,000 plus back payments. Get the CTS (employment stability fund) calculations wrong and employees can file complaints that drag on for months.

You've got three ways to hire in Peru legally. Here's how they actually work in practice:

Option 1: Set up your own entity

• Cost: $15,000-35,000 upfront, $8,000-12,000 annual maintenance
• Timeline: 4-6 months minimum
• Complexity: SUNAT tax registration, municipal licenses, labor ministry filings, CTS fund setup
• Makes sense when: Hiring 15+ people long-term, permanent market commitment

Option 2: Hire contractors

• Cost: None upfront, but limited control and major risks
• Timeline: Immediate
• Risks: Labor ministry fines ($5,000+), back taxes, automatic employee reclassification
• Makes sense when: Short projects under 6 months, specialized consulting
• Note: Hire with Columbus handles compliant contractor agreements too

Option 3: Use an employer of record (Recommended for most)

• Cost: $179/month per employee
• Timeline: 2-3 days to hire
• Complexity: Zero. We handle everything including CTS calculations and profit-sharing
• Makes sense when: 1-20 employees, testing the market, multi-country teams

The math is pretty clear. Hiring 3 people costs $537/month with an EOR versus $25,000+ for entity setup plus ongoing compliance headaches.

An EOR handles employment contracts, monthly payroll, tax filings, CTS contributions, profit-sharing calculations, and keeps you compliant when Peru's labor laws change. No surprises, no late-night scrambling to figure out what went wrong.

Ready to hire in Peru without the compliance headaches? Get started with Hire with Columbus.

What employment types can you use?

You've got three ways to bring someone onboard in Peru. Here's how the costs and risks stack up.

How can you hire in Peru?

Most companies jump straight to "what contract type do I need?" But the real question is how you'll legally employ someone in the first place. Let's break down your options with actual numbers.

Setting up your own entity means incorporating a subsidiary in Peru, which costs around $20,000 upfront and takes 4-6 months. You'll need ongoing accounting, legal compliance, and HR infrastructure that runs about $2,500 monthly for a small team. Makes sense if you're hiring 20+ people long-term and want full control.

Hiring contractors looks tempting because you can start immediately with zero setup costs. But Peru's labor authorities don't mess around with misclassification. If your "contractor" works set hours, uses your equipment, or follows your processes, they're legally an employee. Penalties include back taxes, social security contributions, and fines up to $50,000. We've seen companies get hit with six-figure bills after labor audits.

Using an employer of record like Hire with Columbus means we become the legal employer while you manage day-to-day work. Your employee gets a proper Peruvian employment contract, we handle payroll and compliance, and you avoid entity setup entirely. At $179/month per employee, it's way cheaper than an entity until you hit serious scale.

Employment contract types in Peru

Once you've decided on your hiring approach, you need to pick the right contract type. Peru recognizes several employment contracts, but most companies use these three.

Permanent contracts (contrato indefinido) are your standard full-time employment agreements with no end date. These give employees the most job security and you the most flexibility for core roles. No restrictions on renewals because there aren't any - the contract continues until someone terminates it.

Fixed-term contracts (contrato temporal) work for specific projects or temporary needs, but Peru limits these heavily. You can only use them for genuine temporary work like covering maternity leave or seasonal projects. Maximum duration is typically 5 years total across all renewals, and if you exceed that or use them for permanent work, the contract automatically converts to permanent.

Part-time contracts (contrato a tiempo parcial) are for employees working less than 30 hours per week. These workers get prorated benefits and vacation time, but they're still entitled to social security, health insurance, and other protections. You can't use part-time contracts to avoid employment obligations.

Here's what matters for each type:

Trial periods apply to all contract types and last 3 months for most positions (6 months for management roles). During this time, either party can terminate without notice or severance. After the trial period ends, you'll need proper cause and notice for termination.

Most companies hiring core team members go with permanent contracts. They're straightforward, give you flexibility to grow the role, and employees prefer the security. Fixed-term contracts seem appealing, but the restrictions make them tricky unless you have genuine temporary needs.

When you work with Hire with Columbus, we draft the appropriate contract type based on your specific situation and ensure it complies with Peruvian labor law. We've seen too many companies get burned by DIY contracts that seemed fine until a labor dispute arose.

How does payroll and taxation work?

Your €60,000 employee in Peru actually costs €78,600 per year once you add employer contributions. That's a 31% markup you need to budget for upfront.

Peru's payroll system hits you with multiple moving parts: income tax brackets that climb to 30%, employer social contributions around 18.5%, and mandatory profit-sharing that can add another month's salary. Miss a deadline and SUNAT (Peru's tax authority) starts penalties at 0.04% daily.

Income tax brackets

Peru uses a progressive tax system with rates that jump quickly. Your employees pay these rates on their annual income:

UIT (Tax Unit) for 2025 is PEN 5,150 (approximately €1,200)

The jump from 20% to 30% at €50,400 catches many companies off guard when hiring senior talent. You'll want to factor this in when setting those higher salaries.

Social security contributions breakdown

This is where your costs really add up. Peru splits contributions between employer and employee, but you're paying the bigger share:

Most employees choose private pension funds (AFP) instead of ONP, which means they pay around 10% instead of 13%. Either way, you're still paying your 10.5% employer portion.

Payment schedule and bonuses

Peru requires 14 salary payments per year, not 12. You'll pay two extra bonuses that hit your cash flow hard if you're not prepared:

• Gratification payments: Half in July, half in December (equivalent to one month's salary each)
• Monthly salary: Paid monthly, typically on the last working day
• Vacation bonus: One month's salary when employees take their 30-day vacation
• Profit sharing: 5-10% of pre-tax profits distributed to employees (if your company is profitable)

That €60,000 salary becomes €70,000 just with the mandatory bonuses, before you add employer contributions.

Total employment cost example

Let's break down what a €60,000 annual salary actually costs you:

Base costs:

• Annual salary: €60,000
• Gratifications (2 extra months): €10,000
• Vacation bonus: €5,000
• Subtotal: €75,000

Employer contributions:

• EsSalud (9%): €6,750
• SCTR insurance (~1%): €750
• SENATI (0.75%): €563
• Subtotal: €8,063

Total annual cost: €83,063

That's a 38% markup on the base salary. Factor in potential profit sharing (another €3,000-€6,000) and you're looking at €86,000+ for a €60,000 employee.

Payroll cycle and deadlines

SUNAT takes deadlines seriously. Your monthly schedule looks like this:

• Employee payment: Last working day of the month
• Income tax withholding: Due by 12th of following month
• Social contributions: Due by 12th of following month
• Monthly tax returns: Filed by 12th of following month

Miss these deadlines and penalties start immediately at 0.04% daily, plus a flat penalty of 0.6% of your monthly tax base. For a company with 10 employees earning €50,000 each, that's about €250 in penalties per day you're late.

The December-January period gets particularly messy with gratification payments, vacation scheduling, and annual tax reconciliation all hitting at once.

Common payroll mistakes

Miscalculating gratifications: These aren't optional bonuses, they're mandatory 14th and 15th month payments. Companies often budget 12 months and get hit with cash flow problems.

Wrong vacation calculations: Employees earn 30 calendar days per year, plus a vacation bonus equal to their monthly salary. That's two months of salary cost for one month of vacation.

SCTR insurance confusion: Work risk insurance rates vary by industry from 0.53% to 1.84%. Construction and mining pay the higher rates, but many companies use the wrong classification.

Late profit sharing: If your company's profitable, you must distribute 5-10% of pre-tax profits by March 31st. Miss this deadline and employees can file complaints with the labor ministry.

Setting up payroll in Peru yourself:

• Local accounting firm: €800-€1,500/month
• Payroll software: €200-€400/month
• Tax compliance expertise: €60,000+ salary for qualified professional
• Penalty risk: Up to €5,000 for missed deadlines

With Hire with Columbus: $179/month per employee, fully compliant, zero penalty risk.

We handle all the calculations, deadlines, and SUNAT filings so you can focus on growing your team instead of deciphering Peruvian tax codes. Your employees get paid on time, taxes get filed correctly, and you sleep better knowing everything's handled.

What benefits and leave are required?

Peru employees get 30 calendar days of vacation annually, and here's the catch—you can't just let them accumulate indefinitely. After one full year of service, they earn the right to take those 30 days, and if they don't use them, you'll need to pay them out when they leave.

The vacation system is pretty straightforward compared to other countries. Employees accrue 2.5 days per month, but they can't actually take vacation until they've completed their first year. After that, they can take their full 30 days anytime during their second year of employment.

Annual vacation

The 30-day vacation entitlement is mandatory—no exceptions. Employees earn this after 12 months of continuous service, and the days don't expire as long as they remain employed. However, you can't force employees to take vacation, but you also can't let it pile up indefinitely without consequences.

Here's what gets tricky: vacation pay must be calculated at the employee's current salary rate, not what they were earning when they accrued the days. So if someone got a raise and then quits, you're paying out their vacation at the higher rate.

You'll also need to pay a vacation bonus equal to one-third of the vacation pay. This isn't optional—it's required by law and applies to all employees regardless of their position or salary level.

Sick leave

Employees can take up to 20 days of sick leave per year without needing social security approval. For the first 20 days, you're on the hook for full salary payments. After day 21, social security (EsSalud) takes over and pays benefits, but you're off the financial hook.

Doctor's notes are required from day one if the absence exceeds three consecutive days. For shorter periods, employees can self-certify, but don't expect this to be widely abused—Peru's work culture generally discourages taking unnecessary sick days.

The good news is that unused sick days don't carry over to the next year, and you don't need to pay them out when employees leave. They're genuinely just for illness, not additional vacation time.

Parental leave

Maternity leave is 98 days (about 14 weeks) at 100% salary, paid by social security. This includes 49 days before the due date and 49 days after birth, though employees can adjust this split with medical approval.

Fathers get 10 consecutive days of paternity leave at full pay, also covered by social security. This applies to biological fathers, adoptive fathers, and same-sex couples through civil unions.

There's no shared parental leave system like you'll find in Nordic countries. The maternity and paternity allocations are fixed and can't be transferred between parents.

Public holidays in Peru (2025)

If employees work on public holidays, you'll pay double their regular daily wage. Most companies just shut down on these days rather than deal with the extra cost and administrative hassle.

Mandatory benefits breakdown

Social security contributions (EsSalud):

• Employer pays: 9% of gross salary
• Employee pays: 0%
• Covers: Healthcare, maternity/paternity benefits, some disability coverage

Pension contributions (ONP or AFP):

• Employer pays: 0% (for private AFP system)
• Employee pays: 10% + insurance premiums (varies by AFP)
• ONP alternative: Employee pays 13%, employer pays 0%

Workers' compensation (SCTR):

• Employer pays: 0.53% to 1.84% depending on risk level
• Employee pays: 0%
• Covers: Work-related injuries and occupational diseases

Bonus payments (mandatory):

You'll pay salary 14 times per year, not 12. The extra payments are:

• July bonus: One month's salary paid by July 15
• December bonus: One month's salary paid by December 15

These aren't discretionary bonuses—they're legally required and calculated based on the employee's current monthly salary.

Optional competitive benefits

Most companies offer private health insurance (EPS) as a supplement to the public system. This typically costs 2-3% of salary and gives employees access to private clinics and shorter wait times.

Life insurance is common but not required. Many companies provide coverage equal to 2-4 times annual salary, costing around 0.5-1% of payroll.

Meal vouchers (vales de alimentación) are popular because they're tax-deductible for employers and tax-free for employees up to certain limits. You can provide up to 20% of minimum wage per month (about S/1,025 in 2025).

Common benefit mistakes

Missing the July/December bonus deadlines: These payments have specific dates (July 15 and December 15), and late payments trigger penalties plus interest. The labor ministry doesn't mess around with these deadlines.

Incorrect vacation calculations: Remember to include the one-third vacation bonus in your calculations. Many companies budget for the 30 days of vacation pay but forget about the additional bonus payment.

Misclassifying EPS contributions: If you offer private health insurance, you can deduct up to 25% of the EsSalud contribution (2.25% of salary), but many companies either don't claim this deduction or calculate it incorrectly.

Payroll tax errors: The July and December bonuses are subject to income tax withholding, but many companies treat them as tax-free payments. This creates problems during annual tax reconciliation.

Administering these benefits correctly requires local HR expertise (typically $40,000+ annual salary), benefits administration software ($200-500/month), and ongoing legal review ($3,000-5,000/year). Factor in the risk of penalty costs for errors—labor fines start at $1,500 per violation.

Hire with Columbus handles all benefit administration, mandatory bonus calculations, and compliance reporting for $179/month per employee. We ensure your July and December bonuses are calculated correctly and paid on time, manage vacation accruals and payouts, and handle all social security filings so you don't have to worry about missing deadlines or miscalculating contributions.

What are the compliance requirements?

Written contracts are mandatory in Peru. Verbal agreements don't count and expose you to claims that can cost months of back pay plus legal fees.

Peru's employment law is detailed and protective of workers. Get the contract wrong, mess up the termination process, or skip mandatory clauses and you'll face fines, voided agreements, and potential reinstatement orders. Here's what you need to know to stay compliant.

Employment contract requirements

Every employment contract in Peru must be in writing and include specific mandatory clauses. No exceptions, no verbal agreements.

Required contract elements:

• Employee's full name, address, and national ID number
• Job title and detailed description of duties
• Workplace location and any travel requirements
• Start date and contract duration (if fixed-term)
• Salary amount and payment schedule
• Working hours and rest periods
• Vacation entitlement details
• Termination notice periods

The contract must be in Spanish, even if your employee speaks English. You can provide a translated copy, but the Spanish version is what counts legally.

Fixed-term contracts can't exceed three years total, including renewals. After that, the contract automatically becomes indefinite. Most companies use indefinite contracts from the start to avoid complications.

Probation periods

Probation periods in Peru max out at three months for most positions. Senior management and specialized technical roles can have up to six months, but you need to justify this in writing.

During probation, either party can terminate with just three days' notice. No severance required, but you still need to pay accrued vacation and any outstanding wages.

After probation ends, full employment protections kick in. That means proper notice periods, just cause requirements for dismissal, and severance obligations.

Working time regulations

Standard work week is 48 hours maximum, typically spread over six days (8 hours per day) or five days (9.6 hours per day). Night work (10 PM to 6 AM) carries a 35% premium.

Overtime rules:

• First two hours daily: 25% premium
• Beyond two hours daily: 35% premium
• Sundays and holidays: 100% premium
• Maximum 12 overtime hours per week

Employees get 24 consecutive hours of rest weekly, plus 45 minutes for lunch if working more than four hours daily.

You must keep detailed time records for all employees. Labor inspectors check these regularly, and missing records trigger automatic fines.

Notice periods

Notice requirements depend on how long someone's worked for you:

These are minimum periods. Your contract can specify longer notice, but not shorter.

Notice must be in writing and delivered personally or by certified mail. Email doesn't count unless your contract specifically allows it.

Termination process

You can't just fire someone in Peru without proper cause and process. Here's what's required:

For cause dismissal:

• Written warning for minor infractions
• 30-day improvement period for performance issues
• Documentation of all disciplinary actions
• Final termination letter citing specific cause

Valid causes include:

• Serious misconduct or criminal activity
• Repeated absences without justification
• Failure to meet performance standards after warnings
• Breach of confidentiality or company policies

Economic dismissal (layoffs) requires government approval if terminating more than 10% of your workforce. The process takes 45-90 days and involves union consultation.

Wrongful termination claims are common and expensive. Employees can seek reinstatement plus back pay, or compensation equal to 1.5 months salary per year worked.

Severance pay

Severance is required for dismissals without just cause:

Plus accrued vacation, 13th month bonus (gratification), and any outstanding overtime.

Voluntary resignation doesn't trigger severance, but you still owe accrued benefits and unused vacation days.

Data protection

Peru follows its Personal Data Protection Law, which mirrors GDPR principles. You need explicit consent to process employee personal data beyond basic employment requirements.

Key obligations:

• Notify employees what data you collect and why
• Secure data storage and transmission
• Allow employees to access and correct their data
• Report data breaches within 72 hours
• Appoint a data protection officer for companies with 500+ employees

Violations carry fines up to 100 UIT (about $37,000 USD) for serious breaches involving sensitive data.

Common compliance mistakes

Invalid employment contracts happen when companies skip mandatory clauses or use English-only agreements. Result: Contract void, back payments owed, potential reinstatement claims.

Wrong termination process is the biggest risk. Fire someone without proper cause and documentation? Expect 6-12 months salary in compensation plus legal fees.

Missing time records trigger automatic fines of 2-5 UIT ($740-$1,850 USD) per violation during labor inspections.

Unpaid overtime claims can go back three years. That $200 monthly overtime you skipped? Now it's $7,200 plus penalties and interest.

Penalties for violations

Labor violations in Peru carry specific financial penalties:

• Invalid employment contract: 5-20 UIT ($1,850-$7,400 USD)
• Improper dismissal: 1.5-2.5 months salary per year worked
• Missing mandatory benefits: 2-10 UIT ($740-$3,700 USD) per employee
• Overtime violations: 3-15 UIT ($1,110-$5,550 USD) per affected worker
• Health and safety breaches: 10-50 UIT ($3,700-$18,500 USD)

Plus legal fees, back payments, and potential criminal liability for serious safety violations.

Hire with Columbus ensures every contract and termination follows Peru law exactly. We handle all documentation, maintain compliant time records, and manage the termination process to avoid costly mistakes. Our legal team stays current on all regulatory changes, so you don't have to worry about missing new requirements or facing unexpected penalties.

What has changed recently?

Peru's been busy updating its employment laws this year, and honestly, some of these changes caught a lot of companies off guard. The government rolled out several significant reforms that affect everything from remote work policies to tax calculations.

The biggest shake-up came in March 2025 when Peru implemented new remote work regulations under Supreme Decree No. 023-2025-TR. Companies now need formal remote work policies documented in employment contracts, and there are specific requirements for providing home office equipment and internet allowances. You can't just let employees work from home anymore without proper documentation – the penalties start at S/10,800 ($2,900) for non-compliance.

Tax and contribution updates

Peru increased its minimum wage to S/1,125 ($302) per month in May 2025, up from S/1,025 in 2024. This affects your payroll calculations and any salary benchmarking you've done previously.

The social security contribution rates also shifted slightly. ESSALUD (health insurance) contributions increased from 9% to 9.5% of gross salary for employers, while employee contributions to the private pension system (SPP) now cap at a higher income threshold of S/13,500 ($3,625) monthly.

Here's what employers are paying now:

New compliance requirements

The SUNAT (tax authority) launched a digital employment registry system called "Registro Digital de Empleados" in January 2025. All employers must register new hires within 72 hours through this platform, and the fines for late registration jumped to S/4,320 ($1,160) per employee.

Peru also tightened its rules around temporary contracts. You can now only use fixed-term contracts for genuinely temporary work, and renewals are limited to two times maximum before the position must become permanent. This change has already caught several international companies who were using consecutive temporary contracts to avoid permanent employment obligations.

Holiday and leave changes

Good news on the vacation front – Peru extended the paternity leave from 10 to 15 calendar days for births occurring after July 1, 2025. The leave is fully paid and must be taken within the first 30 days after birth.

They also added a new public holiday: "Día de la Amazonía Peruana" on June 28, 2025, specifically for employees working in Amazon region departments. If you have remote workers in those areas, they're entitled to this additional day off.

What this means for international employers

If you're hiring through an EOR like Hire with Columbus, these changes are automatically handled in your employment agreements and payroll calculations. But if you're managing compliance yourself or working with local contractors, you'll need to update all your documentation and processes.

The remote work changes are particularly tricky because they're retroactive to January 2025. Companies with existing remote workers in Peru need to formalize those arrangements immediately or risk those S/10,800 penalties per employee.