PEO Peru

Find a Professional Employer Organization in Peru

Peru’s stable political environment and solid economy makes it a good prospect for doing business in Latin America. But, depending on the nature of your engagement with the South American country, hiring staff through a professional employer organization in Peru could be your ideal option.

Hire via a Professional Employer Organization in Peru

Because, when you hire through a professional employer organization in Peru — which can also be referred to as a PEO — you avoid the need to incorporate a local entity, enjoy guaranteed compliance from the provider, and are able to get to work in only the time it takes to find the staff you need. As part of a compliance guarantee, your provider will take care of a range of legal and administrative concerns, including managing the salaries of staff, and as such is often referred to as a PEO payroll company.

Peru has emerged as an increasingly popular destination for foreign direct investment (FDI) over recent years, with FDI as a percentage of GDP more than doubling from 1.57% in 2000 to 3.89% in 2019.

While Peru is perhaps best known as an investment destination in terms of opportunities available in the mining sector, with the country sitting on large reserves of copper and gold and investment in the sector hitting $5.24 billion in 2021 (all figures in USD).

SEE ALSO: Find a Good Corporate Attorney in Peru

Agriculture and fishing are also major industries, generating a significant portion of GDP and attracting foreign investment, with fruits, nuts, soy, and seafood among Peru’s most important exports.

Peru is also a major trade hub, with the port of Callao having one of the highest container throughputs in Latin America, and being just one of three major ports serving the Pacific Ocean. In 2021, Peruvian exports hit new records, with agro-export companies among the fastest growing.

Peru’s trade credentials are boosted by its status as a founding member of the Pacific Alliance — an economic association including Chile, Colombia, and Mexico, and to which Ecuador has formally applied to join.

In late 2021, the Pacific Alliance demonstrated its long-rumored interest in expanding into Asia-Pacific when Singapore was inaugurated as an associate member. Australia, Canada, New Zealand, and South Korea have been named as potential candidates for similar status in the future.

Alongside its neighbors Bolivia, Colombia, and Ecuador, Peru is also a founding member of the Andean Community of Nations (CAN), a more than half century old regional integration initiative, which has continued to implement a range of integration measures in recent years.

What to expect from a professional employer organization in Peru

A professional employer organization in Peru will seek, hire, and onboard staff on the behalf of a client, as well as managing their payroll. That means, depending on the profile of the staff being sought, the client can have local workers in the space of a few weeks or even days.

While they will officially be employees of the professional employer organization, they will report directly to the client, who will retain full control over their schedules and workloads. As such, they will effectively act as employees of the client.

In providing PEO payroll company services in Peru, the provider will oversee the salaries and other administrative matters, generally charging the client on a per employee basis.

That fee will often work out to be less than the cost of going through company formation and subsequent liquidation, while also comes with the convenience of having a complex administrative and compliance matter covered by a third-party provider with proven expertise.

That in turn means that when you partner up with a professional employer organization in Peru, you enjoy the benefit of guaranteed compliance with all relevant aspects of commercial, employment, and labor law.

REAL-LIFE EXAMPLE: A US company is looking to hire a bilingual software developer. They decide that a Peruvian employee may be a good option (having a high level of education, often being bilingual and costing less than a US employee). However, the US company does not want to go through the administrative hassle of forming a local company in Peru. Instead, they work with an Peruvian PEO service provider who can ‘hire’ the individual, and comply with all local employment requirements. While the employee is technically employed by the PEO, they will be directed by the US company. 

Compliance issues handled by a PEO payroll company in Peru

Your professional employer organization in Peru will implement the following statutory obligations related to maintaining employees:

  • Working Hours: The standard workweek is eight hours per day, with a maximum of 48 hours per week.
  • Bonuses: In Peru, employees are entitled to a ’13th’ and ’14th’ salary, bonuses each equal to a month of salary and usually distributed in July and December.
  • Vacation leave: Employees are entitled to 30 days of paid vacation leave per calendar year, of which 15 must be taken as holiday and the rest can be cashed out.
  • Sick Leave: Employers are obliged to pay the first 20 days of doctor-authorized sick leave, after which it is covered by the public health provider Essalud.
  • Parenthood leave: In Peru, labor law allows for paid maternity leave totaling 98 days, made up of 49 days before the due date and 49 days after. In the case of paternity leave, new fathers are entitled to 10 consecutive days of paid leave.
  • Terminations: In the event an employee has their contract terminated unless for misconduct, they will be entitled to severance payments on top of any outstanding salary, which the PEO payroll company in Peru will calculate and oversee the payment of.
The graphic above highlights when it is best to use a Professional Employer Organization in Chile, or any country. PEO Chile
The graphic above highlights when it is best to use a Professional Employer Organization in Peru, or any country. Professional Employer Organization in Peru

How to use a payroll calculator

If you are keen to get an idea of the possible costs involved in payroll outsourcing in Peru, using a payroll calculator is one way to get a very good estimate.

Use Biz Latin Hub Payroll Calculator.
Use Biz Latin Hub Payroll Calculator.

Because while a payroll calculator won’t be completely accurate, it will give you the opportunity to search according to the salary, the number of employees, the country you want to enter, and the currency you wish to work in. As such, you will be able to understand your likely costs across a range of salaries, while also being able to compare other countries as potential alternative destinations. 

You can find the BLH payroll calculator at the bottom of our Hiring & PEO Services page. The calculator will allow you to make good estimations of the costs involved in hiring in Latin America and the Caribbean based on country, currency, and salary, with the calculator factoring in local statutory deductions.

To use the BLH payroll calculator, you will need to undertake the following steps:

Step 1: Select the country

Choose the country where you are doing business, or planning to launch. This feature will be useful when it comes to comparing potential alternative markets.

Step 2: Select the currency you wish to deal in

You can choose between US dollars (USD), British Sterling (GBP) and Euros, as well as the local currency for the country you are looking at, based on that which is most convenient to you. Note that for Ecuador, El Salvador, and Panama, the local currency is also USD, as they have dollarized economies.

Step 3: Indicate an employees monthly income

Here you can indicate the expected salary you will be paying an employee, in the currency of your choice.

Step 4: Calculate your estimated costs

Based on all of the information you have provided, you will receive results indicating your estimated costs, including a breakdown for estimated statutory benefits you will be liable for.

Step 5: Compare your costs to other options

With a good estimate at hand of how much your staff in Peru would be, if you are flexible about your expansion into Latin America and the Caribbean, you can use the BLH payroll calculator to compare those costs to other jurisdictions.

Common FAQs when hiring through an Employer of Record (EOR) in Peru

Based on our experience these are the common questions and doubts of our clients.

1. How to hire employees in Peru?

You can hire an employee by incorporating your own legal entity in Peru, and then using your own entity to hire employees or you can hire through an Employer of Record (EOR), which is a third party organization that allows you to hire employees in Peru by acting as the legal employer. Meaning you do not need a Peruvian legal entity to hire local employees.

2. What is in a standard employment contract in Peru?

A standard Peruvian employment contract should be written in Spanish (and can also be in English) and contain the following information:

-ID and address of the employer and employee
-City and date
-Location where the service will be provided.
-Payment frequency.
-Social benefits.
-Probation period
-Work hours
-Specific agreements or pacts.  
-What are the mandatory employment benefits in Peru?
-Social Security Contributions (health, pension, and occupational risk)
-CTS (Compensation for Time of Service)
-Vacation
-Family Allowance (if applicable)
-National Holidays Bonus
-Christmas Bonus
-Profit Sharing (if applicable to the sector)

3. What are the mandatory employment benefits in Peru?

– Social Security Contributions (health, pension, and occupational risk)
– CTS (Compensation for Time of Service)
– Vacation
– Family Allowance (if applicable)
– National Holidays Bonus
– Christmas Bonus
– Profit Sharing (if applicable to the sector)
– To learn more please read our recent article on
– Employment laws in Peru.

For more information on mandatory employment benefits read our recent article on Employment laws in Peru.

4. What is the total cost for an employer to hire an employee in Peru?

The total cost for an employer to hire an employee in Peru can vary based on the salary; however, indicatively the employer cost for mandatory employment benefits is 30% to 40% percent of the gross employee salary, which is additional to the employee’s gross salary.

Please use our Payroll Calculator to calculate employment costs.

5. Does the EOR legally employ your employees?

It’s important to know if the provider manages local employment in Peru. Having a local employer is crucial, as they handle tasks like maintaining a local entity, registering with tax authorities, payroll processing, tax filing, benefits, and HR compliance. Additionally, the provider must maintain proper corporate governance for all their companies. 

6. Does the EOR provide payroll compliance and guidance for Peru?

It seems obvious but you do need to ensure that the EOR can provide its services in Peru. It is also worth checking which other countries they operate in. Not all providers have global advisory services. Hiring one with such services eliminates the need for multiple consultants to manage compliance in all your countries of operation.

7. How does the employment contract work?

When working with an Employer of Record (EOR), the contractual handling of the employment relationship is crucial. The EOR serves as the legal employer and needs a contract with the worker, which may or may not include you. The agreement must be compliant with the law and aligned with your company’s practices across all locations the EOR supports. Contracts vary across territories. Some have detailed tripartite agreements, clearly defining responsibilities, with the EOR handling payments, taxes, and local matters, while you retain policy control. Benefits and statutory requirements should be discussed. When choosing an EOR, examine their template agreements for consistency and consider how they ensure uniformity while complying with local practices.

8. Does the EOR possess in-depth payroll and HR expertise?

For effective multi-country HR and Payroll support, the Employer of Record needs extensive international payroll and HR expertise, as well as a good understanding of local employment and tax laws. Look for evidence of robust processes and comprehensive guides to simplify information. During the sales or onboarding process, speak to those responsible for employment compliance and assess their depth of knowledge and understanding of your challenges. Inquire about written guides for your convenience, as this shows their investment in supporting customers with local regulations.

9. What is the employment model they use in Peru?

Employers of Record often keep their local employment practices in different countries undisclosed. However, understanding these practices is essential due to significant legal differences. Some countries allow unlimited EoR models, while others have time or job function limitations. Compliance with these limitations is mandatory, as violating local laws can lead to serious consequences.

Biz Latin Hub can be your professional employer organization in Peru

At Biz Latin Hub, we provide integrated market entry and back-office services throughout Latin America and the Caribbean, with teams in 17 major cities throughout the region and trusted partners in the markets where we are not present. That makes us an ideal partner to support multi-jurisdiction market entries and cross-border operations.

Our portfolio includes accounting & taxation, company formation, due diligence, hiring & PEO, and corporate legal services. If you are looking for a PEO payroll company in Peru, we can help you.

Contact us today to find out more about how we can assist you.

If you found this article on hiring through a professional employer organization in Peru of interest, you may want to check out the rest of our coverage of this South American country. Or read about our team and expert authors.

Biz Latin Hub’s Snapshot of Employment Law in Peru.

WORKING HOURS

The standard working day is eight (8) hours long, for between five (5) and six (6) days, so that a standard working week is no more than 48 hours long.

TYPES OF EMPLOYMENT CONTRACT

There a three (3) main types of employment contract in Peru:

Indefinite-term contract: 
This is a permanent type of contract, with an undefined duration, which can only be ended if both parties mutually agree, or when one party has the right to act unilaterally.

Fixed-term contract: 
This type of contract lasts for a specified period, which can be in the form of a temporal agreement, an accident or emergency contract, or a contract for a specified task or project.

Part-time contract: 
A part-time contract must not involve working for more than four (4) hours per day and can include remuneration set at lower than the minimum salary.

Termination and severance

Under Peruvian law, an employee must give 30 days of notice of their intention to vacate their role, although the employer can waiver this obligation. In the event of the employer terminating the employee’s contract unilaterally and without just cause, they must pay the employee any outstanding salary

1) How much notice does an employee need to give when they decide to leave their job?
The employee must give 30 calendar days' notice of resignation, and it is up to the employer whether or not to accept the waiver of this term.
It should be noted that the employee's request for the waiver of the term can be verbal or written, but the employer's non-acceptance of the waiver must be in writing.
2) What costs are involved in terminating an employee's contract? (e.g. paying accrued benefits, statutory liquidation/severance entitlements)
The amounts depend on the employee's salary:
- Truncated vacations
- CTS (Compensation for Time of Service)
- Truncated gratuity
- Reimbursement of 5th category
- Discounts

3) Under what circumstances can you terminate an employee's contract without incurring costs (i.e. what would constitute "just cause" after a probation period has ended)
Whenever there is a resignation or dismissal, the above benefits will be incurred.


Note:
-If the dismissal is for objective cause (related to the worker's capacity or conduct) you must still be paid your social benefits that are pending payment but no severance pay corresponds.  
-If the employer decides to dismiss the employee during the probationary period, regardless of whether it is for 3, 6 or 1 year, CTS is payable if the employee works one month or more, it is computable for the enjoyment of vacation leave and gratuity on a proportional basis.



VACATIONS, LEAVE, AND OTHER ABSENCES

Statutory vacation allowance /  Paid Time Off leave (PTO)
Employees are entitled to a total of 30 paid vacation days per calendar year.

Maternity and paternity leave:
Employees are entitled to a total of 90 days maternity leave, which can begin either 45 or 30 days prior to the due date. Paternity leave totals 10 consecutive days to be taken either from the day of the birth, the day the mother is discharged from hospital, or three days prior to the due date. In the case of premature or multiple births, paternity leave is extended to 20 consecutive days, while in the case of the infant being affected by terminal disease or severe disability, or where the mother’s health is affected by serious complications, leave is extended to 30 consecutive days.

Sick leave: 
Employees are entitled to 20 days of paid sick leave per year. After 20 days, the employer must continue to pay the employee but can reclaim the costs from the public health provider (Essalud).

Bereavement: 
Five (5) days of bereavement leave are granted in the event of the death of parent, child, sibling, or spouse/civil partner.


STATUTORY CONTRIBUTIONS
Employee Deductions:
Private pension fund: 12% of salary
Income tax: between 8% and 30% (based on total salary)
Employer Contributions:
Essalud: 9% of an employee’s salary
Unemployment fund: Each year, a total of one (1) monthly salary + average overtime + 1/6 of the employee’s annual bonus


Other bonuses
Each year, an employee is entitled to bonuses totalling two (2) monthly salaries 
Profit Sharing:
Depending on its economic activity, any company that employs more than 20 people must share between 5% and 10% of net profits, with payment based on the salary level and total number of days worked during the fiscal year for which the profit is being shared.
Snapshot of employment law in Peru. Professional Employer Organization in Peru
The information provided here within should not be construed as formal guidance or advice. Please consult a professional for your specific situation. Information provided is for informative purposes only and may not capture all pertinent laws, standards, and best practices. The regulatory landscape is continually evolving; information mentioned may be outdated and/or could undergo changes. The interpretations presented are not official. Some sections are based on the interpretations or views of relevant authorities, but we cannot ensure that these perspectives will be supported in all professional settings.
Legal Team Peru

Legal Team Peru

Legal Team Peru is the Biz Latin Hub leading experts on doing business in Peru The Team writes on the news, doing business, law, and changing regulations. Read more about them here. You can contact Legal Team Peru via our "contact us page".

Receive the latest news and advice about expanding your business globally
Subscribe to our newsletter to receive the latest business news and advice about entity formation, legal entity compliance, accounting, back office and fiscal requirements. Receive the latest news and advice about expanding your business globally.

This field is for validation purposes and should be left unchanged.