How to Hire Employees in Peru

Peru offers foreign companies a compelling entry point into South America's Pacific Alliance. Growing economy, strategic location connecting Asian and Latin American markets, expanding mining and manufacturing sectors, and improving business infrastructure.

But economic potential doesn't mean regulatory simplicity.

Peru enforces comprehensive employment regulations with strict compliance expectations across mandatory benefit calculations, severance fund deposits, and detailed labor inspection requirements. Early missteps in contract structure, CTS deposits, or employee classification trigger costly disputes, regulatory penalties, and expansion delays that compound with every hire.

Hiring employees in Peru requires:

• Clarity on hiring models (entity vs. Employer of Record vs. contractor)
• Mandatory employer obligations under Peruvian labor legislation
• Payroll tax structures and social security contributions
• Termination protections and notice requirements
• Legal distinctions separating compliant employment from misclassification risk

This guide walks you through each step: choosing the right hiring model, onboarding your first employee, managing payroll, navigating termination rules, and avoiding compliance traps that catch unprepared employers off guard.

Core truth: Hiring employees in Peru requires the right hiring model and strict adherence to local labor laws. One hire done wrong costs more than doing ten right.

What Are Your Employment Options When Hiring in Peru?

Before posting a job or signing an offer letter, decide how you'll employ talent. Foreign companies typically choose between three models: establishing a local entity, partnering with an Employer of Record (EOR), or engaging contractors. Each has distinct implications for compliance risk, cost structure, and operational control.

Entity setup → means full legal presence. Register a Peruvian company (SAC, SRL, or SA), handle all employer obligations directly, and bear complete liability.

EOR hiring → outsources employment compliance to a third-party legal employer while you retain operational control.

Contractor engagement → treats individuals as independent service providers, not employees. But only when the relationship genuinely reflects independence.

The stakes are higher than they appear. Misclassifying an employee as a contractor triggers back taxes, social security penalties, and reclassification claims. Setting up a local entity in Peru for hiring costs PEN 5,000–PEN 15,000 total, including registration fees, notary services, legal counsel, accounting setup, and regulatory filings with SUNARP (Public Registry Office) and SUNAT (Tax Authority).

Choosing the wrong model doesn't just slow hiring. It creates legal exposure that compounds with every additional hire.

1. Hiring Through a Local Entity

Establishing a Peruvian entity gives you direct control over employment, payroll, and benefits administration. You become the legal employer. Full responsibility for Peruvian labor law compliance, tax withholding, social security contributions, and statutory filings.

This model makes sense when:

• You're committing to long-term operations in Peru
• Hiring at scale (typically 10+ employees)
• You need to own intellectual property and operational infrastructure locally

The trade-off: entity formation takes 2-4 months, requires ongoing legal and accounting support, and locks you into administrative obligations even if hiring slows.

2. Hiring Through an Employer of Record (EOR)

An EOR becomes the legal employer in Peru while you direct the employee's day-to-day work. The EOR handles employment contracts, payroll processing, tax compliance, social security administration, and statutory filings.

You maintain operational control. They absorb legal liability.

EOR hiring suits:

• Companies testing the Peruvian market
• Scaling quickly (hires live in days, not months)
• Expanding into multiple countries without establishing entities everywhere

It's not a workaround. It's a legitimate employment model under Peruvian law, ideal when speed, compliance assurance, and low upfront cost matter more than direct entity ownership.

3. Hiring Independent Contractors

Contractors are appropriate for project-based work, specialized services, or genuinely independent engagements. Peruvian law distinguishes employees from contractors based on subordination, exclusivity, payment structure, and the reality of the working relationship. Not what the contract says.

Misclassification happens when companies treat contractors like employees:

• Setting their hours and work schedules
• Providing equipment and workspace
• Directing how work is done
• Maintaining exclusive relationships

Local Entity Vs EOR Vs Independent Contractor: Side-by-Side Comparison

What Are The Legal Requirements for Hiring in Peru?

Peruvian employment law is governed by the Labor Productivity and Competitiveness Law, various labor decrees, and regulations enforced by SUNAFIL (Labor Inspection Authority). Peru's regulatory framework emphasizes worker protection through mandatory benefits, severance funds, and detailed procedural requirements.

Key employer obligations:

• Provide written employment contracts registered with Ministry of Labor (MTPE)
• Register employees with EsSalud (Social Health Insurance)
• Register employees with pension system (ONP or private AFP)
• Make biannual deposits to CTS (Severance Compensation Fund)
• Make monthly contributions to social security (EsSalud 9%)
• Contribute to pension system (ONP 13% or AFP ~13%)
• Withhold income tax (5th category tax for employees)
• Maintain accurate payroll records and employment files
• Provide mandatory profit-sharing (companies with 20+ employees in certain industries)
• Pay vacation bonuses, gratifications (July and December), and family allowances
• Comply with working hours limits (8 hours per day, 48 hours per week)

Employment relationships are presumed indefinite unless a fixed-term contract meets specific legal criteria. Probationary periods are typically 3 months (extendable to 6 months for management positions, 12 months for confidence positions).

Peru's enforcement environment is not theoretical. SUNAFIL conducts regular labor inspections. Employees can file claims through labor courts. Non-compliance with payroll or contract standards results in financial penalties, back-payment orders, and reputational damage.

The presumption favors employee protection, not employer flexibility.

What Are the Employment Contract Rules in Peru?

Written, locally compliant employment contracts are not optional. They're legally required.

While indefinite employment relationships can be proven through conduct, written contracts protect both parties and are mandatory within specific timeframes. The contract must be in Spanish, signed by both parties, and registered with MTPE within 15 business days of employment start (for fixed-term contracts).

Types of Employment Contracts

• Indefinite-term contracts are the default and provide maximum employee protections. They continue until lawfully terminated by either party with proper notice and severance, and include full entitlements under Peruvian law.
• Fixed-term contracts are permitted only for specific circumstances defined by law: temporary work, accidental work, specific projects, seasonal work, or supply substitution. Fixed-term contracts must be in writing, specify the reason for temporary nature, and cannot exceed legal duration limits (typically 5 years maximum including renewals). Improper use converts contracts to indefinite-term status.
• Part-time contracts specify regular working hours less than 4 hours per day with reduced benefits (no CTS, gratifications, or vacation entitlements). Exceeding 4 hours per day triggers full-time status.

Full-time employment follows an 8-hour workday, 48-hour workweek standard. Many industries operate on alternative schedules (accumulated or flexible hours) but must maintain weekly limits.

Probationary periods allow employers to assess new hires during the first 3 months (extendable to 6-12 months for specific positions), with simplified termination procedures during this window.

What to Include in an Offer Letter?

Employment offers must specify the job title, duties, reporting structure, and work location.

Essential contract elements:

• Employer and employee identification details
• Job title, description, and classification
• Start date and contract type (indefinite or fixed-term with legal justification)
• Work location
• Gross monthly salary (must meet or exceed minimum wage)
• Working hours and schedule
• Probation period (if applicable)
• Benefits (CTS, gratifications, vacation, family allowance if applicable)
• Notice period requirements
• Applicable pension system (ONP or AFP with employee choice)

Clarity matters. Ambiguous job descriptions or vague compensation terms create disputes during performance reviews or terminations. Peruvian labor courts interpret contract ambiguities in favor of employees.

NDAs and Confidentiality Agreements

Confidentiality clauses are enforceable under Peruvian law, particularly when protecting trade secrets, client information, or proprietary processes. Intellectual property (IP) created during employment typically belongs to the employer for work-related inventions unless otherwise specified.

Post-employment non-compete clauses are valid but must meet strict requirements: reasonable duration (typically 6 months to 2 years), adequate compensation, limited scope, and must protect legitimate business interests. Non-competes are more strictly enforced for confidence-level positions (high-level management with access to sensitive information).

Overly broad non-competes risk being struck down as unenforceable.

How Payroll Costs and Taxes Work in Peru?

Peru's labor costs are moderate within Latin America. But only if you understand the full employer burden.

As of 2026, Peru's monthly minimum wage is PEN 1,025 (unchanged), applicable to full-time workers in 8-hour workdays. Typical total employer costs for mid-level hires range from PEN 3,000 to PEN 8,000 per month, including gross salary and mandatory contributions.

1. Payroll and Salary Structure in Peru

Salaries are quoted and paid in Peruvian soles (PEN). Compensation typically includes base salary, biannual gratifications (July and December - one month salary each), CTS deposits (one month salary annually), vacation (30 calendar days annually), and family allowance (10% of minimum wage if employee has dependents).

Employers must meet minimum wage thresholds of PEN 1,025 monthly for full-time employment.

2. Employer Payroll Obligations

Employers face substantial mandatory contributions totaling 20-25% of gross salary:

• EsSalud (Social Health Insurance): 9% of gross monthly salary
• Pension contributions: ~13% of gross salary (ONP state system 13%, or AFP private system employer portion varies)
• CTS (Severance Compensation Fund): 8.33% of gross salary deposited biannually (May and November)
• Life insurance: Mandatory after 4 years employment (varies by policy)
• Work risk insurance (SCTR): For high-risk industries only

Additional mandatory payments (not percentages but full salary equivalents):

• Gratifications: Two full monthly salaries annually (July and December) - includes 9% EsSalud on top
• Vacation: 30 calendar days paid annually
• Family allowance: 10% of minimum wage (PEN 102.50) if employee has dependents

Total employer burden including benefits typically ranges 45-55% above base monthly salary when annualized.

These contributions sit on top of the employee's gross salary. Not embedded within it.

3. Employee Tax Contributions

Employees face deductions withheld at source:

• Pension contributions: ONP 13% (state system) OR AFP ~13% (private system - employee chooses)
• Income tax (5th category): Progressive rates on annual income

Income tax brackets (2026, annual income):

• Up to PEN 5 UIT (~PEN 24,150): 8%
• PEN 5-20 UIT (~PEN 24,151-96,600): 14%
• PEN 20-35 UIT (~PEN 96,601-169,050): 17%
• PEN 35-45 UIT (~PEN 169,051-217,350): 20%
• Above PEN 45 UIT (~PEN 217,350+): 30%

Deductions available: 7 UIT standard deduction plus pension contributions.

Total employee deductions range from 13-25% of gross salary depending on income level and pension system choice.

4. Social Security Contributions

Peru operates a dual pension system where employees choose between ONP (state-run, pay-as-you-go) or AFP (private, individual capitalization accounts). Both employers and employees contribute. Healthcare is provided through EsSalud, funded entirely by employer contributions (9%).

5. Minimum Wage and Statutory Pay Requirements

Monthly minimum wage of PEN 1,025 applies to full-time employment (8 hours per day). This excludes mandatory benefits which sit on top.

Employers must also pay:

• Overtime premiums (25% surcharge for first 2 hours, 35% thereafter on weekdays; 100% for Sundays/holidays)
• Night shift differentials (35% surcharge for work 10 PM-6 AM)
• Gratifications (July and December - full monthly salary each, plus 9% EsSalud)
• CTS deposits (biannually in May and November)
• Vacation pay (30 calendar days paid, or cash equivalent if not taken)
• Family allowance (10% of minimum wage for employees with dependent children)

In practical terms, employers should budget 45-55% above monthly gross salary when annualizing costs for all mandatory benefits. For professional roles, this puts the true monthly cost of hiring in Peru between PEN 3,000 and PEN 8,000, depending on seniority and role.

How Employers Pay Employees in Peru?

1. Payment Methods

Salaries are paid via bank transfer to the employee's Peruvian bank account. Direct deposit is standard practice. Cash payments are uncommon for formal employment and create compliance risks.

Payslips must contain:

• Pay period
• Gross salary and all components (base, bonuses, allowances, overtime)
• All deductions (pension, income tax, other authorized deductions)
• Net salary
• Employer contributions 
• Year-to-date totals

Payslips must be provided monthly, typically electronically or in print.

2. Salary Payment Frequency

Payroll runs monthly, with salaries typically paid within the first 5 business days of the following month for work performed in the prior month.

Payment delays beyond legal limits breach labor law and give employees grounds for lodging complaints with SUNAFIL.

How To Onboard Employees in Peru?

1. New Hire Onboarding Checklist

Register the employee with EsSalud, pension system, and SUNAT before their first working day. Provide signed employment contracts, company policies, role-specific training materials, and access to payroll/benefits systems.

Onboarding essentials:

• Register with EsSalud for health insurance
• Register with chosen pension system (ONP via SUNAT or selected AFP)
• Open CTS account at financial institution (employee chooses bank)
• Register with SUNAT electronic payroll system (PLAME)
• Register employment contract with MTPE (for fixed-term contracts)
• Sign and provide employment contract
• Conduct workplace safety orientation (mandatory)
• Set up payroll system access
• Provide occupational risk assessment if applicable
• Assign direct manager and clarify expectations

Schedule orientation sessions covering workplace health and safety (mandatory under Occupational Safety Law), company policies, and reporting structures. Ensure the employee understands vacation policies, gratification payment schedules, and CTS deposit procedures.

2. Required Employee Documentation

Peruvian employment and tax regulations require employers to collect specific employee documents at the time of onboarding. These records support payroll processing, social insurance registration, and statutory compliance.

Documents you need from new hires:

• National ID (DNI) or passport for foreigners
• Tax identification number (RUC if self-employed previously, otherwise DNI)
• Pension system affiliation document (ONP or AFP)
• Proof of address
• Educational certificates relevant to the role
• Bank account details for salary payment
• Bank account details for CTS deposits
• Health examination certificate (for certain industries)
• Work permit and visa (for foreign nationals)
• Declaration of dependents (for family allowance eligibility)

Maintain signed copies of the employment contract, occupational risk assessments, safety training records, and acknowledgment of company policies in the employee's personnel file. These documents become critical during SUNAFIL inspections or disputes.

What Are The Best Practices Of Interviewing and Hiring in Peru?

Peruvian labor law prohibits discrimination based on race, gender, age, religion, opinion, economic condition, marital status, disability, pregnancy, or HIV status. Interview questions must focus on job-related qualifications and competencies.

• Avoid questions about family planning, marital status, religious beliefs, political affiliations, pregnancy intentions, or health conditions unless directly relevant to essential job requirements and legally justified.
• Data privacy matters. Under Personal Data Protection Law, candidate information must be collected with consent, stored securely, and used only for recruitment purposes. Candidates have rights to access and correct their information.
• Document retention and processing justifications carefully.
• Peruvian candidates value job stability, clear career paths, and comprehensive benefits packages.
• Communicate hiring timelines, provide prompt feedback, and set realistic expectations about compensation and role responsibilities.

A sluggish or opaque hiring process signals organizational dysfunction.

Work Permits and Right to Work in Peru

1. Peruvian nationals have unrestricted work rights in Peru and require no permits.

2. MERCOSUR citizens (Argentina, Brazil, Paraguay, Uruguay) and associated members (Bolivia, Chile, Colombia, Ecuador) enjoy simplified temporary residence processes but still require work authorization.

3. Foreign nationals require valid work visas and residence permits issued by Immigration Office before starting employment. 

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Common work authorization types include:

• Temporary Resident Work Visa: For assigned or hired workers, requires employment contract and employer sponsorship
• Independent Work Visa: For self-employed professionals or business owners
• Artist or Sports Visa: For performers or athletes under contract
• Religious Work Visa: For religious workers sponsored by recognized institutions
• Andean Work Visa: Simplified process for citizens of Andean Community countries

Key considerations for foreign national hires:

• Processing times: expect 1 to 3 months depending on visa type and completeness
• Employer must be registered with SUNAT and have operations in Peru
• Employment contract must be approved by MTPE (foreign worker approval)
• Quota limitations: Maximum 20% foreign workers, maximum 30% of payroll for foreign salaries (exceptions exist)
• Work authorization tied to specific employers and positions
• Residence permits must be maintained alongside work authorization

Hiring foreign nationals without valid work authorization exposes employers to fines from PEN 2,000-25,000 per violation, contract nullification, and potential business closure orders.

How Does Employment Termination Work in Peru?

1. Lawful Grounds for Termination

• Employers can terminate for just cause (serious misconduct, repeated minor infractions after warnings, criminal convictions) or without cause (economic reasons, objective reasons).
• Termination requires documented justification and adherence to strict procedures. Just cause terminations require prior written notice specifying grounds and allowing employee response (due process). Without-cause terminations are heavily restricted and require specific procedures depending on reason.
• Employees enjoy extremely strong protections against unfair dismissal. Peruvian labor courts scrutinize termination justifications closely and frequently order reinstatement or substantial damages for improper dismissals.

2. Notice Periods

Notice requirements vary by termination type:

Just cause termination:

• No advance notice required if proper cause and procedure followed
• 6-day period for employee to respond to charges before final decision

Mutual agreement termination:

• No statutory notice requirement (negotiated between parties)

During probation (first 3 months):

• No notice or severance required

Objective reasons (economic/technological):

• Requires administrative procedure with labor authority
• Various notice periods apply depending on specific cause

Peruvian law does not mandate standard notice periods for ordinary voluntary resignation - typically 30 days customary but varies by position and contract terms.

3. Severance Requirements

Severance requirements depend heavily on termination type.

Arbitrary dismissal (unjustified termination):

• Employee may choose: Reinstatement OR compensation of 1.5 months salary per year of service (minimum 3 months)
• Plus payment of all pending benefits (CTS, vacation, gratifications)

Mutual agreement termination:

• Negotiated severance (typically 1-2 months per year of service)
• Must be formalized in writing to avoid future claims

Economic/technological reasons:

• Severance of 1.5 months salary per year of service (if procedure followed properly)

Just cause termination:

• No severance if proper grounds and procedure proven
• Burden of proof on employer

Resignation:

• No employer-paid severance
• Employee entitled to pending benefits only (CTS, vacation days, gratifications)

Typical negotiated severance for mutual agreements:

• 1.0-2.0 months per year: Standard settlement
• 2.0-3.0 months per year: Long tenure or senior positions

All terminations trigger payment of CTS balance, accrued vacation, prorated gratifications, and any pending compensation. These amounts can be substantial given Peru's benefit structure.

Employee vs Contractor Classification in Peru

Peruvian authorities assess classification based on subordination (direction and supervision), exclusivity or predominance of relationship, fixed compensation, and integration into employer's organization. SUNAFIL and labor courts presume employment relationships when individuals work continuously under direction. Contracts labeled "independent contractor" mean nothing if the working relationship resembles employment.

Misclassification consequences include:

• Retroactive reclassification as employee from day one
• Back payment of all social contributions (EsSalud 9%, pension ~13%)
• Back payment of all benefits (CTS, gratifications, vacation pay, family allowance)
• Income tax adjustments and penalties
• Fines from SUNAFIL up to PEN 270,000 for serious violations
• Automatic indefinite employment contract status
• Severance obligations if relationship ends
• Criminal prosecution for fraudulent labor relationships

The "one contractor won't attract attention" myth dies fast when SUNAFIL inspections or employee claims begin. Peruvian authorities aggressively pursue misclassification in labor-intensive industries.

What Compliance Risks Should Employers Know When Hiring in Peru?

• Payroll non-compliance (incorrect social security contributions, missed CTS deposits, failure to pay gratifications on time, or inaccurate income tax withholding) results in financial penalties, back-payments with interest, and potential criminal liability for serious violations. SUNAFIL conducts regular labor inspections with particular scrutiny of foreign employers.
• Contract violations (missing written contracts, failure to register fixed-term contracts with MTPE, unclear employment conditions, or improper use of part-time contracts beyond 4-hour limits) create unenforceable terms and heavily favor employees in disputes. Courts presume indefinite full-time employment status when documentation is deficient.
• Termination disputes arise when employers bypass due process procedures, fail to document just cause adequately, miscalculate severance, or terminate without following administrative procedures for objective reasons. Peruvian labor courts strongly tilt toward employee protection. Improper terminations result in reinstatement orders or compensation equivalent to 1.5 months per year of service plus damages.

With unemployment at 4.7% (Nov 2025) forecasted to trend around 6.0-6.5% in 2026, 

Compliance failures don't just cost money. They damage the employer brand in a market where labor rights awareness is growing and SUNAFIL enforcement is intensifying.

How an Employer of Record (EOR) Helps You Hire in Peru?

An Employer Of Record (EOR) eliminates entity formation delays, absorbs compliance risk, and handles payroll, tax, CTS deposits, and benefits administration.

What you gain with an EOR:

• Speed: Hires go live in days instead of months
• Certainty: Peruvian labor law adherence, accurate CTS and gratification calculations, proper EsSalud and pension remittance
• Control: Employee reports to you, performs work under your direction
• Risk mitigation: EOR handles complex benefit calculations, SUNAFIL compliance, and changing regulations

EORs don't replace strategic workforce planning. They enable it.

• Testing the Peruvian market without committing to entity setup costs? An Employer of Record (EOR) model makes sense.
• Scaling from 2 to 20 employees within six months? An EOR enables rapid, compliant growth.
• Hiring across multiple Latin American countries without setting up local subsidiaries? An EOR keeps expansion flexible and manageable.

The model works because it's legally recognized: the EOR is the statutory employer, you're the operational employer, and the employee receives full Peruvian labor law protections.

How Gloroots Simplifies Hiring in Peru?

When hiring in Peru through Gloroots, the entire process is managed for you end-to-end. You do not need to coordinate vendors, navigate local regulations, or manage administrative steps.

Gloroots runs the complete hiring workflow:

• Candidate sourcing, shortlisting, and background verification
• Initial screening to assess skills, experience, and role fit
• Interview coordination for final selection
• Offer issuance and compliant employment setup
• Statutory registrations (EsSalud, pension system, SUNAT), payroll setup, CTS account opening, and benefits administration
• Employee onboarding aligned with Peruvian labor regulations

This model removes operational overhead entirely, allowing you to focus on building and managing your team while Gloroots handles hiring execution, compliance, and onboarding from start to finish.

Gloroots provides end-to-end EOR services in Peru, handling employment contracts, payroll processing, tax compliance, social security administration, CTS deposits, gratification payments, and statutory filings. Local compliance expertise ensures your hiring aligns with Peruvian labor law requirements, from contract drafting to termination procedures.

The platform combines self-service functionality (contract management, onboarding workflows, payroll visibility) with dedicated customer success support.

With Gloroots, you get:

• Audit-ready reporting
• Transparent cost breakdowns
• Finance-team-friendly invoicing with country-level detail
• GL mapping

Gloroots scales with you: whether hiring your first Peruvian employee or expanding a distributed team across 140+ countries, the infrastructure supports growth without the complexity of multi-entity management.

It's not a vendor relationship. It's workforce infrastructure that adapts to your expansion strategy.

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FAQs

1. Can a foreign company hire employees in Peru without setting up a local entity?

Yes. Foreign companies can hire through an Employer of Record (EOR) without establishing a Peruvian entity. The EOR becomes the legal employer, handling compliance, payroll, tax, CTS deposits, and social security obligations while you direct the employee's work.

2. What are the legal requirements for hiring employees in Peru?

Employers must provide written contracts, register with Social Health Insurance (EsSalud) and pension systems, make monthly contributions, deposit CTS biannually (8.33% of salary), pay gratifications in July and December, withhold income tax, register with SUNAT electronic payroll, and comply with Peruvian labor law on hours, leave, and termination.

3. What taxes and social security contributions do employers pay in Peru?

Employers in Peru typically pay 20–25% of gross salary in mandatory contributions, including EsSalud (9%), pension contributions (12%), CTS, and statutory bonuses (gratifications).

4. How long does it take to hire and onboard an employee in Peru?

Through an EOR, hiring and onboarding can occur within 5 to 10 business days. Establishing a local entity first adds 2 to 4 months for registration and regulatory approvals.

5. What is the easiest way to hire employees in Peru compliantly?

Partnering with an EOR is the fastest, lowest-risk path. The EOR handles contracts, payroll, tax, EsSalud, pension compliance, CTS deposits, gratification payments, and benefits while you maintain operational control, eliminating entity formation costs and enabling hiring within days.

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