Overview: Peru

Contributed by Vinatea & Toyama

During COVID-19, the Peruvian government has approved transitory regulations that, by making the management of labor relations more flexible, have allowed the continuity of labor relationships. For example, the Emergency Decree extraordinarily allows employers to apply leave without payment to its employees, provided that it is approved by the Ministry of Labor. In addition, regulations for remote work have been issued, which have allowed employers to vary form face-to-face provision of services to home office, with a less rigid regulation than that of telework, which already existed in our legislation.

In any case, this flexibility has a temporary scope. Labor relations in Peru are mainly ruled by the provisions contained in the Labor Productivity and Competitiveness Law and by the labor case law. Peruvian labor laws and, above all, labor case law, have quite a protectionist slant toward employees. For example, according to Peruvian legislation, temporary hiring is an exception and, as such, it has various requirements for its validity, which are also strictly controlled by the authorities. In addition, the constitutional case law has determined that an employee can request his or her replacement in the event of an unjustified dismissal.

In fact, this is confirmed by the results of the World Economic Forum. The Global Competitiveness Report 2019, in which, of the 141 countries analyzed worldwide, Peru is in position 134 in terms of job placement and employees’ dismissal.

In addition, during the employment relationship, Peruvian legislation has provided several benefits to which employees in private activity are entitled:

(i) Remuneration: Employees shall receive a minimum wage of S/ 930.00 (Nine Hundred and Thirty and 00/100 Soles) if rendering services for an ordinary working day, (not exceeding of eight daily hours or 48 monthly hours). Reduced working hours shall be proportionally paid.

(ii) Family allowance: Family allowance shall be paid to employees having children under 18 years old or until the age of 24 if they are studying at college or university. The employees are entitled to receive an amount equivalent to 10% of the minimum wage (currently S/ 93.00), irrespective of the number of children the employee has).

(iii) Compensation for length of services: The purpose of this benefit is to serve as coverage in case of termination of employment. It is equivalent to 9.72% of the monthly remuneration approximately. It shall be paid in May and November by the employer in a bank account in the name of the employee.

(iv) Legal bonuses in July and December: Employees are entitled to the payment of two bonuses during the year, each one equal to one monthly salary. The bonuses are paid one in July and one in December, proportionally to the full months worked during the period.

(v) Extraordinary bonuses: Employees are entitled to the payment of two extraordinary bonuses each year, payable on July and December, equivalent to 9% of the monthly salary.

(vi) Profit sharing: This benefit is mandatory for employers with twenty employees or more.

Employees have the right to receive a percentage of the annual income before taxes of the employer.

Depending on the economic activity of each employer the percentage to be distributed among the employees of a company varies between 5% and 10%. The annual amount to be received by each employee may not exceed 18 monthly remunerations.

(vii) Mandatory life insurance: A life insurance policy must be hired by the employer at its cost and expense in favor of all its employees.

Employees are also entitled to paid leave such as weekly rest, maternity leave, paternity leave, sick leave, and vacations. Regarding vacations, employees are entitled to 30 calendar days of paid vacations per year. Once a complete year of service is achieved, the employee must use his or her 30 days of vacations within the subsequent year of accruing the right.

Otherwise, if this does not occur, the employee will earn the right to an additional remuneration and a severance as a compensation for not having taken vacations on time, equal to a monthly remuneration for each one.

On the other hand, employers also have important obligations regarding safety and health at work. Indeed, employers have a legal prevention duty and therefore must devote all their efforts to preventing occupational accidents or diseases, complying with obligations such as training of employees, establishment of a committee on safety and health at work, and risk assessment, among others. Safety and Health at Work is a fundamental aspect for organizations in Peru.

Accordingly, an employee can only be dismissed if there is a cause established by law, related to his/her conduct or capacity, and duly proved. In addition, a formal procedure provided by law must be carried out. In that sense, if a dismissal without a proven cause is carried out, according to our labor case law, the employee could claim: (i) his/her reinstatement to his/her job position; or, (ii) the payment of the mandatory severance for arbitrary dismissal, at their sole discretion.

The authorities in charge of verifying that employers comply with their obligations are SUNAFIL (for its acronym in Spanish) and the judiciary. Indeed, SUNAFIL, through an inspection procedure verifies whether there was a breach and, if applicable, can impose a fine on the employer. Also, employees can pursue a claim to the judiciary to assert any right that has been violated. It is important to note that both are independent routes and it is not necessary to go to one before the other; however, it is usual for employees to request an inspection from SUNAFIL before going to court, since SUNAFIL’s final resolution could serve as a means of proof with important institutional support.

According to our migratory and labor regulations, in order for a foreigner to provide services in Peruvian territory, he or she requires a work visa issued by the migratory authority and an employment contract duly registered before the Ministry of Labor. For this, prior to the effective provision of services in Peru, an immigration procedure must be initiated before the immigration authority (either from Peru or from abroad). It is important to mention that there are certain countries with multilateral agreements with Peru (Argentina, Brazil, Paraguay, Uruguay, Bolivia, Chile, Colombia and Ecuador) and, therefore, there are particular rules for obtaining a work visa.

Finally, in Peru, unionization and the right to strike are constitutionally recognized rights. In this sense, labor unions activity has special protection and is increasingly active in Peru. Unions are representative, especially in sectors such as mining or the industrial sector, and increasingly, they are affiliated with federations that seek to act as interlocutors.

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