Legal Requirements As To The Form Of Agreement
In general, there is no legal requirement as to the form of agreement (employment contract) when the employee or worker is hired with an indefinite term. The majority of employees are hired verbally under an employment contract with an indefinite term. If there is a reason to limit the period of the contract because of a temporary objective, a fixed term employment contract should be used, in which case it needs to be in writing. Likewise, a written employment contract is mandatory when the employee is not a national of Peru and must to be registered at the Peruvian Ministry of Labour. It is also permissible to use part-time employment contracts, by a written agreement, depending on the circumstances, the part-time contracts must be registered at the Peruvian Ministry of Labour too.
Under labour law, the trial period is three (3) months. This legal trial period may be extended to six (6) months when an employee holds a position of trust and up to one (1) year for high rank executives in the case of management staff (conventional trial periods). On the other hand, the parties may agree that the trial period is not applicable in the labour relationship.
Hours Of Work
The ordinary working hours for men and women over age is eight (8) hours per day or forty-eight (48) hours per week, as maximum. A lesser amount can be established, either by Law, by agreement of the parties or by the employer’s unilateral decision.
Special Rules For Part-time Work
Part-time contracts must be written and registered at the Peruvian Ministry of Labour.
Remunerations are fixed under the rules of the market.
In general terms there is a minimum wage (currently S/. 930.00 Nuevos Soles Peruvian Currency) per month. Employees or workers who work at night (from 10 p.m. to 6 a.m.) are paid with a special surcharge of 35% over the minimum wage aforementioned, (currently S/. 1,255.50 Nuevos Soles Peruvian Currency) per month
There are 12 nonworking holidays established by Law in Peru (e.g. January 1st, Thursday and Friday in Easter week, May 1st, Christmas, Independence Day, etc.).
Likewise, employees and workers are entitled to one (1) or two (2) compulsory rest days in each week, normally Saturday and Sunday, depending on their work week in their workplace.
Employees and workers are also entitled to 30 calendar days paid for rest period (vacation) per year, after one year of service.
Teenagers from 12 to 14 years old may work a maximum of 4 hours per day and 24 hours per week. Teenagers between 15 and 17 years old may work 6 hours per day and 36 hours per week.
At the age of 70, retirement is mandatory and automatic, except if the parties agree to continue the employment.
The first 20 days of illness in a year are paid by the employer. If the Employee or worker is ill for more than 20 days, he/she will receive sick pay (subsidy) from the Employer, but the Employer is reimbursed by the Social Security.
There are Pension Funds and Insurance to cover disability.
Location Of Work/Mobility
The employee’s normal workplace must be specified in the employment contract, if this contract is required in writing. When there is no requirement to have a written employment contract, the employer should establish it in a formal communication to avoid any misunderstanding.
Mobility allowance can be included within the employment contract, but it cannot be an unreasonable amount. When the job requires travel to other temporary locations, it is normal for the employer to reimburse the employee or worker, as applicable, for all reasonable travel expenses.
There are two pension plan systems. One is a public system and the other one is a private system. The public system is administered by a Government Agency (ONP) and the private one is administered by Pension Fund Administrators (AFP) The employer should withhold and pay monthly these pension contributions to the public Administrator (ONP) or the corresponding AFP, depending on the chosen system.
Parental Rights (Pregnancy/ Maternity/ Paternity/ Adoption)
A pregnant woman may not be dismissed from work during pregnancy or for 98 days after giving birth.
A pregnant woman has a right to 49 days of prenatal rest and 49 further days of postnatal rest. In cases of multiple birth this right must be extended for a further 30 days.
An employee is entitled to be paid a maternity subsidy for 98 days.
Since 2018 there is also a paid paternity leave of ten (10) consecutive working days. This paid license could be extended to 20 days in the case of premature births and multiple births, 30 days in the case of births with terminal congenital disease or severe disability, or 30 days in the case of serious complications with the mother's health.
Also, in the event that the mother dies during childbirth or while on her maternity leave, the father of the child born will be the beneficiary with the mother license.
At the end of the postnatal period, the working mother is entitled to one hour a day of breastfeeding leave, until her child is one year old. In the case of multiple births, the leave for breastfeeding will be increased by one more hour a day.
Finally, paid leave of up to 30 days is granted to an employee that adopts a child whose age does not exceed 12 years.
Employment contracts with non-nationals (foreign employees) must be worded in accordance with certain forms provided by the labour regulations (e.g.: the term of the employment contract will not exceed three (3) years – however, renewals are possible; the obligation of the foreign employee to train a Peruvian national in the same position where the foreign employee performs labour activities in the local company; payment of return tickets at the termination of the employment contract, etc.).
All the fixed-term employment contracts must include the following: objective cause of the temporal hiring (indicating the legal basis), the names of the parties, the date when employment begins, the remuneration, benefits, working day, working hours, place of work and job title/job description, etc.
The employer and the employee are free to agree any other terms in addition to the compulsory provisions, provided that these terms are no less favourable than certain statutory rights.
Types Of Agreement
Employment contracts with non-nationals as well as fixed-term and part-time employment contracts with national employees or workers, must be executed in writing and, in the case of foreign employees, submitted to the Labour Authority for approval and registration.
Rules regarding secrecy and confidentiality are normally included in written employment contracts or in separated agreements. Breach of secrecy is cause for dismissal according to national law.
Ownership of Inventions/Other Intellectual Property (IP) Rights
Normally inventions should be the property of the inventor, unless the employee or worker uses working tools provided to him/her by the employer for his/her invention and he/she creates this in the worksite or during his/her working hours, or when the inventor has been hired to create such an invention, in which case, the economical exploitation of the invention is agreed to belong to the employer.
There are no regulations regarding pre-employment considerations.
A specific labour law imposes a limit (in percentage terms) on the number of foreign employees or workers who can be hired in a local company.
The employment of non-nationals is limited to 20% of the total number of employees or workers and 30% of the overall payroll in the local company (employer). Employment contracts with non-nationals must be approved by the competent Labour Administrative Authority.
Once the non-national employment contract has been approved, the expatriate may initiate the corresponding migratory procedure at MIGRACIONES’S offices, to obtain his/her corresponding worker visa.
Andean Community members, as well as, Spanish people, Immigrants, etc., are exempt from such limits, but their employment contracts need to be registered with the Labour Authority. Once registered, such people may initiate the migratory procedure at MIGRACIONES’S offices, to obtain his/her corresponding worker visa.
Hiring Specified Categories Of Individuals
There are certain benefits for employers that hire disabled people and also there are age limits for employees engaged in certain types of jobs (e.g. underground work, hazardous conditions, night work, etc.)
Outsourcing And/Or Sub-Contracting/Temporary Agency Work
In Peru there are specific rules for special companies of services dedicated to the provision of a workforce (staffing for temporary activities, supplementary roles or/ and specialized services) regulated by Law 27626 and its rules; and for Outsourcing companies, when the latter develop services with permanent personnel provision related to the core business of the main company (user company) regulated by Law 29245, Legislative Decree 1038 and its rules.
Staffing companies, who must be duly registered with the Labour Authority, in general are dedicated to providing personnel for complementary or auxiliary activities of their clients (user companies). Outsourcing companies, who are dedicated to performing an integral service related to the main activity of their clients (user companies), should act at their own risk and with their own financial, technical, material and human resources. In both cases the clients are jointly liable with their contracted companies, for unpaid labour duties of the staff who has provided the services. Moreover, if legal requirements are not met, the clients (user companies) shall incorporate the personnel (of the staffing company or the outsourcing company) onto their payroll and pay penalties.
Staffing: under the provisions of Law N° 27626 and its regulations, approved by Supreme Decree N° 003-2002-TR, the hiring of staff through a special company that offers provision of workforce services will proceed in only three (3) cases:
- Highly specialised services unrelated to the main activity of the user company;
- Complementary services and therefore outside the core business of the user company (such as safety, repair, cleaning, external messaging, or similar, and
- Temporary services which are work of an occasional nature (Transitional activities other than regular business of the user company) or replacement (activities designed to replace a worker of the user company that has his/her contract suspended by justified cause, or – for administrative reasons – the worker is performing other work in the same company) and in no case should the number of workers hired under this modality exceed 20% of the entire staff in the user company.
It is forbidden for staffing services to be involved in the continued implementation of the core business of the user company.
During the period of assignment of workforce provided in favour of the user company, the staffing services company remains the legal employer, which means that the user company is not responsible for the payment of wages or social benefits or any other right or benefit of the workforce assigned because the user company is not its employer.
The hiring of services provided by staffing companies are subject to certain rules, among which it should be noted that the contract between both companies (the staffing company and the user company) should be in writing and duly filed at the Peruvian Ministry of Labour. Also, the staffing company is obliged to grant a letter of guarantee (carta fianza) – in favour of the user company or in favour of the Ministry of Labour – in order to ensure the payment of one month of social benefits and pension obligations in favour of the workforce assigned. If the letter of guarantee does not cover part or all of these obligations, the user company is severally liable thereon.
Additionally, the staffing company must be registered at the Ministry of Labour and its main and single core business should be the provision of staffing services (Workforce provision).
Outsourcing: the scope of the Outsourcing Law includes user companies whose workers belong to the private sector regime that outsource part of its core business, commissioning it to another company (outsourcing company) provided that there is continuous placement of workers from the outsourcing company to the workplace or place of business of the user company rendering the required services.
By outsourcing, a company hires another one to develop specialized activities or work which shall be performed at its own account and risk, assuming responsibility for the results of its activities. The services are carried out by the outsourcing company with its own financial, technical or material resources, and with workers under its exclusive subordination. Outsourcing companies should comply with the following requirements: plurality of clients, have proper equipment, own capital investment, and the form of its remuneration should be calculated by hours work or services completed.
If the integral service is performed with continuously appointing workers to the facilities of the user company, the outsourcing company must be registered at the Ministry of Labour and must inform its employees and the user company’s employees about the integral services to be provided. Further, a written outsourcing service agreement is required. In this case, the user company is jointly and severally liable for worker’s rights and obligations of social security of all the workers of the outsourcing company appointed to the facilities of the user company. Such liability remains for one year after the termination of the appointment and the user company might claim any amount paid against the outsourcing company.