Peru is quickly becoming a leading destination for companies looking to expand their remote teams and access a skilled talent pool in Latin America. Known for its dynamic economy, diverse workforce, and growing infrastructure, Peru offers significant advantages for businesses seeking to hire and operate in the region. This guide will walk you through everything you need to know about hiring in Peru. From understanding different hiring methods and navigating labor laws to setting up a business entity for direct hiring, this comprehensive guide covers the essential aspects of recruitment, payroll, taxes, and compliance. Whether you’re a startup hiring your first Peruvian contractor or a growing company establishing a local entity, this guide will help you navigate the Peruvian market efficiently and compliantly.
Key Stats About PERU
Language
Spanish (English proficiency is growing, particularly in the business and tech sectors)
Time Zone
GMT-5 (similar to Eastern Standard Time, with no Daylight Saving Time)
Currency
Peruvian Sol (PEN)
Population
Approximately 33 million
Major Cities for Talent
Lima, Arequipa, Trujillo
Internet Penetration
Over 60%, with reliable high-speed internet in urban areas
Labor Force
Approximately 17 million, with a strong focus on tech, finance, and services
Education
 High literacy rate (94%) with approximately 20,000 STEM graduates annually
Why Hire in Peru?
Peru has become one of Latin America’s most promising markets for hiring skilled professionals. Here’s why it stands out as an ideal location for businesses seeking remote talent:
Government Incentives
Peru’s government actively supports foreign investment through free trade agreements, tax benefits, and simplified regulatory frameworks. Programs like Peru StartUp foster innovation and entrepreneurship, attracting skilled professionals ready to work with international companies.
Skilled Workforce
With a labor force of over 17 million, Peru offers a diverse and highly educated talent pool. Cities like Lima, Arequipa, and Trujillo are known for their universities and professional ecosystems, providing access to professionals in technology, engineering, finance, and customer service.
Growing Economy
Peru has one of the fastest-growing economies in Latin America, with a GDP of $250 billion in 2023. A stable macroeconomic environment and a strong focus on foreign investment make it an attractive market for international businesses.
Cultural Compatibility
Peruvians exhibit a work culture that aligns well with North American and European standards, emphasizing collaboration, punctuality, and adaptability. Additionally, Peru’s GMT-5 time zone enables seamless communication with U.S.-based teams, facilitating real-time collaboration.
Unlock
Peru's
talent goldmine.
MOST PROMISING MARKETS
3 Ways to Hire
in Peru
When it comes to hiring talent in Peru, businesses have three main options: engaging contractors, utilizing Employer of Record (EOR) services, or forming a local legal entity. Each approach offers distinct advantages, compliance requirements, and cost considerations. Here’s a breakdown of these options:
1. Hiring Contractors in Peru
Hiring contractors in Peru is often the simplest way to quickly onboard talent for short-term or project-based work. Contractors operate as self-employed individuals and handle their own taxes and benefits.
PROS
Flexibility: Suitable for short-term projects or roles with fluctuating workloads.
Cost-Effective: No requirement to provide benefits such as health insurance, pensions, or paid leave.
Simplicity: Minimal paperwork with no need to set up a legal entity.
CONS
Compliance Risks: Misclassifying employees as contractors can lead to financial and legal penalties.
Limited Control: Less oversight and control compared to full-time employees.
Talent Attraction: Top candidates may prefer the stability and benefits of full-time employment.
Key Considerations: Clearly define the scope of work, deliverables, and payment terms in a contractor agreement. Ensure compliance with Peruvian laws that distinguish contractors from employees to avoid misclassification risks.
2. Employer of Record (EOR) Services in Peru
An Employer of Record (EOR) serves as the legal employer of your Peruvian staff, managing payroll, taxes, benefits, and compliance. This allows businesses to hire full-time employees without the need to establish a local legal entity.
PROS
Compliance: Ensures adherence to local labor laws, benefits, and tax regulations.
Quick Onboarding: Speeds up hiring without navigating Peru’s administrative complexities.
Reduced Administrative Burden: Payroll, HR, and benefits are managed by the EOR.
CONS
Service Costs: EOR services charge a monthly fee per employee, adding to operational expenses.
Indirect Control: Certain employment decisions must go through the EOR.
Key Considerations: EOR services are ideal for companies exploring the Peruvian market or hiring small teams. They offer a compliant and flexible solution for hiring full-time talent.
3. Entity Formation in Peru
Setting up a local legal entity in Peru allows businesses to hire employees directly and manage their operations independently. This option is best suited for companies planning long-term investments and larger workforce expansion.
PROS
Full Control: Directly oversee hiring, payroll, benefits, and operations.
Market Presence: Establish a stronger local brand and long-term footprint in Peru.
Long-Term Strategy: Ideal for businesses scaling operations and building large teams.
CONS
Time-Consuming: The process of incorporation involves significant time and paperwork.
Higher Costs: Upfront costs for registration, legal fees, and ongoing compliance.
Regulatory Complexity: Requires navigating Peru’s legal and tax environment.
Key Considerations: Setting up an entity requires registering with Peru’s Public Registry, obtaining a tax identification number (RUC), and complying with labor and tax obligations. This option is most suitable for businesses with long-term growth strategies in Peru.
Labor Laws and
Employment Contracts
Understanding Peru’s labor laws is essential to ensure compliance and maintain a positive employer-employee relationship. This section outlines the main types of employment contracts and the key labor regulations.
Types of Employment Contracts
Peruvian labor law recognizes several types of employment contracts. The most common ones are:
Indefinite-Term Contract: The default contract type for permanent roles with no defined end date. This provides stability for long-term hires.
Fixed-Term Contract: Designed for temporary or project-based roles, with a maximum duration of five years. After this, the contract may convert to indefinite-term.
Part-Time Contract: Suitable for employees working fewer than 24 hours per week. Benefits are provided on a proportional basis.
Key Considerations: All employment contracts must be in writing and clearly outline job duties, salary, benefits, working hours, and termination conditions. Fixed-term contracts require a defined end date and justification for temporary employment.
Employee Rights and Benefits
Peruvian labor law guarantees employees several rights and mandatory benefits:
Working Hours: The standard workweek is 48 hours, typically spread over six days. Overtime is paid at a rate of 1.25 to 2 times the regular hourly rate, depending on the day and time.
Paid Leave: Employees receive 30 calendar days of paid vacation annually after completing one year of service.
Public Holidays: Peru recognizes 12 public holidays, which are observed as paid days off.
Maternity and Paternity Leave: Female employees are entitled to 14 weeks of paid maternity leave, while fathers are entitled to 10 days of paid paternity leave.
Severance Pay: For termination without just cause, employees are entitled to one month’s salary per year of service, up to a maximum of 12 months.
Key Considerations: Adhering to these rights and benefits is critical for maintaining compliance and building trust with employees. Employment contracts should outline these terms clearly to avoid disputes.
Employee Rights and Benefits
Employers in Peru must comply with labor laws that guarantee various rights and benefits to employees. These regulations aim to protect workers while maintaining a fair and balanced work environment.
Working Hours
The standard workweek in Peru is 48 hours, typically divided across six days.
Overtime is permitted and must be compensated at a rate of 1.25 times the regular hourly wage on weekdays and 2 times on Sundays or holidays.
Paid Leave
Employees are entitled to 30 calendar days of paid vacation annually, which can be taken after completing one year of continuous employment.
Peru recognizes 12 public holidays per year, which employees typically receive as paid days off.
Maternity and Paternity Leave
Female employees are entitled to 14 weeks of paid maternity leave, with the option to split the leave period before and after childbirth.
Male employees are entitled to 10 days of paid paternity leave following the birth of their child.
Mandatory Bonuses
Employers are required to provide two mandatory bonuses annually, equal to one month’s salary each:
Social Security Contributions
Employers are responsible for contributing to Peru’s social security system, which includes health insurance and pensions:
Health Insurance (EsSalud): Employers contribute 9% of the employee’s monthly salary to the public health insurance system.
Pension Contributions: Employees contribute 10% of their salary to the pension system, which may be public (ONP) or private (AFP).
Key Considerations: These benefits must be accurately calculated and disbursed to avoid penalties. Offering competitive benefits beyond the mandatory requirements can also help attract and retain top talent in Peru.
Payroll, Benefits
and Compensation
Employers must follow strict guidelines when managing payroll and compensating employees in Peru. Compliance with payroll structures, mandatory benefits, and contributions is essential to avoid legal issues.
Salary Structure
Base Salary: The minimum wage in Peru is 1,025 PEN (approximately $270 USD) per month as of 2024.
Bonuses: Mandatory July and December bonuses equal to one month’s salary each.
Allowances: Employees earning below a specified threshold are entitled to a transportation or meal allowance.
Mandatory Benefits
Health Insurance: Employers must contribute 9% of an employee’s monthly salary to the public health system (EsSalud).
Pension Contributions: Employees must contribute 10% of their salary to their pension plan, either through the public (ONP) or private (AFP) system.
Severance (CTS): Employers must deposit a severance amount equivalent to one month’s salary per year of service into a Compensation for Time of Service (CTS) account.
Payment Cycles
Monthly Payments: Salaries are typically paid monthly.
Deductions: Employers must withhold taxes and contributions for pensions, social security, and other mandatory deductions.
Key Considerations: Employers must ensure payroll compliance by calculating mandatory contributions, taxes, and bonuses accurately. Partnering with a local payroll provider can help simplify these processes.
Navigating Taxes and
Legal Compliance in Peru
Understanding Peru’s tax and legal framework is vital for businesses hiring local talent. Employers must comply with corporate and employment tax regulations to avoid penalties.
Corporate Taxes
Corporate Income Tax: The standard corporate income tax rate is 29.5%, applicable to taxable income.
Value-Added Tax (VAT): A 18% VAT is applied to the sale of goods and services, with specific exemptions for items like basic food products.
Employment Taxes and Withholdings
Income Tax Withholding: Employers must withhold income tax from employees’ salaries based on progressive rates, ranging from 8% to 30%.
Social Security Contributions: Employers are responsible for contributing 9% of salaries to EsSalud.
Pension Contributions: Employees contribute 10% of their salary to their pension plan, deducted directly from their wages.
Key Considerations: Accurate calculations and timely remittance of these taxes and contributions are essential. Failure to comply can result in penalties and legal issues for the company.
Data Protection and Privacy Regulations
Peru’s Data Protection Law (Law 29733) governs the collection and processing of personal data:Â
Data Consent: Employers must obtain explicit consent from employees before processing their personal information.
Data Security: Companies must implement measures to protect employee data from unauthorized access or misuse.
Permitted Use: Employee data can only be used for purposes outlined in the consent form or employment contract.
Key Considerations: Businesses must maintain accurate records and ensure compliance with Peru’s tax and data protection laws. Collaborating with local legal and accounting experts can help manage these obligations effectively.
Company Formation
and Setup in Peru
For businesses planning a long-term presence in Peru, setting up a local entity is a critical step. Here’s what the process entails:
Types of Business Entities
Simplified Stock Company (S.A.C.): The most flexible and common structure for foreign investors. It allows limited liability and streamlined governance.
Limited Liability Company (S.R.L.): Requires at least two partners and is ideal for small businesses.
Public Corporation (S.A.): Suitable for larger companies, requiring stricter governance and reporting requirements.
Registration Process
Choose a Business Name: Verify the availability of the name with Peru’s National Public Registry (SUNARP).
Draft and Notarize Bylaws: Define the company’s purpose, governance, and operational rules.
Register with SUNARP: Submit incorporation documents to obtain a business registration number.
Obtain a Tax ID (RUC): Register with Peru’s National Tax Authority (SUNAT) to obtain a tax identification number.
Open a Corporate Bank Account: Required for conducting business transactions and payroll payments.
Key Considerations: The process of establishing a legal entity in Peru can take several weeks. Partnering with local legal advisors ensures smooth navigation of the regulatory requirements.
Compliance and
Management in Peru
Ongoing compliance with local regulations is essential for businesses operating in Peru. Key compliance areas include tax filings, payroll management, and social security contributions.
Annual Compliance Requirements
Tax Filings: Companies must file annual corporate income tax returns and monthly VAT declarations.
Financial Statements: Businesses are required to prepare and submit financial statements to the tax authority (SUNAT).
Social Security Contributions: Employers must remit social security and pension contributions monthly.
Working with Local Partners
To streamline operations and ensure compliance with Colombian regulations, many foreign companies collaborate with local partners:
Accounting Firms: Handle bookkeeping, tax filings, and financial reporting to ensure accuracy.
Legal Advisors: Provide support for employment contracts, compliance updates, and dispute resolution.
Payroll Providers: Manage salary payments, deductions, and contributions to streamline operations.
Key Considerations: Regular audits and collaboration with local experts can help ensure compliance and reduce the risk of penalties.
Leveraging Employer of Record (EOR) and Professional Employer Organization (PEO) Services
For companies seeking to hire in Peru without establishing a legal entity, EOR and PEO services offer a practical solution.
Employer of Record (EOR): The EOR acts as the legal employer, managing payroll, taxes, and benefits, while you retain operational control.
Professional Employer Organization (PEO): Similar to an EOR, a PEO handles HR, compliance, and payroll, allowing you to focus on day-to-day business activities.
Key Considerations: These services simplify hiring and ensure compliance, making them an ideal option for companies new to the Peruvian market.
Conclusion to Hire in Peru
Peru offers a dynamic and growing environment for businesses seeking to hire skilled talent in Latin America. With its diverse workforce, stable economy, and government incentives, Peru is an excellent choice for remote teams and local operations. Whether you opt to hire contractors, use an EOR, or establish a local entity, this guide provides the foundation to navigate Peru’s labor market efficiently and compliantly.