Hiring in Peru: A Comprehensive Guide for US Companies

Peru has emerged as a strategic hub in the global talent market, offering a unique blend of skilled professionals, competitive labor costs, and a business-friendly environment. Its urban centers, especially Lima, are home to a growing pool of highly educated workers in fields like technology, finance, and engineering. For US-based companies, Peru represents an attractive destination for international hiring due to its:

• Access to a large, diverse, and motivated talent pool.
• Cost-effective labor compared to North America and Western Europe.
• Proximity to US time zones, enabling seamless collaboration.
• Robust legal frameworks that protect both employers and employees.

Whether you’re seeking full-time employees, project-based specialists, or remote teams, understanding Peru’s labor market and compliance requirements is crucial for successful expansion.

How to Hire Employees in Peru

Assess Your Hiring Needs

Before entering the Peruvian market, clarify your hiring objectives:

• Full-time vs. project-based support: Decide if you need permanent staff for ongoing operations or contractors for short-term projects.

• Local compliance requirements: Peru’s labor laws are comprehensive, with strict rules around contracts, benefits, and payroll.

• Onboarding speed vs. long-term control: Consider if you need rapid market entry or prefer building a local presence for greater control.

A clear assessment will help you choose the right hiring model and avoid compliance pitfalls.

Hiring Options in Peru

You have two primary options for hiring in Peru:

• Set Up a Legal Entity: Establishing a local subsidiary or branch gives you direct control over hiring, payroll, and compliance. This approach is best for long-term investments but requires significant time, capital, and administrative effort.

• Partner with an Employer of Record (EOR): An EOR acts as the legal employer on your behalf, handling payroll, benefits, and compliance. This model enables rapid hiring without the need for a local entity, making it ideal for testing the market or scaling quickly.

For more on global expansion strategies, see The Need for EOR, PEO, and AOR for Global Expansion and Employer of Record: Complete Guide for Global Employers.

EOR vs. Legal Entity: Side-by-Side Comparison

Feature	Employer of Record (EOR)	Legal Entity
Setup Speed	Fast (days to weeks)	Slow (months)
Upfront Investment	Minimal	High (registration, legal, office)
Compliance Management	Handled by EOR	Your responsibility
Payroll & Benefits Administration	Outsourced to EOR	In-house
Market Entry Flexibility	High	Limited
Direct Control Over Employees	Moderate	Full
Long-Term Scalability	Good for testing/early stages	Best for large, permanent teams
Risk of Local Non-Compliance	Low	High if not managed properly

Understanding Worker Classification

Employees vs. Contractors: Key Differences

Proper classification is critical in Peru. Here’s how employees and contractors differ:

Aspect	Employees	Contractors
Relationship	Ongoing, subordinate	Project-based, independent
Benefits	Mandatory (health, pension, bonuses, etc.)	Not entitled to statutory benefits
Payroll Taxes	Employer withholds and remits	Contractor responsible for own taxes
Work Direction	Employer sets hours, tasks, oversight	Contractor controls how/when work is done
Termination	Regulated by law, notice required	Based on contract terms
Compliance Risk	High if misclassified	Lower, but must avoid “hidden employment”

Legal Implications and Risks of Misclassification

Misclassifying employees as contractors is a common risk in Peru. If authorities determine that a contractor is actually functioning as an employee, your company may face:

• Back payment of benefits (health, pension, bonuses).
• Retroactive payroll taxes and penalties.
• Fines for non-compliance.
• Legal disputes or reputational damage.

Peru’s labor authorities actively monitor classification, so ensure contracts, work arrangements, and reporting accurately reflect the true nature of the relationship. For more on global classification, see W-2 and 1099 Forms: Differences, Usage, and Classification Regulations.

Hiring Costs and Payroll

Hiring Costs Overview

Hiring in Peru is cost-effective, but employers must budget for:

• Base salary: As of January 2025, the minimum wage is 1,130 PEN/month.
• Mandatory benefits: 13th and 14th-month pay, health insurance, pension, and compensation for time of service (CTS).
• Payroll taxes: Employer contributions for health (EsSalud), risk insurance, and other statutory deductions.
• Recruitment and onboarding: Costs for sourcing, training, and integrating new hires.

Competitive salaries are expected in sectors like tech, finance, and mining, especially in Lima.

Payroll Setup Steps

To run compliant payroll in Peru:

1. Register your entity or EOR with the Peruvian Labor Ministry.
2. Collect employee data (tax ID, bank info, contract details).
3. Calculate gross-to-net pay, including all statutory deductions.
4. Remit payroll taxes (income tax, EsSalud, pension) to authorities.
5. Disburse net salary via approved payment methods.
6. Maintain payroll records for audits and compliance.

For a deeper dive, see How Tarmack Streamlines Global Payroll and Compliance for Enterprise Growth.

Income Tax Rates

Peruvian income tax is progressive, with rates based on annual earnings. Employers must withhold the correct amount from each paycheck and remit it to tax authorities. Always consult local experts or your EOR for current rates and thresholds.

Payment Methods

• Direct deposit/EFT: The most common and efficient method, transferring funds directly to Peruvian bank accounts.
• International wire transfer: Used when local banking is unavailable, but incurs higher fees.
• EOR payroll: If using an EOR, all payments and compliance are managed for you.

For more on international payments, see How to Pay International Employees.

Using Global Payroll Services

Global payroll platforms or EORs simplify compliance by:

• Automating payroll calculations and tax withholdings.
• Ensuring timely payments and statutory filings.
• Providing local expertise to avoid costly errors.

This approach is especially useful for companies without a local HR team or those managing multi-country payrolls.

How to Properly Hire and Pay Contractors

• Use clear, written contracts specifying project scope, deliverables, and payment terms.
• Avoid directing daily work or integrating contractors into core business functions.
• Pay via bank transfer or approved digital platforms, maintaining documentation for compliance.
• Review Peruvian labor laws regularly to avoid “hidden employment” risks.

For best practices, see Best Ways to Pay International Independent Contractors: Challenges and Solutions.

Compliance Risks

Incorrect Payroll Contributions

Errors in calculating or remitting payroll taxes (EsSalud, pension, CTS) can result in:

• Fines and penalties.
• Retroactive payments.
• Audits and reputational risk.

Invest in reliable payroll software or partner with an EOR to ensure accuracy.

Permanent Establishment Risk

If your company has a substantial presence in Peru—such as a physical office or ongoing remote workforce—you may trigger “permanent establishment” status, leading to additional corporate tax obligations. Always assess your business footprint and seek local tax advice.

Statutory Benefits

Peru mandates several non-negotiable benefits:

• 13th and 14th-month salary (paid in June and December).
• Health insurance (EsSalud).
• Pension contributions.
• Compensation for time of service (CTS).
• Paid leave entitlements (annual, maternity, paternity, sick leave).

Failure to provide these can result in legal action and back payments.

Misclassification Risks

Improperly classifying employees as contractors to avoid taxes or benefits can lead to:

• Backdated payroll taxes and benefits.
• Legal disputes.
• Significant fines.

For more on compliance, see Employment Compliance and Its Importance.

Provincial/Regional Law Variances

While Peru’s labor laws are largely national, some regions may have additional regulations or municipal taxes. Always check local requirements, especially when operating outside major urban centers.

Overview of Intellectual Property Rights for Employers

Employers in Peru should:

• Include IP assignment clauses in employment and contractor agreements.
• Protect trade secrets and confidential information through NDAs.
• Ensure compliance with Peru’s data protection and IP laws.

For more on IP management, see Managing Intellectual Property (IP) Through EOR: Key Considerations for Businesses.

Onboarding Process

Before Their First Day

• Finalize and sign employment contracts (in triplicate).
• Register employees for tax and social security.
• Set up payroll and statutory benefits.
• Prepare onboarding materials and IT access.

On Day 1

• Conduct orientation and workplace safety briefing.
• Complete tax and benefits paperwork.
• Introduce new hires to their team and systems.

During Their First 90 Days

• Provide job-specific training and mentorship.
• Schedule regular check-ins and feedback sessions.
• Monitor performance and support cultural integration.

Offer Letter Essentials

• Clearly state job title, salary, benefits, and working conditions.
• Outline probationary period (typically three months).
• Specify notice periods, termination terms, and statutory benefits.
• Include confidentiality and IP clauses.

NDAs and Confidentiality

• Require employees and contractors to sign NDAs.
• Clearly define confidential information and IP ownership.
• Outline consequences for breaches.

Running Background Checks

• Obtain written consent before conducting checks.
• Verify education, work history, and references.
• Ensure compliance with Peru’s data protection laws.

For more onboarding tips, see Top Eight Best Practices for Onboarding International Employees: How EOR Can Help.

Remote Employee Management

Managing remote teams in Peru requires robust processes:

• Computer and App Access: Provide secure laptops, VPNs, and access to essential tools.
• IP Protection: Use strong contracts and technical safeguards to protect company IP.
• Performance Management: Set clear goals, regular check-ins, and transparent communication channels.
• Data Security: Comply with Peru’s data protection laws; use encrypted communications and secure storage.

For actionable tips, see How to Manage Employees Remotely and Globally and Building Organizational Culture in Remote Teams: Employee Well-Being & Productivity.

Labor Law Compliance

Key Working Condition Requirements

• Standard workweek: 48 hours (typically 6 days x 8 hours).
• Overtime: Paid at premium rates (25% extra for first two hours, 35% thereafter, 100% on holidays).
• Annual leave: 30 days paid vacation after one year.
• Maternity leave: 98 days, fully paid.
• Paternity leave: 10 days.
• Sick leave: Requires medical certificate after three days.

Working Conditions by Employment Type

• Full-time employees: Entitled to all statutory benefits and protections.
• Contractors: No statutory benefits; must be truly independent.

No At-Will Employment

Peru does not recognize at-will employment. Termination must be for just cause or follow contract terms, with proper notice and severance as required by law.

Trade Unions and Collective Bargaining

• Strong union presence, especially in larger companies and certain sectors.
• Collective bargaining agreements may set additional terms for wages, benefits, and working conditions.

For more on global labor law challenges, see Navigating the Challenges of International Labor Laws with EOR Services.

Termination Guidelines

Acceptable Termination Reasons

Peruvian law allows termination for:

• Just cause (misconduct, poor performance, redundancy).
• End of contract term (for fixed-term contracts).
• Mutual agreement.

All terminations must be documented and follow due process. During probation (typically three months), employers have more flexibility but must still document reasons.

Notice Periods and Legal Protections

• Notice periods: Typically 30 days, unless otherwise specified in the contract.
• Severance: Owed unless termination is for just cause.
• Documentation: Employers must provide written notice and reason for termination.
• Dispute resolution: Employees can challenge dismissals through labor courts.

For best practices, see Suggested Script for Terminating an Employee Professionally and Respectfully.

Benefits of Hiring in Peru

Foreign companies benefit from Peru’s:

• High-quality talent pool: Skilled professionals in tech, finance, engineering, and more.
• Cost efficiency: Lower labor costs than North America or Western Europe.
• Time zone alignment: Overlaps with US working hours for real-time collaboration.
• Business infrastructure: Modern banking, reliable internet, and growing tech ecosystem.
• Flexible hiring models: Options for full-time, contractor, or EOR-based hiring.
• Growth potential: Access to emerging markets in Latin America.

Tap into Peru’s Talent Market

Hiring in Peru offers US companies a strategic advantage—access to skilled talent, cost savings, and operational flexibility. However, success depends on understanding and complying with Peru’s complex labor laws, tax rules, and cultural nuances. 

By choosing the right hiring model (EOR or legal entity), investing in compliant payroll processes, and prioritizing proper worker classification, you can build a high-performing team while minimizing risk.

For a deeper look at global hiring strategies, see Top 5 Hacks to Hiring and Managing Talent Abroad and Guide to Global Expansion for Talent Acquisition Leaders.

Ready to build your team in Peru?

Contact Tarmack today to learn how our global EOR platform can help you hire, pay, and manage talent in Peru—compliantly and efficiently. Get Started Now