Executives used to at-will employment are often surprised by how Peru handles misconduct. A regional manager discovers that a sales supervisor has been diverting customer orders to a relative’s company, and the instinct is to end the relationship that afternoon. In Peru, that instinct is the fastest way to turn a strong case into a liability. Dismissal for serious misconduct is legally available and frequently used, but it only holds if three things line up: a ground that the statute recognizes, evidence that will survive a court’s scrutiny, and a written procedure followed in the right order and at the right time.
This article explains how falta grave (serious misconduct, the Peruvian equivalent of gross misconduct) works, how it interacts with global compliance policies, and where foreign-owned employers most often lose cases they should have won. For the full map of termination routes, see our guide to termination of employment in Peru.
Why Peru requires a cause
The starting point is constitutional. Article 27 of the 1993 Constitution requires the law to give employees “adequate protection against arbitrary dismissal.” The statute that implements this for the private sector is the Productivity and Competitiveness Law (the consolidated text of Legislative Decree 728, approved by Supreme Decree 003-97-TR, usually cited as the LPCL).
Article 22 of the LPCL states that an employee working four or more hours a day can only be dismissed for a just cause provided by law and duly proven. The causes fall into two families: those related to the employee’s capacity (article 23) and those related to conduct (article 24). Conduct-based causes are serious misconduct, a criminal conviction for an intentional offense, and disqualification from practicing the activity.
Key point
A breach of company policy is not automatically a dismissal ground in Peru. The question is always whether the conduct fits one of the statutory categories of serious misconduct and whether it is serious enough to justify ending the relationship.
Two groups sit outside this framework: employees still within their probationary period (generally three months, extendable in writing for qualified, trust and management staff) and part-time employees working under four hours a day. Even for them, a dismissal motivated by a prohibited reason, such as discrimination, pregnancy or, since Law 32431, a cancer diagnosis, is null.
The statutory categories of serious misconduct
Article 25 of the LPCL defines serious misconduct as a breach of the employee’s essential duties that makes it unreasonable to continue the relationship. It then lists the conduct that qualifies. In summary:
| Category (art. 25 LPCL) | Typical examples in an international operation |
|---|---|
| Breach of labor good faith; repeated refusal to follow orders; breach of the internal work rules or safety rules, if serious | Falsifying expense reports, ignoring safety protocols on site |
| Deliberate and repeated reduction in output | Sustained, intentional slowdown after warnings |
| Appropriation (completed or attempted) or misuse of employer property | Diverting inventory, using company assets for a side business |
| Use or disclosure of confidential information, false information intended to harm, unfair competition | Sending client lists to a competitor, working for a rival |
| Repeated attendance under the influence of alcohol or drugs (or once, if the role makes it exceptionally serious) | A forklift operator or driver reporting for duty intoxicated |
| Violence, serious indiscipline, verbal or written abuse | Assaulting or insulting a colleague or supervisor |
| Intentional damage to premises or equipment | Sabotage of machinery or systems |
| Abandonment for more than three consecutive days; unjustified absences above statutory thresholds; repeated lateness already sanctioned | Unexplained absence during a project peak |
| Sexual harassment | Harassment by a manager or by any employee |
On absences, the thresholds are specific: more than five days in a 30-day period or more than fifteen in a 180-day period, whether or not previously sanctioned. Lateness only becomes serious misconduct if it is repeated and has been sanctioned before.
Legal note
Article 26 of the LPCL provides that serious misconduct is established by its objective verification in the employment procedure, independently of any criminal proceeding. The employer does not need to wait for a prosecutor or a conviction, but it does need proof that would convince a labor judge.
Where global policies fit
Multinational groups rely on codes of conduct, anti-bribery policies and IT acceptable-use rules. In Peru these documents do real work, but indirectly. They show that the employee knew the standard, they help characterize the conduct as a breach of good faith, and, when incorporated into the internal work rules (Reglamento Interno de Trabajo, mandatory for employers with more than 100 employees), they can support the category of breaching approved internal rules. What they cannot do is create a dismissal ground that the statute does not contain.
The procedure, step by step
Article 31 of the LPCL prohibits dismissal for conduct or capacity without first giving the employee, in writing, a reasonable period of no less than six calendar days to respond to the charges. The only exception is flagrant serious misconduct where granting that period would be unreasonable. For capacity-based causes, the period is at least thirty calendar days to demonstrate capacity or correct the deficiency.
- Investigate and document. Gather the evidence before any letter goes out. Our guide on documenting workplace misconduct covers interviews, digital evidence and chain of custody.
- Send the notice of charges (carta de preaviso or carta de imputación de cargos). It must describe the specific facts, dates and statutory category. See the notice of charges before a dismissal in Peru.
- Allow the response period. At least six calendar days. The employer may release the employee from attending work during this period, with full pay, as long as this does not hinder the defense.
- Evaluate the response. Read it, check any new facts, and record why the explanation is or is not accepted. The quality of this step matters; we discuss it in the employee’s right of defense before dismissal.
- Issue the dismissal letter. Article 32 requires written notice stating precisely the cause and the termination date. If the employee refuses to receive it, it can be delivered through a notary or a justice of the peace, or the police where neither is available.
- Close out the relationship. Pay the final settlement and issue the documents the employee needs to access their CTS (a severance fund the employer deposits twice a year into a bank account in the employee’s name).
Watch out
Article 32 prevents the employer from later invoking a cause different from the one stated in the dismissal letter. If an investigation uncovers additional misconduct, it must be charged in the notice, not added in court.
Immediacy
The final paragraph of article 31 embodies the principle of immediacy (inmediatez): the employer must act within a reasonable time after learning of the misconduct and completing its investigation. If it waits too long, the misconduct is treated as forgiven. There is no fixed number of days; courts look at how long the investigation reasonably required and whether the employer acted diligently. Approval chains that run through a regional office and a global ethics committee are a common source of delay, and they are rarely accepted as an excuse.
Illustrative scenario
Illustrative scenario
Illustrative scenario: a logistics company with 220 employees in Lima, owned by a European group, receives a whistleblower report that a warehouse supervisor is selling returned goods through an online marketplace. The group’s ethics team in Madrid opens a case, reviews CCTV footage and marketplace listings over five weeks, and issues its findings in English. The local HR manager, following the regional playbook, emails the supervisor a two-paragraph “termination for cause” notice the same day, effective immediately.
The underlying conduct is a textbook case of appropriation and breach of good faith. Yet the dismissal is exposed on several fronts. No notice of charges was sent, so the employee never had the statutory six days to respond. The notice did not identify the statutory category or the specific transactions. It was written in English, which gives the employee an argument that he could not understand and answer the charges. And the evidence sits in a foreign investigation file that may be hard to present to a Peruvian labor judge in usable form.
A defensible approach would have been to translate the relevant findings, send a Spanish-language notice of charges describing each sale with dates and amounts, release the supervisor from attendance with pay, evaluate his response, and then issue a dismissal letter limited to the charged facts, all within a timeline the company can justify.
Proof and consequences
Under article 37 of the LPCL, the employer bears the burden of proving the cause in court. If it cannot, the dismissal is treated as arbitrary. The statutory consequence is severance under article 38: one and a half ordinary monthly salaries per full year of service, capped at twelve monthly salaries, with fractions of a year paid proportionally and the probationary period excluded.
Severance is not the only risk. The Constitutional Court, in Exp. 976-2001-AA/TC (Llanos Huasco, 2003), described the fraudulent dismissal: one based on non-existent, false or imaginary facts, or on fabricated evidence, for which reinstatement may be ordered. Where the dismissal falls into a nullity category under article 29 (for example, trade union activity, pregnancy, or a complaint against the employer), the remedy is reinstatement with back pay. The exposure analysis is developed in unfair dismissal in Peru.
Common mistakes
- Treating a policy breach as self-evidently a dismissal ground without mapping it to article 25.
- Charging vague conduct (“loss of trust”, “unethical behavior”) instead of specific facts.
- Letting a foreign approval process consume weeks after the investigation closes.
- Sending letters in English, signed by an expatriate manager without clear authority to represent the Peruvian employer.
- Adding new reasons in the dismissal letter that were not in the notice of charges.
- Relying on evidence obtained in a way that intrudes on privacy or communications without a clear policy basis.
A fuller list, with how each error plays out in court, is in mistakes that undermine a dismissal in Peru.
Preventive recommendations
As a preventive matter, we recommend that international employers build a Peru-specific annex to their global investigation and termination playbooks. It should set out who in Peru has authority to sign disciplinary letters, require Spanish-language notices, define a target timeline from investigation closure to notice of charges, and map the group’s code of conduct to the statutory categories. Internal work rules should describe prohibited conduct concretely, because a rule the employee received and acknowledged is far easier to enforce than a policy stored on a global intranet.
Before a high-stakes dismissal (a senior manager, a union officer, a pregnant employee, or anyone recently diagnosed with a serious illness), a legal review of the file and the letters is a modest cost compared to a reinstatement order. Our terminations and exits practice supports companies through that review and the execution of the procedure.
Bottom line
Serious misconduct is a legitimate and effective route to end employment in Peru, but it is a procedural route. The employer must identify a statutory category, prove specific facts, give the employee a real opportunity to respond, and act promptly. Groups that adapt their global playbooks to those requirements keep their decisions intact; those that apply at-will habits usually end up paying severance, or reinstating the employee they meant to remove.