The weeks before signing are when employment issues are cheapest to deal with. Once the purchase agreement is signed, leverage shifts; once the deal closes, whatever was not priced, indemnified or disclosed becomes the buyer’s problem. In Peru, where employment law is detailed, protective and enforced by an active inspectorate, a short list of recurring issues accounts for most of the exposure a buyer inherits.
The ten risks below are the ones we would expect any buyer, fund or lead counsel to have covered before closing. For each, we explain why it matters under Peruvian law and what to request from the target. The list complements a full employment due diligence and the sizing method in identifying and sizing employment liabilities. Readers who need a primer on the Peruvian employment system can start with Employing in Peru.
How to use this list
Treat each item as a question the data room must answer. If the target cannot produce the requested records, record the gap as a finding in its own right: missing time records or incomplete contract files are themselves evidence of exposure. For the underlying framework, see our guide to employment risk in Peru.
Key point
Most of these risks are “population” risks. The question is rarely whether one employee has a claim, but how many employees are in the same position, because both back pay and inspection fines scale with the number of workers affected.
The ten risks
1. Fixed-term contracts that should be indefinite
Why it matters. Peru permits fixed-term contracts only under specific modalities, in writing, stating an objective cause, and within a combined maximum of five years. A contract that uses a generic cause, covers permanent work, exceeds its limits, or lapses while the employee keeps working is treated as indefinite-term. Those employees then enjoy protection against arbitrary dismissal, and non-renewal can be challenged as a dismissal, with reinstatement claims in some cases. Our article on fixed-term contract reclassification sets out the grounds.
What to request. A list of all fixed-term employees with start dates, modality, stated cause and renewals; copies of contracts for a representative sample; and evidence supporting the stated causes.
2. Unpaid overtime and misclassified exempt staff
Why it matters. Overtime carries a premium of at least 25% for the first two hours and 35% for further hours. Work performed without formal authorization is presumed authorized if the employer allowed it. Only management staff, employees not subject to immediate supervision and certain intermittent roles are excluded from maximum working hours; labelling an employee as “trust” staff does not by itself exclude them.
What to request. Attendance registers, shift rosters, access-control or system logs for a sample period, overtime paid by month, and the list of employees treated as exempt, with their job descriptions.
3. Errors in the benefit base
Why it matters. CTS (a severance fund deposited by the employer in May and November into a bank account in the employee’s name) and gratificaciones (two statutory bonuses paid in July and December) are calculated on “computable pay”, which includes regular variable pay. Payments labelled as non-remunerative that are in fact freely available to the employee, or commissions left out of the base, generate shortfalls across the workforce.
What to request. CTS and gratificaciones calculations for recent periods, the payroll concept catalogue with the treatment of each item, and details of bonus, commission and allowance plans.
4. Unused annual leave
Why it matters. Employees are entitled to 30 calendar days of paid leave per year of service. If leave is not taken within the year after it accrues, the employee receives an additional indemnity of one month’s pay. In targets with weak leave planning, this liability builds silently.
What to request. Leave balances by employee and accrual year, the leave schedule, and any written agreements on accumulating, splitting or reducing leave.
5. Outsourcing and staffing arrangements
Why it matters. Outsourcing is lawful when the contractor is genuinely autonomous, with its own resources, its own risk and exclusive direction of its workers. If the target directs them, the arrangement can be recharacterized and the workers treated as the target’s employees. Where staff are continuously deployed at the client, the client is jointly liable for their labor obligations during the deployment and for one year after it ends. Staffing through temporary labor intermediation is limited to specific cases and, for temporary services, to 20% of the user company’s workforce. See when outsourcing is recharacterized.
What to request. All outsourcing and staffing contracts, the contractors’ registration details, headcount deployed per contractor, and evidence of who supervises, schedules and evaluates deployed workers.
Watch out
A regulation that prohibited outsourcing of core business activities was declared null by the Supreme Court in a popular action proceeding. That widens the options, but it does not cure arrangements where the target directs the contractor’s staff. Confirm the current state of the rules at the time of signing.
6. Off-payroll workers and independent contractors
Why it matters. Any personal, paid and subordinated service is presumed to be an indefinite-term employment relationship, whatever the contract says. Failing to register an employee on the payroll is classified as a very serious infringement, counted per worker. Independent contractors who work fixed hours under the target’s direction are a frequent source of both claims and fines.
What to request. The list of individuals paid through service invoices, their contracts, duration, payment history and reporting lines; and a reconciliation between the payroll and all individuals with access credentials to the target’s premises or systems.
7. Pending SUNAFIL inspections and unmet compliance orders
Why it matters. SUNAFIL, Peru’s national labor inspection authority, can impose fines calculated in tax reference units (UIT, S/ 5,500 in 2026) according to severity and the number of workers affected. Failing to comply with an inspector’s compliance order is itself an infringement, and repeated infringements can be surcharged. An open inspection may also widen during the deal.
What to request. All inspection orders, records, compliance orders and fines from recent years, the status of each, evidence of remediation, and access to the target’s SUNAFIL electronic mailbox history.
8. Litigation and reinstatement claims
Why it matters. Beyond the amount claimed, Peruvian courts can order reinstatement with back pay in cases of null dismissal (for example, dismissals linked to union activity, discrimination, pregnancy or, since 2025, a cancer diagnosis) and in certain cases of dismissal without stated cause or on fabricated grounds. Reinstatement cases are hard to price because back pay accrues until the employee returns.
What to request. A litigation schedule with amounts, remedies sought, procedural stage and counsel’s assessment; settlements and payments in recent years; and pre-litigation demands or complaints received.
9. Health and safety systems and accident history
Why it matters. Employers with 20 or more workers must have a joint health and safety committee and internal safety rules; all employers must assess risks, provide at least four training sessions a year, carry out occupational medical examinations and keep statutory records. Fatal accidents must be reported to the Ministry of Labor within 24 hours, and serious breaches can lead to temporary closure and criminal exposure. High-risk activities also require SCTR, a supplementary occupational-risk insurance.
What to request. Safety committee minutes, risk assessments, training logs, medical examination records, accident and incident registers, SCTR policies where applicable, and sexual harassment prevention records (committee or delegate, annual assessment, complaints handled).
10. Collective, executive and change-of-control commitments
Why it matters. Collective agreements bind the employer and set cost increases for their term; pending bargaining or union formation affects integration plans. Executive agreements may contain retention bonuses, change-of-control payments or enhanced severance. Foreign employees must fit within legal limits (20% of the workforce and 30% of payroll, with exemptions) and hold an appropriate immigration status.
What to request. Collective agreements and bargaining files, union registrations, executive and key-employee agreements, bonus and incentive plans with change-of-control terms, and foreign employee contracts with their approvals and immigration documents.
Allocating each risk in the deal
| # | Risk | Typical protection |
|---|---|---|
| 1 | Fixed-term reclassification | Specific indemnity and post-closing regularization covenant |
| 2 | Overtime and exempt staff | Price adjustment for quantified shortfall; indemnity for the rest |
| 3 | Benefit base errors | Price adjustment or debt-like item |
| 4 | Unused leave | Price adjustment or debt-like item |
| 5 | Outsourcing and staffing | Specific indemnity with escrow; remediation covenant |
| 6 | Off-payroll workers | Specific indemnity; regularization before or after closing |
| 7 | Inspections | Disclosure plus specific indemnity for fines and remediation |
| 8 | Litigation | Specific indemnity; conduct-of-claims provisions |
| 9 | Health and safety | Warranty, remediation plan; condition precedent if critical |
| 10 | Collective and executive terms | Disclosure, warranties and treatment of change-of-control payments |
Illustrative scenario
Illustrative scenario: a strategic buyer is acquiring a services company with 150 employees. The pre-closing review finds 25 employees on repeated fixed-term contracts with an identical generic cause, and six “independent consultants” working full-time under a department manager. The parties agree a specific indemnity with a holdback covering both issues, and the seller undertakes to support regularization in the first months after closing.
Final checks before signing
Before the agreement is signed, confirm that each material finding has a home in the documents, that warranty definitions use Peruvian concepts (CTS, gratificaciones, fixed-term modalities, outsourcing, health and safety), and that the survival period of employment indemnities reflects how long claims can realistically arise. If the buyer plans post-closing restructuring, remember that Peruvian law requires just cause to dismiss protected employees and that collective terminations for economic or structural reasons follow an administrative procedure; the cost belongs in the model now.
Our employment due diligence team can run this review against the data room and deliver it in the lead counsel’s format.