Employment contracts in Peru: elements, forms and risk

Most foreign companies arrive in Peru with a contract template that has worked elsewhere: a short offer letter, a clause reserving the right to end employment on notice, a bonus plan governed by group policy and perhaps a choice-of-law clause pointing to the parent’s jurisdiction. In Peru, several of those features either have no legal effect or actively create risk. The reason is structural. Peruvian employment law starts from a presumption that protects the employee’s job, and the contract is read against that presumption rather than the other way round.

This article explains what an employment contract is under Peruvian law, which contract forms are available, which formalities apply from the first day and where international templates typically fail. It is written for general managers, HR leads and in-house counsel of subsidiaries, branches and regional headquarters that are hiring locally for the first time or reviewing an existing workforce. For the broader picture, see our guide to employment contracts in Peru.

What makes a relationship “employment”

Peru’s core private-sector statute is the Labor Productivity and Competitiveness Law (the consolidated text of Legislative Decree 728, usually cited as the LPCL). It identifies three elements of an employment relationship:

• Personal service. The individual performs the work themselves and cannot freely send a substitute.
• Remuneration. The work is paid, in cash or in kind.
• Subordination. The employer directs the work, gives instructions, sets schedules and can discipline.

When the three elements are present, the LPCL presumes that an employment contract of indefinite duration exists. The name the parties give the document is secondary. Inspectors from SUNAFIL, Peru’s national labor inspection authority, and the labor courts apply the principio de primacía de la realidad (primacy of reality): facts prevail over paperwork. A “consultancy agreement” with someone who works fixed hours, reports to a manager, uses company equipment and is paid monthly is, in substance, an employment contract.

No at-will employment: what the presumption means in practice

Unlike at-will jurisdictions, Peru does not allow an employer to end an employment relationship simply by giving notice. Once the probation period has passed, an employee who works four or more hours a day can only be dismissed for a just cause set out in the law, related to the employee’s conduct or capacity, and after a written procedure that gives the employee an opportunity to respond.

A dismissal without a stated cause, or with a cause the employer cannot prove in court, is a despido arbitrario (unfair or arbitrary dismissal). The LPCL sets the statutory compensation at 1.5 monthly salaries per full year of service, capped at 12 monthly salaries. In addition, Constitutional Court case law allows employees to seek reinstatement in certain cases, for example when no cause at all was given or the cause was fabricated. We cover both routes in our article on unfair dismissal.

The practical consequence for contract design is that a Peruvian contract cannot “buy” flexibility with a termination-on-notice clause. Flexibility has to come from lawful tools: a properly documented probation period, a justified fixed-term contract where the need is genuinely temporary, or a negotiated exit.

The main contract forms

Peruvian law offers a limited menu. Each option carries its own formal requirements, and choosing the wrong one is one of the most common sources of later liability.

Indefinite contracts

This is the default and, for most permanent roles, the correct choice. It gives the employer a probation period (three months as a rule, extendable in writing for qualified, trust and management positions, as explained in our note on probationary periods) and then the ordinary protections apply.

Fixed-term contracts

Peru allows nine types of contratos sujetos a modalidad (fixed-term contracts subject to a specific legal justification), grouped into temporary, accidental and project-based contracts. Each requires an objective cause: a real, documented reason why the need is temporary. Using a fixed-term contract for permanent work is the classic route to reclassification. We explain the options in fixed-term employment contracts in Peru and the conversion risk in when fixed-term contracts become indefinite.

Part-time contracts

A part-time contract under Peruvian law means an average of less than four hours a day. It must be written and registered with the Ministry of Labor and Employment Promotion (MTPE) within 15 calendar days. Below that threshold, the employee does not accrue CTS (a severance fund the employer deposits twice a year into a bank account in the employee’s name), statutory annual leave or protection against unfair dismissal, but does receive gratificaciones (two statutory bonuses paid in July and December). “Part-time” in the colloquial sense, such as a 30-hour week spread over five days, is not part-time for these purposes.

Management and trust positions

The LPCL recognizes personal de dirección (management staff who represent or stand in for the employer) and personal de confianza (trust staff with direct access to management or confidential information). The classification follows a procedure: the positions must be identified, the employee informed in writing and the status recorded in payroll and payslips. It affects working-time rules and the probation period, but it does not turn the role into an at-will position.

Obligations that apply from the first day

A signed contract is only one piece. Several obligations are triggered by the start of work, regardless of the contract form:

• Payroll registration. The employee must be registered in the T-Registro, the labor module of Peru’s electronic payroll, no later than the day they start work. Failing to register a worker in time is classified as a very serious infringement, counted per affected worker.
• Life insurance. The Seguro Vida Ley, an employer-funded life insurance policy, is mandatory from the start of the relationship.
• Payslips. Payslips must be delivered no later than the third working day after payment; electronic delivery is allowed.
• Statutory benefits. The employee accrues CTS, gratificaciones, 30 calendar days of paid annual leave per year of service (subject to minimum attendance requirements) and, in companies with more than 20 employees, profit sharing. Employer health contributions to EsSalud, the public health insurance system, apply from the first month.
• Minimum wage. The monthly minimum wage is S/ 1,130 (Supreme Decree 006-2024-TR). An increase has been announced but still requires a supreme decree.

Adapting a global offer letter

Group templates are usually drafted around the parent company’s law. Before using one in Peru, review at least the following points:

1. Termination clauses. Remove any at-will language or unilateral termination on notice. It has no effect and signals that the document was not prepared for Peru.
2. Duration. If the role is permanent, the contract should be indefinite. Fixed terms “to see how it goes” are not a lawful objective cause.
3. Probation. State the probation period expressly, and document any extension in writing within the legal limits.
4. Pay structure. Classify each component correctly. Whether a payment is remunerative or not changes the base for benefits and contributions; see our note on remunerative and non-remunerative payments.
5. Governing law. A foreign governing-law clause does not displace Peruvian mandatory rules for work performed in Peru; the Constitution makes statutory and constitutional labor rights non-waivable.
6. Employer entity. The employer should be the Peruvian entity that directs and pays the employee.

Our employment contract drafting work typically starts here: keeping the group’s commercial terms and replacing the legal architecture.

Common mistakes

• Using a fixed-term contract for a permanent role because it “feels” more flexible.
• Signing contracts through the foreign parent rather than the local entity.
• Treating a reduced weekly schedule as part-time when the daily average is four hours or more.
• Hiring “consultants” who, in practice, work like employees.
• Allowing people to start work before T-Registro registration and before the contract is signed.
• Copying bonus and commission language from group policy without analyzing its effect on CTS, gratificaciones and contributions.

Checklist before a new hire starts

• The employing entity is the Peruvian subsidiary or branch that will direct and pay the employee.
• The contract form matches the real need (indefinite, justified fixed-term, genuine part-time).
• Probation terms, and any extension, are in writing and within the legal limits.
• Pay components are classified and reviewed for their effect on benefits.
• For fixed-term or part-time contracts, registration with the MTPE is diarized within 15 calendar days.
• T-Registro registration is completed no later than the start date.
• Seguro Vida Ley coverage is in place.
• For foreign nationals, contract approval and immigration status are resolved before work begins.

Bottom line

A Peruvian employment contract is not a formality that sits alongside a global offer letter. It is the document an inspector or judge will read against the presumption of indefinite employment, the rules on fixed-term hiring and the facts of the relationship. Companies that design contracts around those rules from the start usually keep the flexibility they need through probation, justified fixed terms and orderly exits, and avoid the far more expensive process of unwinding a template that was never built for Peru.