Employment due diligence in Peruvian transactions

In a Peruvian transaction, employment issues rarely stop a deal, but they frequently change its price, its structure or the protections the buyer needs. Unpaid benefits, reclassified contracts, outsourcing arrangements that do not meet legal requirements and pending inspections are liabilities that stay with the business after closing. Employment due diligence is how a buyer finds them before signing.

The business problem

Peruvian employment liabilities can be large relative to the size of a target, and they are not always visible in the financial statements. Fixed-term contracts used for permanent work may be reclassified as indefinite. Pay items treated as non-remunerative may, in fact, form part of the base for CTS (a severance fund the employer deposits twice a year into a bank account in the employee’s name) and gratificaciones (two statutory bonuses paid in July and December). Outsourcing arrangements that fail the autonomy test can make the target the employer of the contractor’s staff. SUNAFIL, Peru’s national labor inspection authority, may have ongoing proceedings with fines expressed in UIT (the tax reference unit, S/ 5,500 in 2026).

The buyer needs to know which of these issues exist, how large they are and how to protect itself. Our guide to employment risk in Peru explains how exposure is identified and sized, and our note on employment due diligence in Peruvian transactions describes the process in more detail.

How we approach it

We work to the deal timetable. We agree the scope and materiality threshold with the deal team or the lead counsel, issue a targeted document request and review the data room: employment contracts, payroll and benefits, outsourcing and staffing agreements, safety records, internal rules, inspection and litigation files, and collective agreements.

Findings are ranked by impact. For material ones, we size the exposure and explain our assumptions, so that the buyer can decide between a price adjustment, a specific indemnity, a pre-closing condition or simply an integration task. We then help translate each finding into deal terms. Our note on the employment risks to review before closing lists the issues we look at most closely.

What the engagement includes, and its limits

The service covers scoping, data room review, management questions, a red-flag report in English, liability sizing, proposed contractual protections and integration notes. Vendor due diligence for sellers follows the same method.

Our review depends on the information made available and on the time the transaction allows. We do not audit the target’s accounts, value the business or provide tax advice. Liability estimates are legal assessments based on stated assumptions, not guarantees of what a court or authority will decide.

Coordination with the parent company, finance and payroll

Transactions involve many advisors. We follow the lead counsel’s report format, coordinate with the financial and tax due diligence teams so that employment liabilities are neither missed nor counted twice, and give the buyer’s finance team figures they can use in the model. After closing, our integration notes feed into an employment audit or an employment compliance program for the acquired entity.

Getting started

Send us the deal timetable, the data room index and the materiality threshold, if one has been set. We will confirm the scope and the review plan.