Termination of employment in Peru: grounds, procedure and exposure

For employers used to at-will jurisdictions, termination is where Peruvian employment law feels most different. There is no general right to end an indefinite employment relationship by giving notice. After probation, the employer needs a legal reason, a formal procedure and evidence — and if any of the three fails, the consequence may be not only a severance payment but an order to take the employee back.

This guide explains how termination works as a system: the ways an employment relationship can end, the grounds for dismissal, the procedure step by step, the types of unlawful dismissal and their consequences, and the negotiated routes that usually produce more predictable outcomes. It is written for general managers, HR leads and regional headquarters who approve exits.

Executive overview

• No at-will termination. Employees working four or more hours a day are protected against arbitrary dismissal once probation ends.
• Only legal causes. Dismissal must rest on the employee’s conduct (usually falta grave, serious misconduct) or capacity, as defined by statute.
• Procedure first. Written charges, a response period, then a dismissal letter stating the precise cause and date.
• Two levels of exposure. An arbitrary dismissal costs statutory severance; an unconstitutional or null dismissal can lead to reinstatement with back pay.
• Short limitation period. Employees have 30 calendar days to challenge the dismissal, which concentrates the risk in the first month.

Legal framework

• Article 27 of the Constitution grants employees “adequate protection against arbitrary dismissal”. The Constitutional Court has read this provision as allowing reinstatement, not only compensation, in certain cases.
• The Productivity and Labor Competitiveness Law (consolidated text of Legislative Decree 728, Supreme Decree 003-97-TR), articles 16 to 40, regulates the causes of termination, the grounds and procedure for dismissal, null dismissals, hostile acts and severance. Its regulations are in Supreme Decree 001-96-TR, amended in 2026 by Supreme Decree 008-2026-TR.
• Law 32431 (2025) added a new ground of null dismissal: dismissal motivated by a cancer diagnosis, its treatment or its effects.
• The New Labor Procedure Law (Law 29497) governs labor litigation, including claims for reinstatement.

Case law is part of the framework. In case 1124-2001-AA/TC (2002), the Constitutional Court ordered reinstatement for dismissals made without stating a cause. In case 976-2001-AA/TC (2003), it systematized the categories of null, unjustified (incausado) and fraudulent dismissal. In case 0206-2005-PA/TC (2005), a binding precedent, it defined when constitutional protection proceedings (amparo) are available in labor matters. In practice, reinstatement claims are now also pursued through ordinary labor courts.

How an employment relationship ends

The statute lists the causes of termination: death of the employee (or of an individual employer); resignation; completion of the work or service, fulfillment of a condition or expiry of a fixed term; mutual termination; permanent absolute disability; retirement; dismissal in the cases and form permitted by law; and termination for objective causes (collective dismissals).

Three of these routes carry most of the day-to-day practice:

Resignation requires 30 days’ notice, which the employer may waive; a request for waiver is deemed accepted if not rejected in writing within three days. Retirement becomes mandatory and automatic at 70, unless otherwise agreed. Our briefing on resignation, mutual termination and dismissal in Peru compares these routes.

Grounds for dismissal

For employees working four or more hours a day, a dismissal requires a just cause set out in the law and duly proven.

Capacity

Causes related to capacity are: a supervening deterioration of physical or mental faculties or ineptitude that prevents the employee from doing the job; deficient performance compared with the employee’s own capacity and the average output in similar roles and conditions; and an unjustified refusal to undergo a medical examination or follow prophylactic or curative measures. Capacity dismissals are demanding to prove: the employer needs objective performance evidence and must give the employee at least 30 calendar days to demonstrate capacity or correct the deficiencies.

Conduct

Causes related to conduct are serious misconduct (falta grave), a criminal conviction for an intentional offense, and professional disqualification. Serious misconduct is defined in article 25 and includes, in summary:

• breach of the duties of the employment relationship that breaks good faith, repeated resistance to orders, and serious breaches of the internal work rules or health and safety rules;
• deliberate and repeated reduction of performance;
• appropriation, attempted or completed, of the employer’s property;
• use or disclosure of confidential information, false information intended to cause harm, and unfair competition;
• repeated attendance under the influence of alcohol or drugs;
• violence, serious indiscipline or verbal or written abuse against the employer, managers or colleagues;
• intentional damage to the employer’s property;
• job abandonment for more than three consecutive days, unjustified absences for more than five days in 30 calendar days or more than 15 days in 180 calendar days, and repeated lateness that has been sanctioned; and
• sexual harassment.

Serious misconduct is established by its objective proof within the employment procedure, regardless of any criminal proceedings. The briefing on dismissal for serious misconduct in Peru analyzes each category.

The dismissal procedure, step by step

The procedure is short, but every step matters in court.

1. Detect and investigate. Gather the facts as soon as the employer learns of them. See how to document workplace misconduct.
2. Assess the ground. Does the conduct fit a statutory category? Is it serious enough for dismissal, or would a lesser sanction be proportionate? Our briefing on disciplinary measures, warnings, suspension and proportionality addresses that choice.
3. Issue the notice of charges (carta de preaviso or carta de imputación de cargos): a written letter describing the facts, the dates, the ground invoked and the evidence, granting a reasonable period of no less than six calendar days to respond (or no less than 30 calendar days in capacity cases). The only exception is flagrant serious misconduct, where a response period would not be reasonable. See the notice of charges before a dismissal.
4. Allow the defense. The employee may answer in writing and present evidence. During this period the employer may release the employee from attending work, provided pay continues and the right of defense is not affected. See the employee’s right of defense before dismissal.
5. Evaluate the response honestly and decide.
6. Issue the dismissal letter, stating precisely the cause and the date of termination. If the employee refuses to receive it, it is delivered through a notary or justice of the peace, or the police where neither is available.
7. Pay the final settlement and deliver the documents that allow the employee to withdraw the CTS severance fund.

Two principles cut across the procedure. First, immediacy: the employer must act within a reasonable time after learning of the misconduct and completing its investigation, or the misconduct may be deemed condoned. Second, consistency: the employer cannot later rely on a cause different from the one stated in the dismissal letter. In litigation, the employer bears the burden of proving the cause.

Unlawful dismissal and its consequences

Arbitrary dismissal and statutory severance

A dismissal is arbitrary when no cause is stated or the cause cannot be proven in court. The statute provides severance as the remedy: 1.5 monthly ordinary salaries for each full year of service, capped at 12 monthly salaries, with fractions of a year paid proportionally by months and days. Probation is not counted.

Unjustified and fraudulent dismissal: the reinstatement route

Constitutional case law adds two categories that allow the employee to seek reinstatement instead of severance:

• Unjustified dismissal (despido incausado): the employee is dismissed verbally or in writing without any stated cause related to conduct or capacity.
• Fraudulent dismissal (despido fraudulento): the employer relies on nonexistent, false or invented facts, or fabricates evidence, or obtains the employee’s will through deceit.

The employee who has been dismissed arbitrarily may generally choose between reinstatement, through the courts, and severance; taking the severance payment closes the reinstatement route. This is a case-law criterion that should be applied with care in each case. The briefing on unfair dismissal in Peru: severance and reinstatement risk explains the choice.

Null dismissal

A dismissal is null when its real motive is: union membership or activities; being a candidate for or acting as employee representative; filing a complaint or participating in proceedings against the employer (unless serious misconduct exists); discrimination on grounds such as sex, race, religion, opinion, language or disability; pregnancy, birth and breastfeeding, when the dismissal occurs during pregnancy or within 90 days after birth (presumed unless a just cause is proven); HIV status; disability; and, since Law 32431, a cancer diagnosis, its treatment or effects. The cancer protection extends to part-time employees, employees on probation and trusted employees, and Supreme Decree 008-2026-TR adds a presumption: if the employee had disclosed the diagnosis and the employer cannot prove a just cause unrelated to health, the dismissal is presumed linked to the illness. Employers must also make reasonable adjustments without reducing pay.

The consequence of a null dismissal is reinstatement with payment of back wages.

Hostile acts

Some employer conduct is treated as equivalent to dismissal: failure to pay wages on time, unjustified reduction of pay or category, relocation intended to cause harm, failure to observe health and safety measures, violence or serious verbal abuse, discrimination, sexual harassment and refusal of reasonable adjustments for employees with disabilities. The employee must first give the employer written notice and at least six calendar days to correct the conduct, and may then seek an order to stop the hostility or treat himself or herself as dismissed and claim severance.

Exposure at a glance

The 30-day period runs from the dismissal; days when the courts are not operating are not counted.

Special categories of employees

Employees on probation and part-time employees

Protection against arbitrary dismissal applies to employees working four or more hours a day who have passed probation. Employees still on probation and part-time employees (fewer than four hours a day on average) do not have it, but they remain protected against null dismissals — and, under Law 32431, against dismissal motivated by a cancer diagnosis. “No protection against arbitrary dismissal” never means that any motive is acceptable.

Management and trusted employees

Management and trusted employees are protected against arbitrary dismissal like other employees. Constitutional case law admits the withdrawal of trust as a ground for ending the relationship only for employees who were hired directly into a trusted position; an employee promoted into such a role from an ordinary position cannot simply be “untrusted” out of the company. The qualification of the position must also match reality: a label in the payroll is not enough.

Negotiating a mutual termination

A mutual termination (mutuo disenso) must be recorded in writing or in the final settlement of benefits. Because it closes the relationship by agreement, it removes the need to prove a cause — but only if the employee’s consent is genuine. As a professional recommendation:

• present the proposal as an option, not as the alternative to an announced dismissal;
• give the employee reasonable time to consider it and, if he or she wishes, to seek advice;
• separate the statutory final settlement, which is owed in any case, from any additional incentive;
• record the agreement clearly, including the termination date and payments; and
• avoid pre-drafted resignation letters, which invite a claim that the resignation was forced.

The final settlement

However the relationship ends, the employer must pay the final settlement of benefits (liquidación de beneficios sociales): pending salary, any accrued CTS not yet deposited, the proportional gratificación for the months worked in the semester (if at least one full month was worked), accrued unused leave and the proportional leave for the incomplete year, plus any severance or agreed incentive. Within 48 hours of termination, the employer must also deliver the certificate that allows the employee to withdraw his or her CTS funds from the bank. The briefing on final settlement on termination in Peru details each item.

Collective dismissals

Terminations for objective causes — force majeure, economic, technological, structural or similar reasons, dissolution and liquidation, or insolvency restructuring — follow a separate procedure before the labor authority. For economic, technological, structural or similar reasons, the procedure applies only if it affects at least 10% of the total workforce, and it involves information to the union or employees, negotiation, an expert report and a decision by the authority. Restructurings of this kind require dedicated planning and are outside the scope of individual dismissal procedures.

What management and regional HQ should do

• Route every exit through Peruvian review, including senior managers. Global separation templates that rely on notice or “garden leave” do not fit Peruvian law.
• Invest in evidence before decisions: performance records, warnings, investigation reports, and preserved digital evidence.
• Keep a proportionate disciplinary system: warnings and suspensions for lesser misconduct, dismissal for serious misconduct. Internal work rules help define expectations.
• Check protected status before any termination: pregnancy, union role, recent complaint, disability, known diagnosis.
• Prefer negotiated exits when the evidence is weak or the relationship has simply run its course — with a genuinely voluntary, well-documented mutual termination.
• Budget the exposure: severance, back pay scenarios and the final settlement of accrued benefits.

Frequent mistakes

• Dismissing verbally or by email “effective immediately” without charges.
• Charge letters that describe conclusions (“lack of commitment”) instead of facts.
• Granting fewer than six calendar days to respond.
• Adding new grounds in the dismissal letter.
• Waiting too long after learning of the facts.
• Asking an employee to sign a pre-drafted resignation as a condition for payment.
• Terminating a fixed-term contract early without assessing the compensation due.
• Forgetting to pay the final settlement and deliver the CTS release document on time.

Where to go next in this cluster

When misconduct surfaces, start with how to document workplace misconduct and decide whether a lesser sanction fits using disciplinary measures in Peru. If dismissal is on the table, read dismissal for serious misconduct, prepare the notice of charges and respect the employee’s right of defense. Before signing anything, review mistakes that undermine a dismissal and size the downside with unfair dismissal in Peru. When a negotiated exit makes more sense, see resignation, mutual termination and dismissal.

Our terminations and exits team structures individual and negotiated exits, and disciplinary procedures supports investigations and charge letters. The employment compliance check gives a first view of your disciplinary and documentation practices. For context on hiring and contract types, see the employment contracts guide; foreign companies should also read employing in Peru.

Key takeaways

Termination in Peru is a regulated decision, not an administrative one. A legal ground, a clean procedure and solid evidence make a dismissal defensible; missing any of them turns it into severance or reinstatement exposure. Where the case is not strong, a genuinely voluntary mutual termination is usually the more rational route. Either way, the decision should be taken with Peruvian review, early, and with the documents ready.