Why Foreign Investors Must Study Labor Laws in Peru

Thirty-two million people live in Peru, which means that it is the fourth most populous country in South America, right after Brazil, Columbia, and Argentina. Twenty million people are legally allowed to work in Peru. Most of the population here is between 15 to 64 years of age. The approval of the Ministry of Labor is needed by 15- and 18-year olds who wish to work, along with parental permission.

Before you invest in Peru, you must know the laws surrounding incorporation, tax, social security, and ex-pats. Below are some labor laws in Peru for foreign employees:

Working Contract

Foreign employees can only work for a maximum of three years, according to their contract. However, upon review, this can be extended for more than three years. The Ministry of Labor has to approve any change in contract.

All foreign employees must be treated the same way as locals. There should be no difference in the hiring process.

The Ratio of Foreign Employees

As a foreign investor, when you open a company in Peru, you must keep in mind that local nationals also need to be hired as part of your organization. In fact, the foreign employees in your business should not be more than 20 percent of the workforce.

Moreover, the salaries of foreign employees should not cross more than 30 percent of the payroll. These laws ensure that even local employees in Peru are allowed employment in foreign companies, and that they receive a regular income.

A General Manager needs to manage all the workings of a company. He can also manage the Board of Directors. Whatever the case may be, the General Manager must have a place in the payroll of the organization. However, the members of the Board of Directors are allowed to be foreigners. In public limited companies, the Board of Directors is common. In case a foreigner is working as a General Manager, they must always carry their foreign ID. Without this, they cannot perform their duties.

Exemptions in Salaries

Exemptions in salaries can be made for individuals in managerial positions, as well as technical employees. It must be kept in mind that foreign workers have a valid visa for only one year. However, this can be renewed every year as soon as it expires.

If a foreign employee does not return to the country for more than 183 days in one year, their immigration status will be lost.

It must be kept in mind that labor laws in Peru are the same for employers and employees. Even though restrictions for foreign workers may make operations tricky at times, foreign investors are advised to keep them in mind when investing in Peru. Moreover, remember that all laws have some sort of exemption – you only have to be smart enough to look!

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