Setting up and managing a payroll in Peru
Peru’s economy has grown significantly in recent years, and the country is attracting an increasing amount of foreign investment.
If your organization is planning a Peru expansion, one of the first things your organization will need to do is start hiring a workforce in Peru. This generally means you’ll have to establish a legal entity in the country, set up a payroll, and follow various administrative procedures. Collectively, these processes can take weeks, potentially delaying your expansion efforts and costing you in lost revenues.
A popular way to bypass the complexity of Peruvian employment is to outsource your payroll setup and management. At New Horizons, we will work with you to build and run a compliant, fully functional Peruvian payroll to help you kickstart your expansion, whether or not you already have a registered entity in the country.
If you have an entity in Peru
If your company already has a legal entity registered in Peru then we can help you with the next steps. Our team will set up and manage your payroll, as well as any associated HR and compliance work to help you focus on the important job of expanding your business in Peru.
If you don’t have an entity in Peru
If you have not registered a legal entity in Peru, then our comprehensive outsourcing services can cover your payroll setup and management, making use of our established Peruvian subsidiary to act as employer of record.
This option is ideal for any organization aiming for a rapid, low-risk, and scalable route into Peruvian hiring and expansion.
Simpler, more reliable expansion in Peru with help from New Horizons
Peru payroll guide
What are the tax and withholding rules in Peru?
Employers and employees in Peru must both make mandatory contributions to various social funds. Employers must contribute 9% of salaries to the health service (RPS), but can receive some of this back if they choose to provide private insurance as well. They must also contribute 11.5% to funds that cover things like pensions, disability insurance, and more. Some employers also need to pay for workplace accident insurance.
Employees must contribute 13% of salary to the national pension system, or choose to use a private pension.
Contractual rights and termination regulations
Employees in Peru are entitled to between six and 30 days of notice prior to termination. The exact length depends on the circumstances of termination. For termination without proper cause, employees are generally entitled to a severance payment of roughly one and a half months of pay for every year of service, up to one year of pay.
Probation periods can be up to one year in length.
How to establish a payroll in Peru
Setting up a payroll in Peru is a complex process, and you will need to deal with language, cultural, and procedural differences if you want to set it up yourself. You will need to first register an entity in Peru, then register with the appropriate tax authorities, and so on.
These initial processes can take weeks or months to finish, which could significantly stall your expansion progress.
Alternatively, New Horizons’ outsourcing can streamline your entire hiring and payroll process, facilitating your Peruvian expansion and ensuring you are fully prepared to grow your business successfully. Our employer or record service means that you can even benefit from our solutions if you have not registered a legal entity in Peru, utilizing our Peruvian subsidiary to act as employer of record for your employees.