What Severance Pay Rules Must Employers Follow in Peru?

Which Employees Qualify for Severance Pay?

• Employees on indefinite-term contracts who are dismissed without just cause or proper objective grounds.
• Employees who have completed at least three months of continuous service with your company.
• Employees who are terminated without following due process, even if you allege cause but cannot prove it.
• Employees whose fixed-term contracts are ended early by the employer without a legally valid reason.
• Employees who experience an indirect dismissal, such as a serious unilateral change in essential working conditions.
• Employees who are not excluded by law, such as certain senior managers who have individually negotiated different protections.

What Are the Legal Timelines for Paying Severance?

Peruvian law expects severance to be paid promptly at the time of termination, together with other final benefits such as accrued salary, unused vacation, and legal bonuses. In practice, many employers aim to pay within 48 to 72 hours of the employee’s last working day to reduce dispute risk. If the dismissal is contested and later declared arbitrary by a labor court, you may be ordered to pay severance retroactively with interest. Delays can also trigger claims for damages and administrative scrutiny. To stay safe, build internal workflows so severance calculations and approvals are completed before issuing the termination letter.

What Penalties Apply if Severance Is Not Paid Correctly?

If your company fails to pay severance correctly in Peru, you face both financial and legal exposure. The employee can file a claim for arbitrary dismissal, and courts may order payment of the full indemnity, interest, and sometimes additional damages. The labor authority (SUNAFIL) can also investigate and impose fines based on the seriousness of the breach and your company size.

• Employees can claim unpaid severance plus legal interest before the labor courts.
• SUNAFIL may impose administrative fines that scale with company size and severity.
• Courts can order reinstatement in some wrongful termination scenarios instead of, or in addition to, severance.
• Non-compliance can affect your company’s reputation and increase the likelihood of collective disputes.
• Repeat violations may trigger closer monitoring and more frequent inspections by labor authorities.

Does Outsourcing Employment via an EOR Change Severance Liability?

Using an Employer of Record (EOR) such as https://www.playroll.com/employer-of-record does not remove the need to comply with Peruvian severance rules, but it shifts who is on the legal hook day to day. In Peru, the EOR is typically the formal employer of record and is directly responsible for calculating and paying severance when a contract ends. However, your company, as the client, usually decides when and why to terminate, so your instructions must respect local just-cause and procedure rules. If the termination is arbitrary, the EOR may seek reimbursement or indemnity from you under the commercial agreement. You should align your internal performance and restructuring processes with the EOR’s compliance framework before initiating any dismissal.

Be 100 Percent Compliant in Offering Severance with Playroll

Playroll helps your company navigate Peru’s severance rules by standardizing how you hire, manage, and offboard employees. Our team tracks statutory changes to the LPCL and related regulations, so your severance calculations reflect the latest caps, salary components, and service-time rules. We also help you distinguish between just-cause and arbitrary terminations, reducing the risk of unexpected indemnity claims.

When you work with Playroll as your global employment partner, we build compliant workflows around notice, documentation, and final-pay deadlines. Your managers get clear guidance on when severance is owed, how much to budget, and what paperwork is needed to defend your decisions. That way, you protect your brand in Peru while giving employees a fair and timely exit experience.