Peru

In Peru, labor law permits various types of employment agreements to cater to diverse work requirements.

Indefinite-Term Employment Contract (Contrato de duración indeterminada)

The Indefinite-Term Employment Contract is the standard type of employment contract in Peru. It has a commencement date but no pre-determined termination date, providing the employee with enhanced job security. Although this contract can be verbal or written, a written agreement is strongly advised for the sake of clarity and to safeguard the interests of both parties.

Fixed-Term Contract (Contrato a plazo determinado)

The Fixed-Term Contract has a specified start and end date for the employment relationship. It can only be utilized under certain conditions and must be documented in writing. The maximum duration of a fixed-term contract is five years, and any extensions beyond this period will automatically transform it into an indefinite-term contract.

Subcategories of Fixed-Term Contracts

There are several subcategories of Fixed-Term Contracts:

• Temporary Work for a Specific Project (Contratación temporal para obra determinada): This is appropriate for projects with a defined scope and timeframe.
• Work for Fluctuating Needs of the Company (Contratación temporal por necesidades de la empresa): This is designed for situations where the company experiences temporary variations in workload.
• Work for Entrepreneurial Reorganization (Contratación temporal por reestructuración empresarial): This is used for company restructuring processes.

Employers are obligated to register fixed-term contracts with the Peruvian Ministry of Labor.

Part-Time Contract (Contrato a tiempo parcial)

The Part-Time Contract allows employees to work a reduced schedule compared to a full-time position. The specific working hours and remuneration should be clearly outlined in the contract. Most benefits offered to full-time employees are also extended to part-time workers on a pro-rated basis, as per Peruvian labor laws.

An employment agreement in Peru should clearly define the expectations for both the employer and the employee. Here are the essential clauses to include:

Parties to the Agreement

The agreement should clearly identify both parties. This includes the employer's company name and registration details, and the employee's full name and identification document number.

Job Details

The job title, a clear description of the employee's duties and responsibilities, and any reporting hierarchy should be defined.

Work Schedule and Location

The employee's regular working hours, including start and end times, and whether a flexible schedule is allowed should be outlined. The primary work location should also be specified.

Compensation and Benefits

The agreement should detail the employee's base salary, payment frequency, and any additional compensation like overtime pay, commissions, or bonuses. The benefits package, including vacation leave, sick leave, social security contributions, and 13th and 14th-month payments should also be outlined.

Termination Clauses

The grounds for termination by either party, following Peruvian labor law guidelines, should be defined. The agreement should include notice periods required for termination by the employer or employee and specify any severance compensation arrangements in case of employer-initiated termination without cause.

Confidentiality and Intellectual Property

If applicable, a clause protecting the employer's confidential information and intellectual property rights should be included.

Dispute Resolution

The process for resolving any disagreements arising during employment, such as mediation or arbitration, should be outlined.

This is not an exhaustive list, and additional clauses may be necessary depending on the specific employment situation. It's always recommended to consult with a Peruvian labor lawyer to ensure your employment agreement complies with Peruvian labor laws and best practices.

The Peruvian labor law framework includes a probationary period within employment agreements. This period serves as an initial evaluation stage in an employment relationship, allowing employers to assess an employee's suitability for the role and their fit within the company culture. Similarly, employees can use this time to gauge if the job aligns with their expectations and skillset.

Legal Framework

The Peruvian legal framework establishes guidelines for probationary periods within Supreme Decree No. 003-97-TR. The key points include:

• Minimum and Maximum Duration: The probationary period can range from a minimum of three months to a maximum of one year.
• Standard Duration: In most cases, the standard probationary period is three months.
• Extended Probation: Extensions are permissible for specific positions requiring more extensive evaluation. The maximum duration is six months for skilled workers and one year for managerial roles.

Key Points to Remember

• Mandatory Requirement: The probationary period must be explicitly outlined in the written employment contract.
• Employee Rights: Even during probation, employees retain certain rights, including minimum wage and social security contributions.
• Termination During Probation: Employers have greater flexibility to terminate an employee's contract during probation without needing a specific justification. However, they are still obligated to comply with notice period requirements.

While Peruvian labor law prioritizes worker freedom, employers can leverage confidentiality and, to a limited extent, non-compete clauses within employment agreements to protect their legitimate business interests.

Confidentiality Clauses

Confidentiality clauses are widely used in Peru and aim to safeguard the employer's sensitive information. These clauses typically outline:

• Protected Information: Definition of confidential information, which may include client lists, trade secrets, formulas, and technical data.
• Employee Obligations: Restrictions on how employees can use, disclose, or retain confidential information during and after employment.
• Exceptions: Limited circumstances where disclosure might be permissible, such as legal requirements or self-defense.

These clauses hold legal weight and can be enforced through civil courts in case of a breach by the employee.

Non-Compete Clauses (Post-Termination)

Important Note: Peruvian law does not directly favor post-employment non-compete clauses. Article 1 of Law 155 (1959) and Article 47 of Decree 2153 (1992) uphold the principle of freedom of work, making it difficult to enforce strict non-compete restrictions after employment ends.

However, employers can still include non-compete clauses in employment agreements. Here's a crucial caveat:

• Enforceability with Compensation: For a non-compete clause to have a stronger chance of being upheld in court, it must be accompanied by financial compensation to the employee during the restricted period.

Key Considerations

• Reasonableness: Even with compensation, courts will consider the reasonableness of the clause's scope. Restrictions should be limited in terms of duration, geographic area, and type of activity restricted.
• Focus on Confidentiality: Confidentiality clauses offer a more enforceable way to protect sensitive information compared to post-employment non-compete clauses.