Peru

In Peru, the legal requirements for notice periods during employment termination vary based on who initiates the termination and the reason for it.

If an employee wishes to resign from their position, they must provide 30 calendar days' written notice to their employer. This period allows the employer to find a replacement and ensures a smooth handover of duties. However, the employee can request to be excused from the notice period, and the employer has the discretion to grant or deny this request. If no response is received within three days of the employee's request, the exemption is considered tacitly granted, and the employment terminates on the fourth day after the initial resignation letter.

On the other hand, the notice period for employer-initiated termination depends on the reason for dismissal. If the dismissal is due to lack of capability, employers must provide the employee with written notice at least 30 calendar days in advance. This can occur due to the employee's performance not meeting expectations or their inability to fulfill the job requirements.

For dismissals related to the employee's serious misconduct or major faults, a shorter notice period of six calendar days applies. This includes situations like theft, dishonesty, or insubordination. It's important to note that dismissals without a justified reason are illegal in Peru.

In Peru, labor law stipulates that employees are entitled to severance pay under certain conditions when their employment is terminated.

Unjustified Dismissal

If an employer ends an employee's contract without a valid reason as defined by Peruvian law, the employee is entitled to severance pay. This is in accordance with articles 34 and 38 of the Ley de Productividad y Competitividad Laboral (LPCL).

Severance Pay Calculation

Indefinite Contracts

For employees with indefinite-term contracts, severance pay is calculated at 1.5 times the employee's monthly salary for each full year of service. The maximum payout is capped at 12 months' salary. If the employee has worked for a fraction of a year, the severance pay is calculated pro-rata based on the months and days worked.

Fixed-Term Contracts

Employees on fixed-term contracts are also entitled to severance pay if their contract is terminated unjustifiably before its expiration date. The severance pay is calculated as 1.5 times the employee's monthly salary for each remaining month on the contract, up to a maximum of 12 months' salary.

Compensación por Tiempo de Servicios (CTS)

Apart from severance pay for unjustified dismissal, employees in Peru are also entitled to Compensación por Tiempo de Servicios (CTS). This is a form of compensation that the employer deposits into the employee's bank account twice a year, in May and November. It is equivalent to one month's salary for every year of service. CTS is a separate benefit and is payable regardless of the reason for termination of the employment relationship.

The process of terminating an employee in Peru is governed by the Ley de Productividad y Competitividad Laboral (LPCL) and varies depending on the reason for termination.

Employee-Initiated Termination

1. Written Notice: An employee wishing to terminate their employment must submit a written resignation letter to their employer, providing at least 30 calendar days' notice as per articles 15 and 16 of the LPCL.
2. Employer's Response (Optional): The employee may request to be excused from the notice period. The employer has three days to respond in writing. If no response is received within three days, the exemption is considered tacitly granted.
3. Termination: The employment relationship ends either at the conclusion of the 30-day notice period or earlier if the employer grants the employee's request for exemption.

Employer-Initiated Termination

The process for employer-initiated termination in Peru is more complex and depends on the reason for dismissal:

Dismissal Due to Lack of Capability

1. 30-day Written Notice: The employer must provide the employee with a written notice of termination, stating the reasons for dismissal. The employee has 30 calendar days to improve their performance or present a defense as per articles 30 and 34 of the LPCL.
2. Correction Period: During the 30-day period, the employee has the opportunity to rectify any deficiencies in their work or provide evidence to challenge the grounds for dismissal.
3. Termination: If the employee does not adequately address the concerns raised by the employer during the 30-day period, the termination becomes effective.

Dismissal with Cause

1. 6-day Notice and Evidence: The employer must provide a written notice of termination specifying the serious misconduct leading to the dismissal. This notice must include supporting evidence as per article 34 of the LPCL.
2. Termination: In this scenario, the employment relationship ends after the six-day notice period ends.

Formalities

Termination notices must always be in writing and clearly state the reasons for termination. Disputes related to terminations are typically handled by the Peruvian labor authorities.