Professional Employer Organization (PEO) in Peru

What is a PEO?

A professional employer organization (PEO) is a service provider that acts as a stand-in for your human resources (HR) department. They’re typically the go-to services for startups and small and medium-sized businesses looking to grow their business on an international scale. However, it’s not uncommon for enterprise-level businesses to take advantage of what PEOs have to offer.

Essentially, a PEO will take on administrative and legal tasks. This might include managing payroll, creating competitive benefits packages for employees, and making sure that your business is compliant at all times in regard to local labor laws in each country you hire from.

When you partner with a PEO in Peru or elsewhere in the world, you’ll have a team of people you can rely on to take care of all the tedious and time consuming tasks. That way you can focus on productivity and scaling your business and save on some sizable costs. Your PEO will also ensure that your international employees receive their statutory benefits and are paid in the correct currency of their country.

If you’re wondering whether PEO services would be right for your business, speak to a team member at Skuad who will be happy to answer your questions.

What are the benefits of using a PEO provider in Peru?

When you choose to use PEO services in Peru, you’re choosing to open up a world of opportunity for your small or medium-sized business. 

Let’s talk about the benefits of partnering with a PEO:

Hire the best talent in Peru and Latin America

Each employee you hire and make part of your team is meant to be a valuable asset that can help your business grow. Sometimes, this type of candidate — or candidates — live on the other side of the world. 

Fortunately, remote work has made it possible to hire international employees without having to relocate them.

With Peru emerging as one of the most stable economies in Latin America, using a PEO means you can tap into the talent pool emerging along with it. After all, skilled workers are also looking internationally for work, and you may be just what they’re looking for in an employer. 

Become more competitive on a global scale

International recognition is a pretty good sign that your business is doing well. The key is outshining the competition when it comes to attracting and retaining new talent.

When you partner with a PEO in Peru, you can rest easy knowing that they’ll take care of ensuring that the required statutory benefits are provided while also helping you build a better benefits package to attract the most qualified candidates. 

Save on unnecessary costs

Without PEO services in Peru, you’ll be looking at some significant expenses when it comes to hiring within the country. Many larger corporations even choose to work with a PEO instead of doing the hiring and onboarding alone simply because it makes more sense financially.

This is because a PEO allows you to skip hiring an in-house team to manage your HR tasks as well as a legal team to keep you compliant with the employment laws in Peru.

Expand into the Latin American market and more

Latin America, in general, is a market that’s deeply connected to North America, Europe, and even Asia. 

By partnering with a PEO in Peru, you’ll gain valuable insights into these new markets (starting with Latin America) through your new Peruvian employees. It’s a great way to gain firsthand knowledge and experience to make your future expansion a success.

Get in touch with a team member at Skuad today to learn more about how we can save you time and money while sourcing top talent from Peru. 

Avoid setting up your own legal entity in Peru

There’s only one alternative to doing business in Peru via PEO services, and that’s by establishing a legal business entity in the country. This can take months if not an entire year, not to mention a team of lawyers that specialize in Peruvian and Latin American labor laws. 

It’s also incredibly costly — and that’s before you factor in the travel and accommodations since you would have to physically be there for more of the incorporation.

Using a PEO in Peru allows you to completely avoid forming a legal entity because it’s the PEO’s job to have its own legal entity established in a number of countries for businesses like yours to use. They can even act as an employer of record (EOR) to source and hire employees on your behalf if needed.

Become more culturally aware

If you’re going to hire employees from other countries, it’s essential to know everything there is to know about the culture. A top priority of your PEO in Peru will be to make sure that you’re informed of all cultural practices as an employer.

For example, Peruvians have what is called la hora Peruviana, which essentially means “Peruvian time.” In other words, Peruvians are very lax about time, and business meetings often don’t start until half an hour after the designated time. 

Remain compliant with Peruvian labor legislation

Each country will have its own legal requirements for what employees must provide their employees with. If you don’t comply with these labor laws, your business could face severe penalties — including business bans.

Labor law compliance covers everything from payroll to social security contributions to paid leave. 

Let’s take a look at some of the most important things you should know about hiring in Peru:

Payroll  

• The currency in Peru is the nuevos soles, or the sol (S/), which is what employees are paid.
• The minimum wage in the country is 750 nuevos soles per month. 
• Fixed-term employee contracts are permitted for up to five years, and while they can be verbal, it’s best to produce them in writing.
• The standard workweek is 8 hours per day and 48 hours per week.
• Peruvian employees are entitled to two bonuses per year equivalent to one month’s salary. These bonuses are given in July and December.
• Severance pay is not typically required in Peru. However, a written notice regarding employee termination must be given 30 days prior to the intended termination.
• Peru has both public and private healthcare, and it’s common for employers to offer private healthcare plans for employees. 

Tax and employer contributions  

Employees in Peru must pay a Unidad Impositiva Tributaria income tax which is a reference unit set annually by the Peruvian Ministry of Economy (MEF):

• 8%: 0 to 5 UIT
• 14%: 5 UIT - 20 UIT
• 17%: 20 UIT - 35 UIT
• 20%: 35 UIT - 45 UIT
• 30%: 45 UIT and above

The Peru corporate tax rate is set at 29.5% and employers are expected to contribute 9% towards employee health insurance and 13% towards employee pension funds.

Paid leave

• In general, Peruvian employees are entitled to one month of vacation time each year.
• Employees are also entitled to up to 20 paid sick days paid by the employer annually. The rest is paid by the country’s social security system if needed.
• Female employees are entitled to a total of 98 days of paid maternity leave, with 49 days prior to giving birth.
• Men are entitled to 10 days of paid paternity leave after the birth of their child.

Learn more about how Skuad’s PEO services can help your business to grow by booking a demo today.

What does it cost to build a team in Peru?

When it comes to setting up a business in Peru, you can expect to pay as much as $41,000. That includes incorporation for the first and second year, but not the engagement amounts and fees for things like opening a corporate bank account, lawyers, and other government fees.

It also doesn’t include the cost of travel, accommodations, and meals. 

However, the pricing for PEO services will vary among the different providers and packages they offer. Skuad’s PEO services in Peru start with a free trial that can be canceled at any time. 

From there, our PEO services begin at the affordable price of $19 per month — which allows you to onboard and pay your international employees right away. We also offer custom prices for enterprise-level businesses, all you have to do is talk to our sales team to get a quote. 

Trust us, it’s much more economical compared to establishing your own business entity in Peru or anywhere else for that matter. 

When you’re ready to start onboarding and paying employees in Peru, book a demo of Skuad’s global PEO solution right away!