FTC regulated: Yes

Valid reasons for FTC use: objective and material reasons

Remarks

Arts 53-71 LPCL list the valid reasons for the use of FTCs (referred to as "contracts subject to special conditions") which fall within 3 categories:
1) Temporary reasons (art. 54 LPCL):
* commencement or launching of a new activity (max. duration of FTC: 3 years)
* increase in market demand (max. duration of FTC: 5 years)
* restructuring of the enterprise in response to the replacement, modification, extension or, in general, any technological change (max. duration of FTC: 2 years)
2) Incidental reasons (art. 55, LPCL):
* transitory needs different from the normal activity (max. duration: 6 months in one year),
* replacement of a worker (max. 5 years)
* emergency contract to cover needs arising from an unforeseen event or force majeure (duration of emergency and max. 5 years)
3) Specific piece of work or service (sec. 56, LPCL):
* performance of a specific piece of work or service (max. 5 years)
* intermittent service contract (max. 5 years)
* seasonal contracts (max. 5 years)
Renewals are allowed within the maximum duration specified above for each contract. A combination of different contracts subject to special conditions is possible provided however that the total cumulative duration does not exceed 5 years (art. 74 LPCL).

Maximum number of successive FTCs: no limitation

Remarks

No limitation on the number of FTC, as long as the duration of the employment relationship does not exceed 5 years (art. 74 LPCL).

Maximum cumulative duration of successive FTCs: 60months

Remarks

Arts 53-71 LPCL list the valid reasons for the use of FTCs (referred to as "contracts subject to special conditions") which fall within 3 categories:
1) Temporary reasons (art. 54 LPCL):
* commencement or launching of a new activity (max. duration of FTC: 3 years)
* increase in market demand (max. duration of FTC: 5 years)
* restructuring of the enterprise in response to the replacement, modification, extension or, in general, any technological change (max. duration of FTC: 2 years)
2) Incidental reasons (art. 55, LPCL):
* transitory needs different from the normal activity (max. duration: 6 months in one year),
* replacement of a worker (max. 5 years)
* emergency contract to cover needs arising from an unforeseen event or force majeure (duration of emergency and max. 5 years)
3) Specific piece of work or service (sec. 56, LPCL):
* performance of a specific piece of work or service (max. 5 years)
* intermittent service contract (max. 5 years)
* seasonal contracts (max. 5 years)
Renewals are allowed within the maximum duration specified above for each contract. A combination of different contracts subject to special conditions is possible provided however that the total cumulative duration does not exceed 5 years (art. 74 LPCL).

Maximum probationary (trial) period (in months): 12 months

Remarks

General rule: Probationary periods may last three months, at the end of which the worker gains the right of protection against unlawful dismissal (art. 10 LPCL).
Extension: The parties may agree to extend the probationary period where the work to be undertaken requires a period of training and adaptation or where the nature of the work or responsibility entailing such extension may be justified (art. 10 LPCL).
Extension of the probationary period must be established in writing and may not exceed:
- six months in total in the case of skilled workers and persons in positions of trust,
- one year for managerial personnel.

Obligation to provide reasons to the employee: Yes

Remarks

Dismissal must be communicated in writing, by letter, stating the reason given for the action. The employer may not subsequently invoke grounds other than those referred to in the letter of dismissal (art. 32 LLCP).

Valid grounds (justified dismissal): worker's conduct, worker's capacity, economic reasons

Remarks

According to art. 22 LPCL, in order for a worker employed for four or more hours daily for the same employer to be dismissed, there must be a valid reason prescribed by law and duly substantiated which may be connected with his or her capacity or conduct.
The LPCL provides an exhaustive list of reasons justifying dismissal.
* Valid reasons connected to the capacity of the worker (art. 23 LPCL): A) deterioration of the physical, intellectual, mental or sensorial faculties or an acquired incapacity having a major effect on his or her performance on the job, whenever there is no vacancy for the worker to be transferred to without compromising his/her safety and health, and that of third persons; inadequate output in relation to the worker's capacity or in comparison to the average output for similar work under similar conditions; or unreasonable refusal on the part of the worker to undergo a previously agreed or legally required medical examination in the context of the employment relationship, or to follow medical treatment or preventive measures prescribed by a doctor in order to avoid illness or accident.
* Valid reasons for dismissal related to the worker's conduct (art. 24 LPCL): conviction for a crime involving fraud (by a decision not subject to appeal); disqualification of the worker imposed by judicial or administrative authorities to carry out his or her job at the workplace for three months or more; and any serious misconduct as defined in 25 LPCL: a violation of the fundamental terms of the contract which makes the continuation of the employment relationship unreasonable, as follows: a) failure to comply with employment obligations in such a way that the breakdown of good faith in the employment relationship may be presumed; the repeated opposition to orders relating to the work; repeated and untimely stoppage of work when this has been found to be the case by the competent authority; or the failure to observe work regulations or occupational safety or health regulations; b) deliberate and repeated deterioration in output, or in the volume or quality of production; c) appropriation or attempted appropriation of goods or services belonging to the employer or for which the worker is responsible, or unjustified retention or utilization of the same; d) the use or transfer to a third party of information reserved for the employer; the unauthorized removal or use of documents belonging to the enterprise; providing false information to the employer with the intention of causing harm or obtaining an advantage; or unfair competition; e) repeated attendance at work in a state of drunkenness or under the influence of drugs or narcotics, and even if it is not repeated, where because of the nature of the work, such condition is exceptionally serious; f) acts of violence, serious breaches of discipline, insults and disrespect in oral or written statements addressed to the employer, his or her representatives, senior staff or other workers, whether they take place inside or outside the workplace; g) deliberate damage to buildings, plant, works, machinery, instruments, documents, raw materials and other goods belonging to the enterprise, or in its possession; h) failure to appear at the workplace for more than three consecutive days; unjustified absence for more than five days over a period of 30 calendar days, or more than 15 days over a period of 180 days, irrespective of whether any disciplinary action is taken in either case; repeated lateness where attention has been drawn to this by the employer, and where disciplinary sanctions such as written warnings and suspensions have already been applied; (i) sexual harassment by the workers’ representatives or whoever has a position of authority over the employees, as well as sexual harassment committed by an employee independently of the hierarchical position of the victim in the working place..

In addition, the LLCP provides for termination for economic, technological, structural or similar reasons, or because of restructuring of the enterprise (Title I, Ch. VII, sec. 7, LLCP).

Prohibited grounds: pregnancy, maternity leave, filing a complaint against the employer, race, sex, religion, political opinion, trade union membership and activities, disability, language

Remarks

Art 29 LPLC provides for the nullity of any dismissal based on those prohibited grounds.
On maternity leave: see art. 29 e) LPCL: any dismissal based on the pregnancy is null if it takes place at any time preceding confinement or 90 days after it [= duration of maternity leave]. Note that maternity protection was enhanced by Law No30367 of 25 November 2015.

Workers enjoying special protection: pregnant women and/or women on maternity leave

Remarks

- There is no specific protection for trade union members or worker's representatives other than the prohibition of dismissing them on the grounds of their affiliation or activities or on the grounds of their candidature, status or former status as a workers' representative. As already mentioned under "prohibited grounds", any dismissal on those grounds will be null. (art. 29 a),b),c) LPCL)

- With regards to pregnancy, delivery and its consequences or breastfeeding any dismissal based on the pregnancy is null if it takes place at any time during pregnancy or 90 days delivery. Additional protection consists in a presumption that the dismissal is grounded on the pregnancy if the employer is unable to prove any other valid reason for the dismissal. Dismissal of a pregnant woman for a valid reason is therefore permitted (art. 29 e) LPCL).

Notification to the worker to be dismissed: written

Remarks

Art. 32 LPCL

Notice period:

Remarks

See art. 31 LPCL:
- The employer must give the worker a reasonable period of written notice, of not less than six calendar days in case of misconduct, so that the worker can present a written defense to any charges brought against him or her.
- If the worker is guilty of flagrant serious misconduct where it would be unreasonable to require the employer to continue the employment relationship, no notice is required.
- In the event of allegations related to capacity of the worker or errors, the employer must give a notice of at least 30 days in order for the employee to prove his or her professional capacities and correct any error.

tenure ≥ 6 months:

  • All: 0.2 months.
  • All: 1 months.

tenure ≥ 9 months:

  • All: 0.2 months.
  • All: 1 months.

tenure ≥ 2 years:

  • All: 0.2 months.
  • All: 1 months.

tenure ≥ 4 years:

  • All: 0.2 months.
  • All: 1 months.

tenure ≥ 5 years:

  • All: 0.2 months.
  • All: 1 months.

tenure ≥ 10 years:

  • All: 0.2 months.
  • All: 1 months.

tenure ≥ 20 years:

  • All: 0.2 months.
  • All: 1 months.

Pay in lieu of notice: No

Notification to the public administration: No

Notification to workers' representatives: No

Approval by public administration or judicial bodies: No

Approval by workers' representatives: No

Definition of collective dismissal (number of employees concerned): Economic, technological and structural reasons: concerning more than 10 % of the workers.

Remarks

See art. 48 LPCL.
[In addition to economic, technological and structural reasons, the LPCL foresees 3 other objective causes for termination of employment, which are not dealt with under this section, namely: a) fortuity and force majeure; b) dissolution, bankruptcy, liquidation proceedings; c) Patrimonial restructuring (See Supreme Decree No 014-99-ITINCI approving the Unified Text of the Law of Patrimonial Restructuring)

Prior consultations with trade unions (workers' representatives): Yes

Remarks

art. 48 a) and b) LPCL: In case of collective dismissal grounded on economic, technological and structural reasons, the employer first has to notify to workers' representatives and provide them with the relevant information regarding the reasons of the retrenchment and the names of affected workers. Then workers' representatives and employer shall undertake a consultation on alternatives to dismissal (suspension, reduction of working hours...).
If the parties reach an agreement, it will become enforceable.

Notification to the public administration: Yes

Remarks

Art. 48 a), c), d), e) LPCL.
After consultations with the trade unions begins, the employer shall file an application before the the Labour Administrative Authority [Autoridad Administrativa de Trabajo] based on an expert report that justifies the need for the dismissal.
Once the workers or their representatives have reviewed the report, they have 15 days to present their own expert report. There shall then be a meeting between the employer and the trade unions or workers' representatives under the auspices of the Labour Administrative Authority in order to find agreement on the retrenchment's modalities. In the absence of agreement on the modalities of the retrenchment, the Administrative Authority will issue an binding decision which can however be challenged within 3 days.

Notification to workers' representatives: Yes

Remarks

Art. 48a) LPCL.

Approval by public administration or judicial bodies: No

Remarks

Art. 48 e) LPCL.
Approval is only mandatory in the absence of agreement on the modalities of the retrenchment between the employer and the worker's representatives. In such cases, the Labour Administrative Authority will issue an binding decision.
If an agreement is reached however, it will be legally enforceable.

Approval by workers' representatives: No

Remarks

If there is an approval by the worker's representatives the collective dismissal will take place according to the agreed modalities. In the absence of such approval, the Labour Administrative authority will issue a resolution (art. 48 LPCL).

Priority rules for collective dismissals (social considerations, age, job tenure): No

Employer's obligation to consider alternatives to dismissal (transfers, retraining...): Yes

Remarks

Mandatory consultations on alternatives to redundancies (such as temporary suspension of work, reduction of working hours..): art. 48 b) LPCL.

Priority rules for re-employment: Yes

Remarks

See art. 52 LPCL: Workers dismissed for fortuity and force majeure or economic, technological and structural reasons have preferential rights to be reinstated if the employer decides to hire, directly or through third persons, new staff to fill similar posts, within a year of the collective dismissal. In the event of non-compliance, the worker is entitled to request, through legal channels, corresponding compensation in accordance with the law.

Severance pay:

Remarks

LLCP does not foresee any severance pay or redundancy payment. The employer can terminate the employment contracts for economic reasons, technological reasons, or structural causes that make the cessation necessary or in the event of force majeure without having to pay compensation.
Dismissal of a worker due to his or her capacity or conduct does not give rise to compensation (art. 34, LLCP)
If the employer dismisses an employee for reasons other than those exhaustively listed in the LPCL, he or she will have to pay compensation for arbitrary dismissal which is calculated according to the length of service (see below - avenues for redress).

tenure ≥ 6 months: 0 months

tenure ≥ 9 months: 0 months

tenure ≥ 1 year: 0 months

tenure ≥ 4 years: 0 months

tenure ≥ 5 years: 0 months

tenure ≥ 10 years: 0 months

tenure ≥ 20 years: 0 months

Redundancy payment:

tenure ≥ 6 months: 0 months

tenure ≥ 9 months: 0 months

tenure ≥ 1 year: 0 months

tenure ≥ 2 years: 0 months

tenure ≥ 4 years: 0 months

tenure ≥ 5 years: 0 months

tenure ≥ 10 years: 0 months

tenure ≥ 20 years: 0 months

Notes / Remarks

Notes

1) Dismissal based on the worker's capacity or conduct: no severance pay (art. 34 LPCL)
2) Collective termination (10% of the workers) for economic reasons, collective termination due to force majeure, bankruptcy, restructuring: Redundancy payment in accordance with art. 21 Supreme Decree No 001-97-TR (Texto Único Ordenado de la Ley de Compensación por Tiempo de Servicios)
2) Dismissal without cause (arbitrary): compensation for unfair dismissal (art. 34 and 38 LPCL - see below)

Note: the Peruvian legislation foresees a seniority award (Compensacion for Tiempo de Servicio - CTS) which is a social benefit payable to a worker, upon termination of employment irrespective of the reason for the termination. It is intended to cover the fundamental risk caused by the termination of an employment relationship and the consequent loss of income. This compensation is equivalent to one monthly average salary per year of service. The CTS is deposited to a bank chosen by the employee each semester, 50 % at all times (in May and November). While prior to 1991, the CTS was to be paid only once the employment relationship was terminated, the employee can now freely withdraw up to 50% of the CTS.

Compensation for unfair dismissal - free determination by court: No

Compensation for unfair dismissal - Legal limits (ceiling in months or calculation method): 1) Arbitrary dismissal (= a valid reason has not been given or cannot be legally substantiated): No right to be reinstated, the worker is only entitled to compensation, as follows:
- Ordinary compensation = 1.5 month's wages for each year of service up to a maximum of 12 months' wages.
- Compensation in micro enterprises: 10 days for each year of service up to a maximum of 90 days' wages.
- Compensation in small enterprises: 20 days' wages for each year of service up to a maximum of 120 days' wages.

2) Dismissal based on prohibited grounds :
The dismissal is null and the worker shall be reinstated but in complying with the decision he or she may opt for compensation, the amount of which is the same as compensation for arbitrary dismissal (see 1)).

Remarks

- See sec. 34 and 38 LPCL (general rules).
On the specific compensation for arbitrary dismissal in micro and small enterprises, see Law on Micro and Small Enterprises [MSE], consolidated version of 2008, art. 47. Pursuant to that law, a micro enterprise is an enterprise employing 1 to 10 workers and whose maximum annual sales do not exceed 150 tributary tax units (Unidades Impositivas Tributarias (UIT)).
A small enterprise is an enterprise employing 1 to 100 workers and whose maximum annual sales do not exceed 1700 tributary tax units (see art. 5 MSE)
- In the event of a constructive dismissal, the worker may choose to bring an injunction against the employer's actions or he or she may choose termination of the contract. In case of such termination, he or she will be entitled to the payment of compensation equivalent to compensation for arbitrary dismissal (art. 30 LPCL)
- Please note that compensation for arbitrary dismissal (art. 38 LPCL) is also due in the event the employer does not observe the preferential right of workers to be re-employed by their former employer within a year of a collective dismissal (art. 52 LPCL)

Reinstatement available: Yes

Remarks

- If a dismissal is declared null and void (that means that the dismissal was based on prohibited grounds), reinstatement is mandatory. However, in complying with the decision the worker may opt for compensation instead (art. 34 LPCL)
- There is no right to reinstatement in the event of an arbitrary dismissal (= a valid reason has not been given or cannot be legally substantiated). Compensation is the only available remedy is such case (art. 34 LPCL)

Preliminary mandatory conciliation: Yes

Remarks

- The New Labour Procedure Law [NLPL], No 29497, in force from 15 July 2010 foresees a preliminary mandatory conciliation hearing and contains a much more detailed provision on the modalities of such preliminary hearing (art. 43).

Competent court(s) / tribunal(s): labour court

Remarks

The New Labour Procedure Law [NLPL], establishes a hierarchy of courts to adjudicate labour disputes, consisting of the Magistrates Courts (Juzgados de Paz Letrados), the Labor Courts of First Instance (Juzgados de Trabajo), the Labour Branches of the High Court (Salas Laborales de la Corte Superior), and the Supreme Court (Corte Suprema). Dismissal cases are heard by the Labour Courts of First Instance (Juzgados de Trabajo). The extinction of the working relationship is observed by Specialized Labour Court as indicated in art. 2 and 51 of the NLPL.

Existing arbitration: Yes

Remarks

Arbitration is recognized as a valid labour dispute resolution mechanism under certain conditions in the New Labour Procedure Law of 2010 (applicable from 15/07/2010): see supplementary provision 6).