The rules on severance pay in detail

An employee is entitled to statutory termination pay in Peru, if he or she has passed the probation period (usually three months) and the termination was on the initiative of the employer.

The calculation is made as follows:

  • Fixed term contracts: the indemnity is equivalent to 1.5 times the monthly salary for each month that remains until the end of the contract, with a maximum of 12 months’ salary.
  • Indefinite term contracts: the indemnity is equivalent to 1.5 times the monthly salary for each year of service to a maximum of 12 payments. Periods of time of less than one year will be paid pro rata.

Additional reasonable compensation is possible for seriously culpable behaviour by the employer.

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Author: Estudio Olaechea

Date: December 2019