The rules on severance pay in detail

An employee is entitled to statutory termination pay in Peru, if s/he 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 2018

 

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