Hiring in Peru means budgeting for roughly 19% above gross salary in mandatory employer costs. The biggest single line item is EsSalud, the national health insurance contribution, which sits at 9% of gross salary. On top of that, you’ll need to account for a mandatory life insurance policy, potential labour risk insurance, and a monthly family allowance for employees with qualifying dependents. This guide covers every obligation you’ll take on as an employer, including your role in withholding and remitting income tax and pension contributions.
Essalud: peru’s mandatory health insurance
EsSalud is Peru’s social health insurance programme, and every employer is legally required to contribute. The rate is 9% of each employee’s gross monthly salary, with no salary ceiling on the contribution.
Who it covers
EsSalud coverage applies to all employees on a formal employment contract in Peru, including foreign nationals working under a Peruvian labour contract. You can’t opt out or substitute it with a private health plan unless the employee is enrolled in a pre-paid health entity (EPS) that complements EsSalud, in which case you split the contribution between both.
What it provides
The contribution funds medical consultations, hospitalisation, surgical procedures, and maternity care for the employee and their registered dependents (spouse, children). Benefits are administered through EsSalud’s own network of hospitals and clinics. For employers, the practical obligation is straightforward: calculate 9% of gross monthly salary per employee, and remit it to SUNAT alongside the monthly payroll declaration.
Vida ley and labour risk insurance
Beyond EsSalud, Peruvian labour law requires employers to carry two additional insurance products. These aren’t optional add-ons; they’re statutory obligations.
Vida ley (mandatory life insurance)
Vida Ley is a group life insurance policy that employers must take out for each employee. The monthly cost depends on the employee’s age and gross salary, so there’s no single flat rate that applies across the board. Younger employees with lower salaries will cost less to insure; older employees with higher salaries will cost more. You’ll need to obtain a quote from an authorised insurer and factor the actual premium into your cost modelling for each hire.
The policy provides a lump-sum benefit to the employee’s beneficiaries in the event of natural death, accidental death, or permanent disability. Employers are legally responsible for taking out and maintaining the policy for the duration of the employment relationship.
Labour risk insurance
If a role involves work classified as hazardous under Peruvian health and safety regulations, you’re also required to carry labour risk insurance (seguro complementario de trabajo de riesgo). The premium rate depends on the risk classification of the activity and the insurer’s assessment. Desk-based roles in a typical office environment won’t trigger this requirement; roles in construction, manufacturing, mining, or certain logistics functions likely will. Confirm the risk classification of each role before finalising your cost budget.
Family allowance
The family allowance (asignación familiar) is a statutory monthly payment that employers make directly to qualifying employees. It isn’t a social security contribution remitted to a government body; it goes straight into the employee’s pay.
Rate and eligibility
The allowance is PEN 113 per month, which equals 10% of Peru’s minimum wage (the Remuneración Mínima Vital, or RMV). An employee qualifies if they have at least one dependent child under 18 years of age. The allowance applies to private-sector employees whose employment conditions aren’t already governed by a collective bargaining agreement that covers the benefit separately.
Edge cases worth knowing
If both parents work for the same employer, both are entitled to claim the allowance independently. You don’t reduce it because both parents work at your company; each parent receives PEN 113 per qualifying child. The allowance continues for a dependent child between 18 and 24 years old if that child is enrolled full-time in higher education, though this extension requires the employee to provide proof of enrollment. Multiple children mean multiple allowances: an employee with three qualifying children under 18 receives PEN 339 per month in total family allowance payments.
Income tax withholding
Peru’s income tax on employment income is called the Fifth Category Tax (Impuesto de Quinta Categoría). You don’t pay this tax yourself, but you’re responsible for calculating it, withholding it from the employee’s monthly salary, and remitting it to SUNAT. Getting the calculation wrong exposes you to penalties, so understanding the mechanics matters.
Tax year and standard deduction
Peru operates on a calendar tax year (January to December). The unit of account for tax brackets is the UIT (Unidad Impositiva Tributaria). For 2026, the UIT is PEN 5,500. Before applying any bracket, every resident employee receives an automatic standard deduction of 7 UIT, which equals PEN 38,500 per year. This deduction comes off gross annual employment income first; the brackets then apply to what remains.
Employees can also deduct up to an additional 3 UIT (PEN 16,500) for qualifying expenses such as restaurant bills, medical fees, and rent, provided they keep documentary evidence. When these deductions apply, they reduce the taxable base further before brackets are calculated.
Resident employee tax brackets
The following rates apply to net annual taxable income (gross annual income minus the PEN 38,500 standard deduction, and any additional qualifying deductions).
| Annual net taxable income | UIT equivalent | Rate |
|---|---|---|
| Up to PEN 27,500 | Up to 5 UIT | 8% |
| PEN 27,501 to PEN 110,000 | 5 to 20 UIT | 14% |
| PEN 110,001 to PEN 192,500 | 20 to 35 UIT | 17% |
| PEN 192,501 to PEN 247,500 | 35 to 45 UIT | 20% |
| Over PEN 247,500 | Over 45 UIT | 30% |
The rates are marginal, not flat. An employee earning PEN 150,000 in net taxable income pays 8% on the first PEN 27,500, 14% on the next tranche up to PEN 110,000, and 17% on the remainder up to PEN 150,000.
Monthly withholding mechanics
You don’t withhold a fixed amount each month. Instead, you project the employee’s expected annual tax liability at the start of each year (or at the point of hire), divide it into equal monthly instalments, and adjust the calculation each month as actual earnings accumulate. SUNAT’s published methodology governs this projection; it accounts for mid-year salary changes and any deductions the employee has declared. You remit the withheld amount to SUNAT each month via the PDT Planilla Electrónica declaration.
Non-domiciled employees
A non-domiciled employee is one who doesn’t have legal residency in Peru and hasn’t been present in the country for more than 183 days in a 12-month period. For these employees, there are no brackets and no standard deduction. You withhold a flat 30% on all Peruvian-source employment income, every month, with no annual reconciliation. The moment an employee crosses the 183-day threshold and becomes domiciled, you switch to the progressive bracket system for the remainder of that tax year. Track this carefully for foreign hires on work permits.
Pension contributions
Every formal employee in Peru belongs to one of two pension systems: the ONP (public system) or an AFP (private fund). The employee chooses their system when they start work. Your role as employer is to withhold the applicable contribution from the employee’s salary each month and remit it to the correct institution. You don’t pay the pension contribution yourself; it’s entirely employee-funded.
Onp: the public pension system
The ONP (Oficina de Normalización Previsional) is the state-run defined-benefit pension system. The contribution rate is a flat 13% of gross monthly salary, with no ceiling. There are no variable components; every ONP member pays the same 13% rate regardless of their salary level. You withhold 13%, remit it to the ONP, and the employee builds up entitlement toward a state pension.
Afp: the private pension system
The AFP system has four private funds in operation: Habitat, Integra, Prima, and Profuturo. Each AFP charges three components on the employee’s contribution:
- A mandatory pension contribution of 10% of gross monthly salary (identical across all four funds)
- An insurance premium of 1.37% of gross monthly salary (identical across all four funds)
- A flow-based commission charged on gross salary (varies by fund)
The commission is where the funds differ. As of April 2026, the flow-based commission rates are:
| AFP fund | Pension contribution | Insurance premium | Flow commission | Total approximate cost |
|---|---|---|---|---|
| Habitat | 10% | 1.37% | 1.47% | ~12.84% |
| Integra | 10% | 1.37% | 1.55% | ~12.92% |
| Prima | 10% | 1.37% | 1.60% | ~12.97% |
| Profuturo | 10% | 1.37% | 1.69% | ~13.06% |
The AFP system also applies a maximum insurable salary of PEN 12,598.91 per month for the insurance premium component. Gross salary above that ceiling still attracts the 10% pension contribution and the fund’s flow commission, but the insurance premium calculation caps at PEN 12,598.91.
Your remittance obligation
Once an employee chooses their system, they generally can’t switch frequently. You withhold the applicable amount each month and remit it either to the ONP or the relevant AFP by the declared deadline. Late remittances attract penalties and interest, so include pension remittance in your monthly payroll calendar alongside the SUNAT deadlines.
Minimum wage 2026
Peru’s national minimum wage (Remuneración Mínima Vital) is PEN 1,130 per month. This figure was established by Ministerial Decree DS 006-2024-TR, which took effect in April 2025, and it remains unchanged for 2026. All employer cost calculations, including the family allowance and EsSalud contributions, build from this base for employees earning at or near the minimum.
The minimum wage applies to full-time private-sector employees working a standard 48-hour week. Part-time arrangements are pro-rated proportionally. You can’t substitute non-cash benefits for the minimum wage; the PEN 1,130 must be paid in cash or its direct equivalent.
Total employer cost: illustrative calculation
The following example uses a gross monthly salary of PEN 5,000 to show how employer costs stack up. It assumes the employee is a resident, holds an AFP pension, and has one qualifying dependent child.
| Cost component | Basis | Amount (PEN/month) |
|---|---|---|
| Gross salary | Fixed | 5,000.00 |
| EsSalud (9%) | 9% × 5,000 | 450.00 |
| Family allowance | Per qualifying child | 113.00 |
| Total employer cash outlay | 5,563.00 | |
| Employer cost above gross (excl. Vida Ley and risk insurance) | ~11.26% |
The PEN 450 EsSalud contribution is the dominant variable cost. The family allowance is a fixed amount per child, not a percentage of salary, so it has proportionally less impact at higher salary levels.
The frequently cited figure of approximately 19% above gross salary reflects the full range of employer obligations across a broader workforce, including Vida Ley premiums, and represents an average rather than a precise per-employee calculation. Your actual cost will depend on the employee’s age and salary (which affect the Vida Ley premium), the role’s risk classification (which determines whether labour risk insurance applies), and the number of qualifying dependents.
Income tax withholding and pension contributions don’t increase your total cost; they’re employee-side obligations that you administer on the employee’s behalf. The actual take-home impact is on the employee, not your payroll budget.
FAQ
Do I pay EsSalud for foreign employees working in Peru?
Yes. EsSalud applies to all employees engaged under a Peruvian employment contract, regardless of nationality. If you hire a foreign national who is working and residing in Peru under a work permit, you contribute 9% of their gross monthly salary to EsSalud just as you would for a Peruvian employee.
What happens if an employee hasn’t chosen between ONP and AFP when they start work?
If an employee hasn’t made an active choice, Peruvian law treats them as defaulting into the AFP system. In practice, newly entering the formal labour market without a prior AFP affiliation triggers an automatic assignment process. Don’t leave this unresolved; establish the employee’s pension system membership before running the first payroll to avoid remittance errors.
Can the family allowance be replaced with a higher base salary?
No. The family allowance is a statutory entitlement that sits on top of the agreed salary. You can’t absorb it into the base wage or offset it against any other pay component. If an employee qualifies, they receive PEN 113 per qualifying child per month as a separate line item in their pay.
Is an Employer of Record (EOR) the best option for hiring in Peru without a local entity?
If you want to hire in Peru but haven’t incorporated a local legal entity, an EOR takes on the employer obligations on your behalf. That includes registering with SUNAT and EsSalud, running the monthly payroll, withholding and remitting income tax and pension contributions, and maintaining the required insurance policies. It’s a faster route to compliant employment than setting up a subsidiary, and it keeps you inside Peruvian labour law without needing to build local HR and legal infrastructure.
What EOR services cover the pension remittance obligation?
A full-service EOR handles the entire pension cycle: determining each employee’s chosen system, calculating the correct withholding each month, and remitting to the ONP or the relevant AFP by the statutory deadline. This is particularly valuable if you’re managing a distributed workforce where tracking individual AFP fund choices and variable commission rates would otherwise require dedicated local payroll expertise.
Do I need to use contractors differently from employees for tax purposes?
Yes. Independent contractors in Peru aren’t subject to the Fifth Category Tax. Instead, they’re responsible for their own income tax filings under the Fourth Category. You don’t withhold income tax or pension contributions for contractors, and you don’t pay EsSalud on their fees. However, misclassifying an employee as a contractor exposes you to back-payment of all contributions and penalties, so the classification decision matters.
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