Sources of regulation
Art. 27 of the 1993 Constitution
of Peru states that the law “grants to the worker adequate protection against
arbitrary dismissal”. This represents a change in approach from art.
48 of the Peruvian Constitution of 1979, which had enshrined a right
of security of employment, stressing that the worker could be dismissed
only for just cause, as prescribed by statute and duly substantiated.
There are other sources of regulation which elaborate on
this new perspective. Termination of employment in the context of individual
relations is governed by Law on Labour Competitiveness and Productivity
(Decreto Supremo No. 003-97-TR, 2103-97) (LLCP) and Law on Training and
Labour Promotion (Decreto Supremo No. 002-97-TR, 21-03-97) (LTLP) as well
as by collective agreements and case law. Work rules are also recognized
by law and are therefore regarded as sources of law.
Scope of legislation
Sec. 4 of the LTLP and sec.
3 of the LLCP state that the scope of this legislation extends to
“all enterprises and workers in the private sector”. From this perspective,
public employees are excluded from the scope of this legislation, as
they are governed by the framework law on public service and remuneration
of the public sector and other supplementary standards. For the purpose
of this legislation, a public servant is a person who renders service
in public administration entities upon appointment or through a contract
with a competent authority, with regular working hours and corresponding
remuneration. A public servant is also a person who is elected or designated
by the competent authority to carry out duties at the highest level in
the government and in autonomous bodies.
Workers subject to special legal rules and those in management
and positions of trust are governed by their own set of rules (secs.
43-45, LLCP).
Contracts of employment
Pursuant to sec. 4 of the LLCP, it is assumed that
there is a contract of indefinite duration “where remunerated services
have been provided in a situation of subordination”. However, contracts
for a definite period and those subject to special conditions may be freely
concluded.
Probationary periods may last three months, at the end
of which the worker gains the right of protection against unlawful dismissal.
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 (sec. 10, LLCP). 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 one year for managerial personnel or persons
in positions of trust. The provisions of sec. 75 of the LLCP govern
the probationary period for contracts subject to special conditions.
With regard to workers employed under special conditions, sec.
76 of the LLCP states that upon expiry of the probationary period,
if the employer arbitrarily rescinds the contract, he or she must award
the worker compensation equivalent to the average ordinary monthly remuneration
for each month of work left until the expiry of the contract, up to a
limit of 12 payments.
Contracts subject to special conditions may be concluded
to meet market requirements or demand for increased production, or if the
temporary or incidental nature of the service or task which is to be carried
out deems it necessary. Intermittent or seasonal contracts which by their
nature may be permanent are accepted (sec. 53, LLCP).
The following are temporary employment contracts (sec.
54, LLCP):
- a
contract concluded at the commencement or launching of a new activity
(maximum duration three years);
- a
contract based on the requirements of the market to meet increases
in market demand which cannot be satisfied by permanent staff (maximum
five years);
and
- a
contract for restructuring of the enterprise, in response to the replacement,
modification, extension or, in general, any technological change (maximum
two years).
The following are considered incidental employment contracts
(sec. 55, LLCP):
- a
casual contract to meet transitory needs different from the normal
activity at the workplace, which may be for a maximum of six months in
one year;
- a
contract to replace a worker for as long as required, for a maximum
of five years; and
- an
emergency contract to cover needs arising from an unforeseen event
or force
majeure (for the duration of the emergency and never for more
than five years).
The following are considered employment contracts for a
specific piece of work or service (sec. 56, LLCP):
- contract
for the performance of a specific piece of work or service;
- intermittent
service contract to cover permanent but discontinuous activities of
the enterprise; and
- seasonal
contracts.
None of the three above-mentioned contracts, according
to common provisions, may exceed five years.
Contracts subject to special conditions are considered
indefinite in the following cases (sec. 77, LLCP):
- where
the worker continues to work after the expiry of the term stipulated
or after agreed extensions where these exceed the maximum authorized limit;
- where
a contract is for a specific piece of work or service and the worker
has continued to provide effective services after completing the work for
which
he or she was contracted, without the contract being renewed;
- where
the holder of the post being replaced does not resume his or her post
on expiry of the period and the substitute continues working; or
- where
the worker can prove deception or fraud in relation to the standards
prescribed by the LLCP.
Sec. 79 of the LLCP expressly
mentions the right to security of employment for workers employed under
special conditions, stressing that they have the same benefits, once the
probation period has ended, as workers employed on contracts for a definite
period.
Termination of employment
Sec. 16 of the LLCP lays
down the following as reasons for the termination of a contract of employment
other than at the initiative of the employer:
- the
death of the worker or employer; in case of the employer’s death the worker
may, by prior agreement with the employer’s heirs, stay on for a brief
period of time, not exceeding one year, to wind up the business (sec.
17, LLCP);
- voluntary
resignation of the worker, with 30 days’ notice, enabling the employer
to release him or her (sec. 18, LLCP);
- the
completion of the task or service, the occurrence of a condition leading
to the contract’s termination and the expiry of the term in contracts
legally concluded, subject to specified conditions;
- mutual
agreement to terminate;
- permanent
total disability;
- the
retirement of the worker; and
- the
termination of employment on objective grounds, that is, due to an
unforeseen event or force majeure, liquidation of the enterprise or bankruptcy.
Under
these circumstances, workers are entitled to compensation for length
of service and enjoy the right of preference for reinstatement.
Dismissal
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 (sec. 23, LLCP).
The following are reasons connected with the capacity of
the worker (sec. 24, LLCP) that may justify dismissal:
- deterioration
of the physical or mental faculties or an acquired incapacity having
a major effect on his or her performance on the job;
- 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.
The following are valid reasons for dismissal related to
the conduct of the worker (sec. 24, LLCP):
- serious
misconduct, which, in accordance with sec. 25 of the LLCP, makes
the continuation of the employment relationship unreasonable, as follows:
- failure to comply with
employment obligations in such a way that the breakdown of good faith in
the employment relationship may be presumed;
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;
- deliberate and repeated
deterioration in output, or in the volume or quality of production;
- 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;
- 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;
- 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;
- 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;
- deliberate damage to
buildings, plant, works, machinery, instruments, documents, raw materials
and other goods belonging to the enterprise, or
in its possession;
- 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;
- conviction
for a crime involving fraud (by a decision not subject to appeal);
or
- 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.
Dismissal for economic, technological, structural or similar
reasons, or because of restructuring of the enterprise are objective grounds
for termination of employment (Ch. VII, sec. 7, LLCP). Workers
dismissed for these reasons are entitled to a severance allowance (Legislative
Decree No. 650) and 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.
The termination of employment contracts solely on economic
grounds may be carried out in cases where a minimum of 10 per cent of the
total workforce of the enterprise is involved, and should follow a special
procedure implying consultation with workers’ representatives and
notification to relevant public authorities.
Pursuant to sec. 29 of the LLCP, dismissal for the
following reasons is considered null and void:
- membership
of a trade union or participation in trade union activities (up to
90 days after having relinquished the post, (sec. 46b of the LLCP regulation);
- candidature
for workers’ representative or acting or having acted in this capacity
(from 30 days leading up to elections and up to 30 days after, (sec.
46a of the LLCP regulation));
- submitting
a complaint or taking part in an action against the employer before
the competent authorities, except in cases of gross misconduct through
acts
of violence, serious indiscipline, or damage suffered by the employer;
- discrimination
on the grounds of sex, race, religion, political opinion or language;
and
- pregnancy,
where dismissal takes place 90 days preceding or following confinement.
Under the provisions of sec. 30 of the LLCP, the
following acts result in constructive dismissal:
- the
non-payment of remuneration, barring force majeure;
- unfounded
reduction of wages;
- transfer
of a worker for the purpose of causing him or her prejudice;
- the
non-observance of safety and health measures which may adversely affect
or endanger the life or health of a worker;
- acts
of violence committed against or serious disrespect to the worker or
his or her family; and
- acts
of discrimination based on sex, race, religion, political opinion or
language, immoral acts, sexual harassment and all other acts which manifest
an improper
attitude adversely affecting the dignity of the worker. In such instances,
before taking legal action, the worker must make a written request
to his or her employer to cease the prejudicial act and must accord him
or her
a reasonable period of not less than six months to rectify the conduct.
Notice and prior procedural safeguards
The employer must give the worker a reasonable period of
written notice, of not less than six calendar days, so that the worker
can present a written defence to any charges brought against him or her,
or 30 calendar days to prove his or her professional capacities and correct
any error. However 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.
During the prior proceedings when the dismissal is for
reasons related to the conduct of the worker, the employer may waive, in
writing, the worker’s obligation to report to work as long as this does
not prejudice his or her right of defence, and guarantees the rights and
benefits to which the worker is entitled (sec. 31, LLCP).
Dismissal must be communicated in writing, by letter, stating
the reason given for the action. If the worker refuses delivery of the
letter, it may be sent through a notary public, justice of the peace, or,
in their absence, the police. The employer may not subsequently invoke
grounds other than those referred to in the letter of dismissal. Notwithstanding
the above, where proceedings are already under way, and a further offence
is brought to the employer’s notice, the proceedings may be recommenced
(sec. 32, LLCP).
At all times, the burden of proof rests with the party
seeking termination (sec. 37, LLCP).
The enterprise should furnish the trade union, or if there
is none, the workers or their authorized representatives, with the relevant
information stating the precise reasons for dismissal. The labour authorities
should also be informed of this process and must make a decision based
on the outcome of specified procedures (secs. 48 and 49, LLCP).
Severance pay
Dismissal of a worker due to his or her capacity or conduct
does not give rise to compensation (sec. 34, LLCP).
Avenues for redress
Judicial action in the event of invalid dismissal, unlawful
dismissal and constructive dismissal must be brought within 30 calendar
days of the act. However, if the worker has left Peru and therefore cannot
bring an action, the time limit is suspended for the duration of this impediment
(sec. 36, LLCP). The time limit for an adjudicated decision is six
months from the end of the hearing (sec. 42, LLCP).
If dismissal is unlawful because a valid reason has not
been given, or cannot be legally substantiated, the worker is entitled
to the payment of compensation equivalent to the average ordinary monthly
remuneration for each year of service up to a maximum of 12 months. Fractions
of years or months are paid in twelfths and thirtieths, as the case may
be (sec. 38, LLCP). The worker may also claim any other right or
social benefit to which he or she is entitled.
In the event that dismissal is declared null and void,
where the worker’s case is declared justified, he or she must be reinstated
in the job, but in complying with the decision he or she may opt for compensation,
as provided for in sec. 38 of the LLCP.
In the event of a constructive dismissal, the provisions
of sec. 30 lay down that 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 referred to in sec. 36, independently of
the fine and social benefits to which he or she is entitled.
Upon determination that the request to invalidate the dismissal
is justified, the judge may order the payment of outstanding remuneration,
with deductions for any period during which there has been an interruption
in the legal proceedings not attributable to either party. Likewise, he
or she may order the payment of a bond corresponding to the amount of compensation
according to length of service and interest, where applicable (sec.
40, LLCP).
In the case of an action brought to invalidate a dismissal,
the court may, at the request of one of the parties, order provisional
payment of an amount which may not exceed the worker’s normal monthly remuneration.
Partial payments are to be made by the employer until they amount to the
full total of the sum payable in compensation for the period of service
outstanding. If this turns out to be insufficient, the amount must be covered
by the bond until the amount deposited and interest on it have been exhausted.
Where a decision is taken to reinstate a worker, the employer is entitled
to have the bond plus the corresponding interest returned, after deduction
of remuneration due (see above) (sec. 41, LLCP).
An employer who fails to comply with an order of reinstatement
within 24 hours of being instructed to do so may be ordered to do so under
penalty of a fine, the amount of which will be increased by increments
of 30 per cent of the original sum upon each subsequent order until compliance
(sec. 43, LLCP).
Further information
- ILO NATLEX Peru
- Vega Ruiz Marìa Luz (ed.). «La reforma laboral en América Latina : 15 años
después». 2005. Regional Office in Latin America and the Caribbean.
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