Countries › Peru › Guide › 7. Labor and employment › Dismissal and severance in Peru: just cause, the six day defence letter, 1.5 salaries per year capped at 12, void dismissals and collective layoffs

Dismissal and severance in Peru: just cause, the six day defence letter, 1.5 salaries per year capped at 12, void dismissals and collective layoffs

Last verified: 2026-10-28 · Status: Stable

Workers on four or more hours a day can only be dismissed for a just cause related to their conduct or capacity, proven by the employer, after a written charge letter giving at least six calendar days to respond and a written dismissal letter. A dismissal without a stated or provable cause is arbitrary and costs 1.5 monthly salaries per year of service, capped at 12, while dismissals for union activity, discrimination, complaints or pregnancy are void and lead to reinstatement with back pay. Claims must be filed within 30 calendar days, collective layoffs for economic reasons need at least 10 percent of staff and a procedure before the labor authority, and resignation requires 30 days' notice.

USD figures use S/ 3.452 per US dollar, the banking system selling rate published by the Superintendencia de Banca, Seguros y AFP for 27 October 2026, from the Banco Central de Reserva del Perú statistics series PD04640PD. UIT based amounts use the 2026 UIT of S/ 5,500 (Decreto Supremo Nº 301-2025-EF, as cited by SUNAT Resolución de Superintendencia Nº 000016-2026). Conversions are for orientation only.

Key facts

Indemnity for arbitrary dismissal per year of service	1.5 monthly salariesTUO DL 728 (DS 003-97-TR) art. 38, as of 2026-10-28 · in force
Maximum indemnity for arbitrary dismissal	12 monthly salariesTUO DL 728 (DS 003-97-TR) art. 38, as of 2026-10-28 · in force
Minimum time for the worker to answer a charge letter	6 calendar daysTUO DL 728 (DS 003-97-TR) art. 31, as of 2026-10-28 · in force
Deadline to sue for void or arbitrary dismissal or hostility	30 calendar daysTUO DL 728 (DS 003-97-TR) art. 36, as of 2026-10-28 · in force
Limitation period for labor claims after the relationship ends	4 yearsLey 27321, as of 2026-10-28 · in force
Resignation notice by the worker	30 daysTUO DL 728 (DS 003-97-TR) art. 18, as of 2026-10-28 · in force
Daily hours from which just cause is required	4 hoursTUO DL 728 (DS 003-97-TR) art. 22, as of 2026-10-28 · in force
Minimum share of staff for economic collective termination	10 %TUO DL 728 (DS 003-97-TR) art. 48, as of 2026-10-28 · in force
Age of mandatory automatic retirement, unless agreed otherwise	70 yearsTUO DL 728 (DS 003-97-TR) art. 21, as of 2026-10-28 · in force

The rule

1. The employment contract ends by death of the worker (or of an individual employer), resignation, end of a lawful fixed term, mutual agreement, permanent total disability, retirement, dismissal in the cases and form allowed by law, and termination for objective causes. Resigning workers must give 30 days' written notice, which the employer may waive. Mutual termination must be in writing or in the final settlement.Texto Único Ordenado del Decreto Legislativo Nº 728, Ley de Productividad y Competitividad Laboral (Decreto Supremo Nº 003-97-TR), Art. 16, 18 and 19, 1997-03-27 official text · verified 2026-10-28

2. Retirement is mandatory and automatic when the worker turns 70, unless agreed otherwise. The employer can also require retirement of a worker entitled to an ONP or private pension if it undertakes to top up the pension to 80 percent of the last ordinary pay, capped at 100 percent of the pension.Texto Único Ordenado del Decreto Legislativo Nº 728, Ley de Productividad y Competitividad Laboral (Decreto Supremo Nº 003-97-TR), Art. 21, 1997-03-27 official text · verified 2026-10-28

3. Dismissing a worker who works four or more hours a day for the same employer requires a just cause set by law and duly proven. Just causes relate to capacity (for example deficient performance compared with average output, or refusing a required medical exam) or conduct (serious misconduct, conviction for an intentional crime, or disqualification). Serious misconduct is a breach of essential duties that makes continuing the relationship unreasonable, such as the cases the law lists.Texto Único Ordenado del Decreto Legislativo Nº 728, Ley de Productividad y Competitividad Laboral (Decreto Supremo Nº 003-97-TR), Art. 22 to 25, 1997-03-27 official text · verified 2026-10-28

4. Before dismissing for conduct or capacity, the employer must give the worker a written charge letter with a reasonable period of at least six calendar days to answer in writing (30 days to demonstrate capacity or correct a deficiency), except for flagrant serious misconduct. The worker can be released from attending while paid. The dismissal must then be communicated by a letter stating precisely the cause and the date; the employer cannot later rely on a different cause. Both steps must follow promptly after the facts.Texto Único Ordenado del Decreto Legislativo Nº 728, Ley de Productividad y Competitividad Laboral (Decreto Supremo Nº 003-97-TR), Art. 31 and 32, 1997-03-27 official text · verified 2026-10-28

5. Dismissal for a proven cause carries no indemnity. If the dismissal is arbitrary because no cause was given or it cannot be proven in court, the worker is entitled to an indemnity of 1.5 ordinary monthly salaries for each full year of service, capped at 12 salaries, with fractions paid by twelfths and thirtieths, as the sole compensation for the dismissal; it is payable only after the trial period. The worker can also claim any other unpaid benefits.
Cost to do it: 1.5 salaries per year, capped at 12; on S/ 8,000 a month the cap is S/ 96,000.00 (about US$27,809.97).
Example: A manager on S/ 8,000 dismissed without cause after 3 years, 7 months and 10 days receives 1.5 x S/ 8,000 x 3.6111 = S/ 43,333.33, plus pending CTS, proportional bonuses and vacation. / About US$12,553.11.Texto Único Ordenado del Decreto Legislativo Nº 728, Ley de Productividad y Competitividad Laboral (Decreto Supremo Nº 003-97-TR), Art. 34 and 38, 1997-03-27 official text · verified 2026-10-28

6. A dismissal is void when motivated by union membership or activity, being or having been a workers' candidate or representative, filing a complaint or taking part in proceedings against the employer, discrimination for sex, race, religion, opinion, language, disability or any other reason, or pregnancy, birth or nursing during pregnancy or within 90 days after birth. If the claim succeeds the worker is reinstated, unless the worker opts for the indemnity, and the court orders back pay from the dismissal date and the related CTS deposits.
Cost to do it: Reinstatement plus back pay for the whole period of the lawsuit, less periods of procedural inactivity not attributable to the parties.TUO DL 728 (DS 003-97-TR) as amended by Ley Nº 29973 and Ley Nº 30367, Art. 29, 34 and 40, 1997-03-27 official text · verified 2026-10-28

7. Acts of hostility equivalent to dismissal include not paying pay on time, reducing category or pay, a harmful transfer, unsafe conditions, violence or serious verbal abuse, discrimination, acts against dignity and refusal of reasonable adjustments for workers with disabilities. The worker must first give written notice of at least six calendar days, and can then sue to stop the hostility or end the contract and claim the arbitrary dismissal indemnity.TUO DL 728 (DS 003-97-TR) as amended by Ley Nº 30709, Ley Nº 29973 and Ley Nº 27942, Art. 30 and 35, 1997-03-27 official text · verified 2026-10-28

8. Claims for void dismissal, arbitrary dismissal and hostility lapse 30 calendar days after the event, a term that cannot be interrupted or extended by agreement. Other claims arising from the employment relationship prescribe four years after the relationship ends.TUO DL 728 (DS 003-97-TR) art. 36; Ley Nº 27321, DS 003-97-TR art. 36; Ley 27321 single article, 2000-07-22 official text · verified 2026-10-28

9. Collective termination for objective causes covers force majeure, economic, technological, structural or similar reasons, dissolution, liquidation and bankruptcy, and restructuring. For economic, technological or structural reasons it must affect at least 10 percent of the company's staff and follows a procedure: information to the union or workers, negotiation of the terms or alternatives, a sworn statement to the labor authority with an expert report from an auditing firm authorised by the Contraloría, conciliation meetings and a decision within five business days (approval if there is none), with appeal. The employer may request a perfect suspension of work during the procedure.Texto Único Ordenado del Decreto Legislativo Nº 728, Ley de Productividad y Competitividad Laboral (Decreto Supremo Nº 003-97-TR), Art. 46 to 48, 1997-03-27 official text · verified 2026-10-28

10. When the termination is approved, the employer notifies the affected workers and pays their benefits, and must prove full payment of CTS within 48 hours of the termination. For one year after a collective termination for force majeure or economic reasons, dismissed workers have priority for rehiring in the same or similar posts, with 15 calendar days' written notice; breaching this gives a claim to the arbitrary dismissal indemnity.Texto Único Ordenado del Decreto Legislativo Nº 728, Ley de Productividad y Competitividad Laboral (Decreto Supremo Nº 003-97-TR), Art. 50 to 52, 1997-03-27 official text · verified 2026-10-28

Service	Salaries owed	Soles	US dollars
1 year	1.5	S/ 12,000.00	US$3,476.25
2 years	3	S/ 24,000.00	US$6,952.49
4 years	6	S/ 48,000.00	US$13,904.98
6 years	9	S/ 72,000.00	US$20,857.47
8 years	12	S/ 96,000.00	US$27,809.97
10 years	12	S/ 96,000.00	US$27,809.97

Arbitrary dismissal indemnity by length of service on a S/ 8,000 monthly salary (DS 003-97-TR art. 38; S/ 3.452 per US$).

Worked example

A Chilean retailer's Lima subsidiary decides to let go a store manager hired on 21 March 2023 on S/ 8,000 a month, with no misconduct it can prove.
Ending the relationship on 31 October 2026 without cause is an arbitrary dismissal: 3 years, 7 months and 10 days give S/ 43,333.33 (about US$12,553.11) (DS 003-97-TR art. 34 and 38).
If instead it had evidence of serious misconduct, it would send a charge letter giving at least six calendar days to answer, then a dismissal letter stating the cause and date, and would owe no indemnity if the cause holds up in court (art. 25, 31, 32 and 34).
Either way it pays pending CTS within 48 hours plus proportional gratificación and vacation; the manager has 30 calendar days to sue over the dismissal (DS 001-97-TR art. 3; DS 003-97-TR art. 36).

Step by step

Check the worker's status: trial period, daily hours, any pregnancy notice, union role or pending complaint (DS 003-97-TR art. 10, 22 and 29).
If there is a just cause, gather evidence and send a written charge letter with at least six calendar days to respond (30 days for capacity issues) (art. 31).
Review the response and, if dismissing, send a letter stating the precise cause and date, by notary if the worker refuses it (art. 32).
If there is no provable cause, negotiate a written mutual termination or pay the arbitrary dismissal indemnity (art. 19 and 38).
Pay CTS within 48 hours and the other final benefits, and deliver the settlement (DS 001-97-TR art. 3).
For economic layoffs of 10 percent or more of staff, run the collective termination procedure with the labor authority (art. 48).

Common traps

Peru has no notice or pay in lieu regime for dismissal: without a proven cause, the cost is the indemnity, and in void cases reinstatement (DS 003-97-TR art. 34).
Skipping the six day charge letter or changing the cause later undermines a dismissal for cause (art. 31 and 32).
Delaying the charge or the dismissal after learning of the facts breaks the immediacy principle (art. 31).
A dismissal linked to pregnancy, union activity or a complaint is void, with back pay for the whole lawsuit (art. 29 and 40).
Cutting pay or category, or a harmful transfer, can be treated as constructive dismissal (art. 30 and 35).
Former workers have 30 days to challenge the dismissal but four years to claim unpaid amounts (art. 36; Ley 27321).

Sources

← Social security in Peru: 9 percent EsSalud, occupational risk insurance (SCTR), and the ONP and AFP pension systems after the 2024 reformProfit sharing in Peru: 5, 8 or 10 percent of pre tax income for companies above 20 workers, how it is split and when it is paid →

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