Countries › Peru › Guide › 16. What is normal abroad but not here › No dismissal at will: cause, procedure or an indemnity

No dismissal at will: cause, procedure or an indemnity

Last verified: 2026-10-29 · Status: Stable

Abroad many employers can end a contract at will with notice; in Peru a worker who has passed the three month probation can only be dismissed for a legal cause relating to conduct or capacity, proven and following a written procedure. A dismissal without cause costs 1.5 monthly salaries per year of service, capped at 12, and certain dismissals (union activity, pregnancy, discrimination) are void and lead to reinstatement. Workers have 30 calendar days to sue, and the dismissal and its reason are never presumed: whoever alleges them must prove them.

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 amounts use the 2026 UIT of S/ 5,500 set by Decreto Supremo Nº 301-2025-EF, as cited in SUNAT Resolución de Superintendencia Nº 000016-2026/SUNAT. Conversions are for orientation only.

Key facts

Arbitrary dismissal indemnity per year of service	1.5 monthly salariesDS 003-97-TR art. 38, as of 2026-10-29 · in force
Arbitrary dismissal indemnity cap	12 monthly salariesDS 003-97-TR art. 38, as of 2026-10-29 · in force
Standard probation period	90 daysDS 003-97-TR art. 10, as of 2026-10-29 · in force
Deadline to sue for void or arbitrary dismissal	30 calendar daysDS 003-97-TR art. 36, as of 2026-10-29 · in force
Minimum time to answer conduct charges before dismissal	6 calendar daysDS 003-97-TR art. 31, as of 2026-10-29 · in force

The rule

1. The probation period is three months; after it the worker is protected against arbitrary dismissal. Dismissing a private sector worker who works four or more hours a day for the same employer requires a just cause set out in the law and duly proven.
Cost to do it: No cost within probation; afterwards cause or indemnity.
Example: A hire on 1 June 2026 completes probation on 1 September 2026.Decreto Supremo Nº 003-97-TR, TUO del Decreto Legislativo Nº 728, Ley de Productividad y Competitividad Laboral (El Peruano 27 March 1997), Art. 10 and 22, 1997-03-27 official text · verified 2026-10-29

2. Before dismissing for conduct or capacity, the employer must give the worker in writing at least six calendar days to answer the charges (except flagrant serious misconduct) or 30 calendar days to show capacity or correct a deficiency, and must then communicate the dismissal by letter stating the precise cause and the termination date. The employer cannot later invoke a different cause.
Cost to do it: Internal and legal time; a defective procedure turns the dismissal into an arbitrary one.
Example: A charge letter served on day 1 allows the worker until at least day 7 to answer before the dismissal letter is sent.Decreto Supremo Nº 003-97-TR, Art. 31 and 32, 1997-03-27 official text · verified 2026-10-29

3. A dismissal is arbitrary if no cause is stated or the cause cannot be proven in court; the worker is then owed an indemnity of one and a half ordinary monthly remunerations for each full year of service, up to 12 remunerations, with fractions of a year paid by twelfths and thirtieths, as the only compensation, plus any other benefits owed.
Cost to do it: 1.5 monthly salaries per year, capped at 12.
Example: Dismissing without cause a S/ 5,000 employee with 2 years and 6 months of service costs S/ 18,750; from 8 years the cap of S/ 60,000 applies. / About US$5,432, and US$17,381 at the cap.Decreto Supremo Nº 003-97-TR, Art. 34 and 38, 1997-03-27 official text · verified 2026-10-29

4. A dismissal is void if motivated by union membership or activity, standing or acting as a worker representative, filing a complaint against the employer, discrimination, or pregnancy, birth and breastfeeding (during pregnancy or within 90 days after birth, presumed unless the employer proves just cause, if the employer had been notified of the pregnancy). If the court finds a dismissal void the worker is reinstated with back pay, unless the worker opts for the indemnity.
Cost to do it: Reinstatement plus back pay and CTS deposits from dismissal to reinstatement.
Example: A pregnant employee dismissed without proven cause can be reinstated and paid all salary missed during the lawsuit.Decreto Supremo Nº 003-97-TR, art. 29 as amended by Ley Nº 29973 (24 December 2012) and Ley Nº 30367 (25 November 2015); art. 34 and 40, Art. 29, 34 and 40, 2015-11-25 official text · verified 2026-10-29

5. Claims for void dismissal, arbitrary dismissal and hostility lapse 30 calendar days after the event; the term cannot be interrupted or extended by agreement. Neither the dismissal nor its reason is presumed: whoever alleges them must prove them.
Cost to do it: Short exposure window for dismissal claims; other unpaid amounts follow the general limitation period.
Example: A dismissal on 1 October can no longer be challenged as void or arbitrary after 31 October.Decreto Supremo Nº 003-97-TR, Art. 36 and 37, 1997-03-27 official text · verified 2026-10-29

Years of service	Monthly salaries owed	Amount	Amount in USD
1	1.5	S/ 7,500	US$2,173
2.5	3.75	S/ 18,750	US$5,432
4	6	S/ 30,000	US$8,691
6	9	S/ 45,000	US$13,036
8	12	S/ 60,000	US$17,381
12	12	S/ 60,000	US$17,381

Arbitrary dismissal indemnity for a S/ 5,000 a month employee (USD at S/ 3.452)

Worked example

Exit cost for a S/ 5,000 employee with 4 full years dismissed without cause on 30 November: indemnity S/ 30,000, plus the CTS accrued since 1 November paid directly, the proportional December gratificación for five months and any untaken vacation; the indemnity alone is about US$8,691.

Step by step

Use the three month probation to assess new hires; document performance from the start.
For conduct cases, serve a written charge letter with at least six calendar days to answer, then a dismissal letter with the precise cause and date.
Where no provable cause exists, negotiate a mutual termination or budget the 1.5 salaries per year indemnity.
Check for protected status (union role, pregnancy notice, pending complaint) before any dismissal.
Diary the 30 calendar day window after each dismissal for possible claims.

Common traps

Dismissing without the written procedure turns a valid cause into an arbitrary dismissal.
Fixed term contracts that do not meet their legal cause can be treated as indefinite, so their non renewal can become a dismissal.
The indemnity is on top of CTS, gratificaciones and vacation pay owed at exit.
Courts can order reinstatement in void dismissal cases, so a cash settlement budget is not always enough.

Sources

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