Running payroll in Peru is entirely manageable once you understand two features that make it structurally different from most payroll systems: mandatory semi-annual CTS deposits and two statutory annual bonuses on top of standard monthly pay. Get those right, and the rest of the system follows a clear, predictable rhythm. This guide walks you through every obligation a foreign employer needs to meet in 2026, from the gross-to-net deduction sequence to pension remittance and minimum wage.
Payroll calendar: pay dates, frequency, and working hours
Peru runs on a monthly payroll cycle, and the statutory pay date is the 28th of each month. Employers must credit salaries by that date regardless of weekends or public holidays, so plan your remittance schedule accordingly.
Standard working hours are 48 hours per week, structured as 8 hours per day across a Monday-to-Friday schedule. Hours worked beyond that threshold are compensable as overtime under Peruvian labour law. There’s no mandatory 13th month salary in Peru; the two statutory annual bonuses described below fulfil that function instead.
Gross-to-net overview: the deduction sequence
Before transferring net pay to an employee, you need to work through a defined sequence of deductions. The order matters because each step affects the taxable base for the next.
Step 1: determine gross monthly salary
Gross pay includes the agreed monthly salary plus any variable components such as commissions. The family allowance of PEN 113 per month is an employer-funded addition on top of gross and isn’t deducted from it, so it doesn’t affect this step.
Step 2: deduct pension contributions
The employee’s pension contribution comes off first. The rate depends on whether the employee is enrolled in the public pension system (ONP) or a private AFP. ONP members contribute 13% of gross salary. AFP members contribute a combined rate of roughly 12.84% to 13.06%, split across a 10% pension deposit, 1.37% disability and life insurance premium, and an AFP commission of between 1.47% and 1.69% depending on which fund they’ve chosen. You remit all pension contributions on behalf of the employee each month.
Step 3: withhold income tax
After pension, you calculate monthly income tax withholding on an annualised basis. Peru uses a progressive scale for tax residents, applied to net income after a deduction of 7 UIT (PEN 38,500 for 2026). The rates run from 8% on the first bracket up to 30% on the highest bracket. For non-domiciled employees, the withholding rate is a flat 30% on gross income with no UIT deduction. You remit withheld tax to SUNAT each month.
Step 4: pay net salary
Net salary is what remains after pension and income tax withholding. The family allowance, if applicable, is added to the net transfer for qualifying employees.
Mandatory bonuses: fiestas patrias and christmas
Peru mandates two annual bonuses under Legislative Decree No. 23544 and related legislation. These aren’t discretionary performance payments; they’re statutory entitlements that every qualifying employee earns regardless of company policy.
Fiestas patrias bonus (july)
The Fiestas Patrias bonus is paid in the first half of July, before the national holiday on 28 July. The amount equals one full month’s salary. If the employee earns commissions, the bonus equals the monthly salary plus the average commission from the previous six months. You calculate and pay this as a separate line item, not as part of regular monthly payroll.
Christmas bonus (december)
The Christmas bonus is paid in the first half of December. The calculation method is identical to the Fiestas Patrias bonus: one full month’s salary, or monthly salary plus average six-month commission for commission earners.
Pro-rata rule
If an employee doesn’t complete the full accrual period before a bonus payment date, you pay a proportional amount. The accrual period for each bonus runs for the six months preceding the payment: January to June for Fiestas Patrias, and July to December for Christmas. An employee who started in April, for example, would receive three-sixths of the full bonus amount in July.
Tax treatment
Statutory bonuses are subject to income tax withholding using the same annualised method as regular salary. They’re not subject to pension contributions under current rules.
Cts: compensation for time of service
CTS (Compensación por Tiempo de Servicios) is a mandatory statutory fund that sits outside regular payroll. It’s not salary, and you don’t pay it to the employee monthly. Instead, you deposit calculated amounts twice a year into a dedicated CTS account held at a financial institution of the employee’s choice.
What cts is and isn’t
CTS functions as a statutory severance savings fund. It accrues regardless of whether the employment relationship ends by resignation or termination, and the employee receives the full balance on exit. Because it’s a separate fund rather than a salary component, it doesn’t affect the gross-to-net calculation for monthly payroll.
How cts accrues
The accrual base for each semester is the employee’s monthly salary plus one-sixth of the semi-annual bonus (gratificación). For each full semester worked, the deposit equals approximately 50% of that base, which amounts to roughly one full month’s remuneration per year across both deposits combined. Employees become eligible after completing more than one month of continuous service.
The two deposit windows
There are two mandatory CTS deposit periods each year:
- May deposit: covers work performed from 1 November to 30 April. Employers must complete this deposit by 15 May.
- November deposit: covers work performed from 1 May to 31 October. Employers must complete this deposit by 15 November.
Missing these windows triggers penalties and accrues interest. Build them into your payroll calendar at the start of each year.
2026 Free-withdrawal provision
Congress has approved a temporary measure allowing employees to make free withdrawals from their CTS balances until 31 December 2026. This means employees can access their accrued CTS during the year without the usual restrictions. As the employer, your obligation to make deposits on schedule doesn’t change. The withdrawal right belongs to the employee and doesn’t affect how or when you remit.
Employer contributions above gross
Beyond the employee’s gross salary, you carry several mandatory employer-side costs. These sit above gross in your payroll cost model and don’t appear as deductions on the employee’s payslip.
Essalud (health insurance)
You contribute 9% of each employee’s gross monthly salary to EsSalud, Peru’s public health insurer. This covers the employee and, in many cases, their dependants. The contribution is due monthly alongside your other remittances to SUNAT and the relevant pension administrator.
Family allowance
For employees with dependent children under 18, you add PEN 113 per month to their pay. This is 10% of the current minimum wage (RMV) and is entirely employer-funded. It’s payable in addition to gross salary and doesn’t reduce any other entitlement. Employees must demonstrate eligibility by providing relevant documentation.
Variable employer insurances
Some employers are also required to contribute to Vida Ley (compulsory life insurance) and sector-specific risk insurance, depending on industry and headcount. The rates on these vary. Factor them into your total employment cost modelling alongside the 9% EsSalud contribution.
Total employer overhead
As a working estimate, plan for employer-side costs of approximately 19% above gross salary, excluding variable Vida Ley and risk insurance premiums. This covers EsSalud and the family allowance where applicable.
Pension: onp vs afp
Every employee in Peru must enrol in a pension scheme, and the choice between the two systems sits with the employee, not the employer. Your role is to withhold the correct amount each month and remit it to the right administrator.
Onp (public pension system)
ONP is administered by the ONP government body. The contribution rate is 13% of gross salary, withheld entirely from the employee. There’s no employer pension contribution on top of this under the ONP system. You remit monthly through the SUNAT online portal.
Afp (private pension funds)
AFP is Peru’s private defined-contribution pension system. Four main AFP funds currently operate in Peru. The total employee contribution breaks down as follows:
| Component | Rate |
|---|---|
| Pension fund deposit | 10.00% |
| Disability and life insurance (SIS) | 1.37% |
| AFP commission (approximate range) | 1.47% to 1.69% |
| Total withheld | 12.84% to 13.06% |
The commission rate varies by fund and can change. You should confirm the current rate for each employee’s chosen AFP at enrolment and when rates are updated. You remit AFP contributions directly to the relevant AFP administrator each month.
Employer’s remittance role
Whether an employee is on ONP or AFP, you’re responsible for calculating the correct withholding, filing the monthly payroll declaration, and transferring funds by the due date. Late remittance attracts penalties and interest under SUNAT enforcement rules.
Minimum wage 2026
Peru’s statutory minimum wage is PEN 1,130 per month gross, established by Supreme Decree DS 006-2024-TR. This figure carries forward unchanged into 2026. No employee may receive a monthly base salary below this threshold, regardless of contract type or working arrangement.
For employees who qualify for the family allowance, the effective minimum floor is PEN 1,243 per month (PEN 1,130 base plus PEN 113 allowance). The allowance is paid on top of the minimum wage, not absorbed into it.
FAQ
Do I need a local entity to run payroll in Peru?
You do need a legal employer registered in Peru to run compliant payroll. Foreign companies without a local entity typically use an Employer of Record (EOR) to hire and pay employees legally without setting up their own Peruvian subsidiary. An EOR takes on the formal employment relationship and handles all registration, payroll, and remittance obligations on your behalf.
Are CTS deposits mandatory even if the employee resigns?
Yes. CTS accrues on a time-served basis throughout the employment relationship and isn’t contingent on how or why employment ends. You must make deposits on schedule during employment, and the full accrued balance becomes payable to the employee on exit regardless of the reason for departure.
What happens if I miss a CTS deposit deadline?
Late CTS deposits accrue interest at the rate applicable to CTS accounts at the receiving financial institution. SUNAT and the Ministry of Labour can also impose administrative penalties for non-compliance. The 15 May and 15 November deadlines are hard statutory dates with no grace period.
Can I engage workers as contractors instead of employees?
You can engage independent contractors in Peru, but misclassification risk is real. Peruvian labour courts apply a principle of labour primacy (primacía de la realidad), meaning the actual working relationship determines the employment status rather than the contract label. If a contractor relationship has the characteristics of employment, the worker can claim employee entitlements retroactively, including CTS, bonuses, and EsSalud contributions.
Which pension system should I enrol a new employee in?
The choice belongs entirely to the employee. If a new employee doesn’t elect a system within the statutory window, they’re automatically enrolled in AFP by default under current rules. Confirm your employee’s preference and document it at onboarding.
Running payroll across Latin America introduces complexity at every layer: statutory bonuses, semi-annual deposits, and dual pension systems all require precision and on-time execution. RemotePass handles compliant payroll, CTS deposits, and employer remittances for teams in Peru and across the region, giving you a single platform instead of a tangle of local obligations.
