Peru: Government Offers Employees Flexibility in Annual Leave

In an effort to promote work-life balance, the Peruvian government has modified its annual leave law by introducing greater flexibility as to when annual leave (paid vacation leave) can be taken and introducing the possibility of granting paid leave before it has been accrued.

Employees in the private sector are entitled to receive 30 paid time-off days per year (calendar days rather than working days). Originally, the whole 30-day period had to be taken consecutively in one go. However, following the reform, an employee can request to split the leave into smaller periods.

In September 2018 and February 2019, the government issued Legislative Decree Nº 1405, which “establishes annual leave regulations in order to favor the reconciliation between work and family life,” as well as its regulations for the general private sector contained in Supreme Decree Nº 002-2019-TR. These decrees introduced the following changes:

• An employee may request, in writing, that annual leave is split in the following way: (i) 15 days, which can be taken in 7 and 8 consecutive days, and (ii) the other 15 days, which can be taken in less than 7 days periods and a minimum of 1 day.
  
  The order in which the split vacation periods are taken will be established through a written agreement between the employee and the employer. If an agreement is not reached, the employer decides the order in which the split vacation periods will be taken.
• Annual leave may be taken in advance of accrual if the employer and employee agree in writing. If the employee’s employment is terminated, he or she is not required to pay back any holiday taken that exceeds the entitlement “earned” at that point in the year.

Comment

In light of these changes, companies may want to update their internal regulations and/or annual leave policies in order to grant vacations according to the options introduced in Legislative Decree Nº 1405 and Supreme Decree Nº 002-2019-TR.

Even though the recent changes are an important step to adapt Peru’s labor regulations to modern trends of flexibility and work-life balance, many feel further improvements could be made. For instance, an annual leave system of business or working days instead of 30 calendar days per year may benefit both companies and employees by allowing employees to plan their vacation time  while taking into consideration employers’ needs to plan their work schedules.

Written by Iván Blume and Daniel Francisco of Rodrigo Elias & Medrano and Roger James of Ogletree Deakins

© 2019 Rodrigo Elias & Medrano and Ogletree, Deakins, Nash, Smoak and Stewart, P.C.