Felipe Chirinos and Jonathan Zura, both lawyers at the ONTIER Peru Labour Law Department, talked about the essentials of the act regulating employee profit sharing in Peru. Companies are compelled to share part of their annual gross profit (tax not included) among their employees. The total amount depends on the industry. Profit sharing in Peru is ruled by article 29 of their Constitution, but it just applies to companies with 20+ employees, as long as said employees are covered by the labour regulations governing private activities and they carry out activities generating third category income tax.
Profit can be delivered to employees in 18 monthly payments maximum (average employee annual retribution). The profit left after being properly shared will be awarded to the Peruvian National Fund for Job Training and Employment Promotion.
Felipe Chirinos and Jonathan Zuta explained what employees should do in case the company failed to comply with employee profit sharing. Moreover, our Labour Law specialists also went over two scenarios where a company doesn't need to comply with employee profit sharing, i.e. if the profit is covering for the previous year losses or if a merger is taking place.