international employment law firm alliance L&E Global

Peru: New Legal Restrictions to Subcontracting

AuthorCésar Puntriano Rosas

On 23 February 2022, the Peruvian Official Gazette published the Supreme Decree N-001- 2022-TR (hereinafter “the Supreme Decree”), which introduces a radical change in the regulation of outsourcing agreements.

Pursuant to this new regulation, all activities that constitute the “core business” (núcleo del negocio) of a company cannot be subject to insourcing. Previously, there was no such prohibition.

The new regulation restricts services that meet two conditions:

  • Qualify as company’s core business.
  • Require continuous displacement of contractor’s employees to the company’s premises (workplace) or to places determined by the company that are outside its workplace, where the displaced worker carries out his work, under the exclusive orders of his employer (operation center).

The core business is defined as part of the main activity of the company but, due to its characteristics, does not correspond to the specialised activities or works that can be subject to outsourcing with displacement.

To identify the core business in the specific case, the following, among others, must be observed:

  • The corporate purpose of the company.
  • What identifies the company in front of its end customers.
  • The differentiating element of the company, within the market in which it develops its activities.
  • The activity of the company that generates added value for its customers.
  • The activity of the company that usually brings the client higher income.

A continuous displacement of a contractor’s workers occurs whether:

  • The displacement occurs, at least, during more than a third (1/3) of the working days of the term agreed in the outsourcing contract; or,
  • Exceeds 420 hours or 52 days of effective work, consecutive or not, within a semester.

The Supreme Decree provides that companies will have 180 days from its publication to adapt to these new rules, i.e., until 22 August 2022. Therefore, after said date, insourcing of main (but not nuclear) specialised activities will still be allowed, as well as the insourcing of nuclear activities without workers’ displacement. Insourcing of complementary (ancillary) activities and outsourcing are not affected by the new restriction.