Supreme Court verdict a threat to wage stability

24 September 2016

It is often the case that important decisions in Peru only show up in the small print of the official gazette (El Peruano) and it takes time for anyone to pick up on their significance.

This appears to be the case of a judicial resolution, made in June but which only recently has attracted a response, enabling employers to reduce an employee’s wages without necessarily securing their prior consent.

Basing their decision on a law passed in 1941 (but apparently never revoked or amended), and two decrees passed during the Fujimori government (1990-2000), the Supreme Court has ruled that an employer may reduce the wages they pay, either by mutual consent of the employee, or not in cases where, for example, a company or a state institution finds itself in a situation adverse to its “stability or economic equilibrium”.

The ruling has set alarm bells ringing among unions and labour lawyers who see this as riding a coach and horses through existing labour contracts in which the wage levels cannot be arbitrarily altered.
http://larepublica.pe/impresa/politica/805113-corte-suprema-declara-legal-la-reduccion-de-remuneraciones

Employers’ associations have long been pressing for labour ‘flexibilisation’, enabling them to adapt more easily to fluctuations in market conditions. International financial institutions have also sought, so far without much success, to push for labour law liberalisation, making it easier for employers to ‘hire and fire’ at will.
One of the judges involved in the case has denied that the new verdict represents a precedent.

All news

  • PSG Aims

    The Peru Support Group exists to promote social inclusion, sustainable development and the observance of human rights in Peru. To that end the PSG highlights shortcomings in observance of established norms, whether international or local in nature, in its research, advocacy and publications. In so doing, it underscores the relationships that exist within the political system, how institutions work, and the effectiveness of policies that aim to reduce poverty and inequality within the context of sustainable development.

  • Historical Overview

    Over the past century Peru has suffered a series of autocratic governments and a civil war in which nearly 70,000 people died. Many of the country's ongoing political and social problems are a legacy of its somewhat turbulent past. 

  • Human Rights

    Human rights violations were widespread during the twenty years after the initiation of armed conflict in 1980. Efforts to convict perpetrators since the war's end have made only limited progress. Today, concerns remain over the treatment of those engaged in social protest, particularly against strategically important investment projects.

  • Why join the PSG?

    • Keep up to date with latest news and developments in Peru
    • Learn about key issues of poverty, development and human rights in Peru
    • Support the work of the Peru Support Group

    Become a member