Peru’s Supreme Court overturns executive order restricting outsourcing

Peruvian law firm Vinatea & Toyama played a central role in defending the country’s outsourcing regime.

The firm notes that with this decision, companies can continue to use outsourcing without legal risks, in accordance with the original rules.

It also highlights that the Supreme Court makes it clear that workers will remain protected against cases of fraudulent or abusive outsourcing through existing oversight mechanisms.

The firm led a significant portion of the more than 500 constitutional challenges filed against the regulation, as well as part of the proceedings pursued before the Institute for the Defense of Competition and Protection of Intellectual Property (Indecopi), which sought to have the decree declared unlawful, and played a central role in defending the class action lawsuit that put an end to the debate regarding the illegality and unconstitutionality of the decree.

“This is a decision of great significance in the Peruvian labor sector, as Supreme Decree No. 001-2022-TR of February 23, 2022, unlawfully and unconstitutionally established restrictions that violated and undermined the essence of Law No. 29345 on Labor Outsourcing,” said Luis Vinatea, partner at Vinatea & Toyama.

The Supreme Court has issued a definitive ruling regarding the illegality and unconstitutionality of the decree, and companies may continue to use this tool, provided they comply with the requirements that the outsourcing law had already established so that it does not affect the labor rights of workers or constitute abuse,” he added.

The ruling applies to all companies in the country.