They seek to extend the termination of employment due to age limit to 75 years

The Labor Commission of the Congress recently approved the prediction of the projects of law 1505, 1535, 2510 and 2824 that seeks to extend the cessation due to the age limit of the worker, both in the private and public sectors, up to 75 years.

This PL The objective is not to increase the age for accessing a retirement pension —which will continue to be 65 years old— but rather Seeks that citizens over 70 continue working if they meet certain requirements.

Let us remember that in Peru the legal age to retire is 65 years, but employees can request to work for five more years and, therefore, the law establishes that at age 70 the employer is empowered to terminate the employee for a once that age is reached.

In detail, the initiative has three requirements In order to extend the age limit: the worker must voluntarily request to continue with his occupation, go through a multidisciplinary medical examination that verifies that he is in optimal physical and mental faculties and, in addition, there must be a need for his service.

Likewise, it is also provided that the employer responds to the request of the older adult within 30 days. If the position is no longer required, he must support it objectively, through a report approved by human resources. Otherwise, it will be considered as null dismissal.

Francis Paredesauthor of one of the projects, summarizes that forced retirement becomes a form of age discrimination and affects the right to work.

Consequences

The profile of the labor market in Peru in recent years is different from other times. “Until the 1990s, 70% of workers had indefinite-term contracts and only 30% short-term, today 7 out of 10 are linked by temporary contracts. So their contributions to social security are discontinuous,” the labor lawyer told La República. Javier Mujica.

In this sense, he reiterated that the proposed opinion would be positive because it guarantees for five more years the work of citizens who have not been able to achieve sufficient contributions to retire. However, he said that the negative side would be fewer jobs for young people who have just entered the world of work.

“These types of discussions would not have to take place if the principle of causality for temporary hiring could be reestablished. That is to say, that a contract of this type is only justified if the work is of a temporary nature and if it is typical of the permanent line, it must be an indefinite contract, with job stability”, added the specialist.

For his part, Fernando Cuadros, economist and former Vice Minister of Employment Promotion, indicated that this new initiative could favor those workers who, after finishing their employment stage, receive a low pension. In his opinion, this proposal would give a greater margin of income, for example, to public workers of the 276 scheme —who only contribute 20% of their income to their pensions— since now they would have 5 more years to accumulate more funds.

Labor and pension system reform

The extension of the age limit to the end of the employment relationship It could help increase the income of citizens, however, it would not solve the problem of workers who receive a low pension, according to the specialists consulted.

“It has to be accompanied by a broader reform that changes the infrastructure of the public and private pension system,” said Cuadros. He also mentioned that in the case of the private sector Mechanisms should be implemented to help improve salary levels.

“For example, collective bargaining would help turn productivity gains into better wages and pensions in the future”he concluded.