Peru’s Supreme Court strikes down regulations restricting outsourcing of 'core business' activities

At a glance

• Peru’s Supreme Court has declared Supreme Decree No. 001‑2022‑TR (Supreme Decree) null and void, fully upholding a legal challenge against the regulation.
• The Supreme Decree had restricted outsourcing of activities considered part of a company’s 'core business' and introduced new criteria and compliance deadlines.
• The Supreme Court found that these measures exceeded the regulatory authority provided by Law No. 29245 and relied on unclear and ambiguous concepts.
• As a result, the amendments are no longer in force, and the previous outsourcing framework is reinstated.
• Companies may continue to outsource core business activities, provided statutory requirements are met, although labour authority oversight remains.

Peru’s Supreme Court, through its Permanent Constitutional and Social Law Chamber, has fully upheld an action challenging the Supreme Decree. The decision, rendered in Case No. 30989-2023-Lima, overturned an initial judgment, which had partially upheld the claim, and declared the contested regulation null and void.

The Supreme Decree introduced several changes to Peru’s outsourcing framework, which included:

• A restriction on outsourcing activities considered part of a company’s 'core business'.
• The introduction of criteria to identify such activities.
• Additional grounds under which outsourcing arrangements may be disregarded for employment purposes.
• A deadline for companies to adjust existing contractual arrangements.

The Supreme Court determined that these provisions exceeded the scope of the regulatory authority, as they imposed restrictions not provided by Law No. 29245, which governs outsourcing regulations. Additionally, it was determined that the criteria for defining 'core business' activities were unclear and ambiguous, leading to confusion in their application.

As a result of the ruling, the amendments introduced by the Supreme Decree are no longer in force and the prior regulatory framework is reinstated. Therefore, companies may continue to outsource activities that could be considered part of their 'core business,' provided that the applicable legal requirements are met and the arrangement is compliant.

Nevertheless, outsourcing arrangements remain subject to oversight by the Peruvian Labor Authority, and compliance risks may persist if statutory requirements are not met.

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