Subcontracting in Peru: A Practical Guide for Mining Technology and Service Companies

Mining suppliers in Peru are responsible for the subcontractors they bring onto a mine site. If a subcontractor does not pay its workers, the supplier and the mining company can both end up paying, and the supplier’s reputation with its client takes the hit.

Mining suppliers use subcontractors for many reasons. A foreign technology company may hire a local firm to install equipment at a mine site, provide after-sales support and maintenance, or deliver part of a larger contract that sits outside its core capabilities, such as a communications network.

This is normal and often necessary. However, foreign companies can get into trouble if they do not understand how subcontracting and outsourcing rules work in Peru, both legally and in practice. The rules have also changed significantly since 2022, and the debate is not over.

This guide explains what changed, when the outsourcing law applies, what mining companies expect, and what suppliers should put in place before they sign.

What Changed in 2026

In April 2026, Peru’s Supreme Court cancelled a 2022 rule that stopped companies from outsourcing their “core business.” You can now outsource core work again, as long as you follow the Outsourcing Act.

The short history:

• 2022: The government banned outsourcing of core business work.
• 2025: One court upheld the ban.
• 2026: The Supreme Court cancelled it, saying the government had gone beyond what the law allowed.

The rules are now back to the original Outsourcing Act (Law 29245). This may not last. Congress is looking at bills that would limit outsourcing again or ban it altogether. Set up your arrangements so they clearly meet today’s rules, and watch for changes.

Subcontracting and Outsourcing Are Not the Same Thing

Not every subcontract falls under the Outsourcing Act. The Act mainly applies when a contractor sends its own workers to work at the client’s site on an ongoing basis. That is where the strictest rules apply, including registration and shared liability for workers’ pay.

For example, if a local firm sends technicians to the mine every day to maintain your equipment, the Act applies. The same is likely true if its crew is based at site for several weeks to install your equipment.

By contrast, if the firm repairs your parts in its own workshop, or simply sells and delivers spare parts, the Act generally does not apply. An agency that supplies workers who take instructions directly from you falls under separate, stricter rules on labour intermediation.

Even when the Act does not apply, normal labour and safety rules still do. Your contract with the mine may also have its own subcontracting rules, which are often stricter than the law.

How Subcontracting Works in Peru

Subcontracting is when a contractor hires an outside company or person to carry out part of a larger contract. There are three parties:

• Main company. The owner of the project, usually the mining company, which hires the main contractor.
• Main contractor. The company hired by the main company to carry out the work. For our readers, this is often the foreign technology or service supplier.
• Subcontractor. The company hired by the main contractor to carry out specific tasks within that contract.

Peruvian law gives the parties wide freedom to negotiate the terms of a subcontract. In practice, the bigger constraint is usually the main contract. Mining contracts often ban subcontracting certain parts of the work or require the mine’s prior written approval before any subcontractor is engaged. Suppliers should check these clauses before they promise a delivery model to the client.

Why Peru is strict about this

Some companies in Peru have historically used subcontracting to avoid obligations to workers. They set up or used shell companies with few assets and no real business, hired workers through them, paid below industry rates or skipped benefits such as health insurance and social security, and then wound the company up, leaving workers unpaid.

This harms workers and creates social instability, particularly in mining districts that already face community opposition. That history is why the law, the labour inspectorate and the mining companies all watch subcontracting closely.

What the Outsourcing Act requires

If you are a mining service or technology supplier and you bring a local subcontractor onto a mine site, these are the main points:

• Your subcontractor must be a real business. Its work should match what you hire it for, and it should have its own equipment, staff and ideally other clients.
• It must manage its own people. It is paid to deliver a job, such as installation or maintenance, not to lend you workers.
• If it is not genuine, its workers can become yours. The arrangement can be treated as fake, and you or the mine can be treated as the real employer.
• If it does not pay its workers, you may have to. You and the mining company can be held jointly liable for unpaid wages, social security, penalties and fines.

Example. A foreign technology company wins a contract to supply and maintain monitoring systems at a copper mine. It hires a small local firm to handle installation and routine maintenance on site. The firm has no equipment of its own, no other clients, and its technicians take daily instructions from the technology company’s site manager. An inspector could treat those technicians as the technology company’s employees. If the firm also stops paying social security, the workers can claim against the technology company and the mine.

This is why checking matters more than contract wording. Paying your subcontractor’s labour debts is expensive, and it puts your relationship with the mine at risk.

What Mining Companies Expect From You

Mining companies hold their contractors to a higher standard than the law, because unpaid workers in a mining district can quickly become protests, blockades and lost production. If you bring a subcontractor onto site, the mine treats its compliance as your compliance.

Typical clauses in mining contracts with suppliers include:

• Restrictions on hiring subcontractors, or a requirement for the mine’s prior approval.
• Open book and open payroll policies, so the mine can check what workers are paid.
• Proof that wages and social security have been paid as a condition for releasing invoice payments.
• Performance or compliance guarantees that the mine can call on if obligations are not met.
• Mandatory health and safety training for every worker on site.
• Step-in rights, allowing the mine to take over or replace work if the contractor fails.
• Penalties for delays, safety breaches and non-compliance.

A typical scenario. A foreign technology company wins a contract to supply and maintain monitoring systems at a copper mine in Peru. It hires a local firm to handle installation and routine maintenance on site. Six months in, the local firm runs into cash problems and stops paying social security. Its workers file claims naming the local firm, the technology company and the mine. The mine withholds the technology company’s invoices until the debts are cleared, and the relationship it worked hard to build is now under strain. None of this required the technology company to do anything wrong, only to not be checking.

Best Practices for Subcontractor Agreements

Good clauses protect you only if someone checks compliance every month. The four areas below need both: the right wording in the contract and a process to back it up.

Information rights. The subcontract should let you, and the mine where required, verify that the subcontractor is paying all wages and social security. It should also include back-to-back penalties, so that any penalty the mine imposes on you because of the subcontractor can be passed on to it.

Ax Legal recommendation: Require a monthly compliance report from the subcontractor, with proof of payment of salaries and social security, and assign someone on your side to review it.

Retention rights. The subcontract should let you withhold scheduled payments if the subcontractor cannot prove it has met its labour and social security obligations.

Ax Legal recommendation: Do not pay an invoice until the monthly proof has been reviewed. If the subcontractor has not paid its workers, withhold the amount immediately and, if necessary, pay the workers’ entitlements directly on its behalf.

Health and safety. Contractors and subcontractors must follow the site’s hygiene and safety rules, usually set out in an internal handbook. If a worker is injured, the main company can be held directly responsible if it did not enforce health and safety measures on site.

Ax Legal recommendation: Mining companies take this very seriously and will sanction breaches. As the main contractor, you are responsible for your subcontractor’s conduct on site, so make sure its workers are trained and following the rules from day one.

Registration and paperwork. Where the Outsourcing Act applies, check that the subcontractor meets the registration requirements for outsourcing companies, and that every worker has a written employment contract. Mining sites may require additional contractor registrations and safety documentation before workers are allowed on site.

Conclusion

Using local subcontractors is a normal part of serving mining companies in Peru. The April 2026 Supreme Court ruling gives suppliers more room to outsource, but it does not change one basic fact: if you bring a subcontractor onto a mine site, its compliance becomes your responsibility.

Foreign companies need to understand how subcontracting is managed in Peru before they rely on it. That means knowing when the Outsourcing Act applies, what the mining contract allows, and what the mine will expect to see from you and your subcontractors.

It also means setting things up properly from the start. Choose a subcontractor that is a real business, put a written agreement in place that mirrors your contract with the mine, and make sure its workers have employment contracts and complete site safety training before they arrive.

Most importantly, keep monitoring. Ask for proof of salary and social security payments every month, review it before you pay any invoice, and act immediately if something is missing. The companies that run into problems are rarely the ones with weak contracts. They are the ones that stopped checking.

Ax Legal helps industrial technology, engineering, and service companies to navigate the legal and commercial aspects of operating their business in Latin America. With deep knowledge of the industrial and natural resource sectors, we provide actionable and practical advice to help streamline our clients’ entries into Latin America, improve how they operate in the region, and to protect their interests.

Over the years, our team of legal and commercial advisors have developed a track record of working with companies of all sizes from Australia, Canada, the U.S., and Europe. The one common factor that connects our clients is that they are leaders in their field, providing innovative technologies and services to the industrial sectors.