Employer of Record in Paraguay

Businesses can only operate smoothly in Paraguay if they comply with local labor laws including drafting compliant employment contract agreements and meeting taxation and payroll obligations. Learn more about the employment laws and regulations in Paraguay below, to avoid any compliance issues.

Employment Contract Requirements

In Paraguay, written employment contracts are required for most types of employment. These contracts, in Spanish and signed by both parties, must specify:

• Termination terms
• Notice period
• Working hours
• Bonuses
• Holiday leave
• Sick leave
• Duties
• Confidentiality provisions
• Agreed salary should be in Paraguayan guaraní

Onboarding Process

We can help you get a new employee started in Paraguay quickly, with a minimum onboarding time of just 1-2 working days. The timeline starts once the employee submits all required information onto the Playroll platform and completes any necessary local authority registrations.

For non-nationals, the Right to Work assessment (if applicable) may add up to three extra days. Additional time may be needed for follow-ups on this assessment. Please note, payroll cut-off dates can impact the actual start date. Playroll's payroll cut-off date is the 10th of each month unless otherwise specified.

Working Hours in Paraguay

In Paraguay, the standard workweek consists of 48 hours, with 8 hours per day. However, if employees work between 8:00 pm and 6:00 am, their weekly hours must not exceed 42.

Overtime in Paraguay

In Paraguay, overtime is voluntary and must be agreed upon by both employer and employee. The maximum overtime allowed is 10 hours per week or 3 hours per day. Overtime compensation is 150% for daytime work and 200% for work on Sundays, nights, or holidays, applicable when employees exceed 48 hours per week.

Probation Period in Paraguay

In Paraguay, probation periods are mandatory for employment contracts. They last:

• 30 days for unqualified employees or domestic workers.
• 60 days for qualified workers or apprentices.
• 90 days for highly skilled workers.

Fiscal Year in Paraguay

1 January- 31 December is the 12-month accounting period that businesses in Paraguay use for financial and tax reporting purposes.

Payroll Cycle in Paraguay

The payroll cycle in Paraguay is usually monthly, with employees being paid by end of month.

Minimum Wage in Paraguay

The minimum wage for employees in Paraguay is typically 13.45 PYG per hour, amounting to ~2,798,309 PYG per month for a typical 48 hour work week.

Bonus Payments in Paraguay

In Paraguay, the law mandates 13th-month payments, requiring an additional month's salary to be paid to employees by the year's end. This payment, often referred to as a Christmas bonus, amounts to one-twelfth of the total annual salary.

Employer Tax Contributions

Employer payroll contributions are generally estimated at an additional 16.5% on top of the employee salary in Paraguay.

Employee Payroll Tax Contributions

In Paraguay , the typical estimation for employee payroll contributions cost is around 9%.

Individual Income Tax Contributions

The individual income tax in Paraguay ranges from 8% to 10%. The tax calculation is based on progressive rates. The income tax is calculated annually, based on the income earned during the calendar year.

Pension in Paraguay

In Paraguay, both employers and employees must make mandatory pension contributions. An individual aged 60 with at least 25 years of service receives 100% of the average salary of the last 36 months. Alternatively, those with a minimum of 30 years of service and aged 55 can receive 80% of the average salary of the last 36 months.

Mandatory Leave Entitlement in Paraguay

The annual leave entitlement in Paraguay is 12 days for a full time worker. These can include public holidays on top of that or within those days, which would otherwise be unpaid.

Public Holidays In Paraguay

Paraguay has 11 mandatory national public holidays in a year.

Paid Time Off in Paraguay

In Paraguay, annual leave entitlements are based on tenure with the employer and accrue as follows:

• 1 to 5 years of service: 12 days
• 5 to 10 years of service: 18 days
• Over 10 years of service: 30 days

Maternity Leave In Paraguay

In Paraguay, employees are entitled to 18 weeks of fully paid maternity leave, managed by Social Security (IPS) with a medical certificate. Additional conditions include:

• Six extra weeks for illness during pregnancy or delivery.
• An additional 30 days per child for multiple births.
• Adoptive mothers receive 18 weeks of leave for children under six months and 12 weeks for older children. Extensions may be granted under special circumstances.

Paternity Leave In Paraguay

After the birth of a child in Paraguay, employees are entitled to 14 calendar days of paid paternity leave. During this period, the employee will receive their regular salary, which will be paid by the employer.

Sick Leave In Paraguay

In Paraguay, employees qualify for paid sick leave after contributing to Social Security for at least four weeks. Sick leave can last up to 26 weeks, with Social Security (IPS) covering 50% of the employee's salary, based on the average income from the previous four months. Payments are managed through the employer.

Parental Leave In Paraguay

Paraguay does not have a separate shared parental leave policy.

Termination Process in Paraguay

In Paraguay, termination procedures vary based on employment agreements, contracts, and reasons for termination. Employees must provide written notice of termination. Employers are limited in unjustly terminating employees with over ten years of employment unless a valid cause exists. Fair termination reasons include:

• The dismissal of the worker for just cause or without just cause (with severance payment)
• Resignation of the worker or withdrawal for justified reasons
• Mutual agreement
• By expiration of the contract

Notice Period in Paraguay

In Paraguay, the minimum mandatory notice period is one day, which increases based on tenure:

• 30 days for employees with up to 1 year of service
• 45 days for employees with 1 year to 5 years of service
• 60 days for employees with 5 years to 10 years of service
• 90 days for employees with more than 10 years of service

Severance in Paraguay

In Paraguay, employees terminated due to redundancy or unsuitability are entitled to severance pay. If terminated without valid reason, the employer must compensate them with 15 days' wages for each year of service, or a proportional amount for six months of service.