Labor Law

Employment Contracts in Paraguay

In Paraguay, employment contracts can technically be oral or written, but we strongly recommend writing a formal contract for each employee. These contracts should be written in Spanish and in the local Paraguayan Guaraní currency. They should also cover all relevant details of the agreement, such as wages/salaries, working hours, benefits, etc.

Fixed Term

Indefinite

Paraguay Working Hours

The standard working week for employees in Paraguay is 48 hours. For overtime work, workers should be paid 150% to 200% of their regular wages.

Holiday Policy

Vacation in Paraguay

Employees in Paraguay accrue paid vacation time with their employer over time. They are entitled to 12 days of paid leave between one and five years of service. Those who have worked for five to ten years can enjoy 18 days of vacation; those who have worked for more than ten years can enjoy 30 days of vacation.

Paraguay Sick Leave

Female employees in Paraguay are entitled to 18 weeks of paid maternity leave. This period of maternity leave is fully paid by the Paraguayan Social Security Institute (Instituto de Previsión Social, IPS) at a rate of 100% of the normal salary.

Fathers in Paraguay are entitled to two weeks of paid paternity leave after the birth of their child. The employer provides compensation for this period of paternity leave.

Termination and Severance in Paraguay

Generally speaking, employees in Paraguay are entitled to receive between one and three months’ notice before terminating their contract, depending on their length of service with the employer. Severance pay may also be required, usually at regular wages for 15 days per year of service. The trial period is limited to three months.

Taxes and Withholdings in Paraguay

Employers and employees in Paraguay are required to contribute 16.5% and 9% of wages respectively to social security contributions. Income tax is subject to a pay-as-you-go system, which means employers must withhold income tax before paying wages.

Income tax is generally levied at 10%. In most cases, corporate tax is also 10%.

Health Insurance in Paraguay

Paraguay has a public healthcare system, but it is common for employers to provide private health insurance to their employees.

Salary and Benefits

Paraguay’s Compensation Law

The mandatory minimum wage (January 2021) for full-time workers is 2,192,839 pesos.

Benefits Administration in Paraguay

As a foreign organization, establishing a Paraguayan benefits system for your employees can be difficult. Running a comprehensive and compliant benefits system can be time-consuming due to language and cultural differences, as well as complex, unique employment laws

Remoly offers an alternative to simplify benefits administration in Paraguay. Our outsourcing services will cover your benefits setup and administration, helping you focus on faster, more successful expansion.