Employment contracts in Paraguay can be either in writing or verbal. An employment contract may be signed by another person on behalf of either party. In this case, the signature must be done at the justice of peace of the jurisdiction, notary public, or the secretary-general of the respective union, if any. The employment contracts must have a stamp on each page along with signatures of the employer and employee. In the absence of a written employment contract, the existence of the employment relationship alleged by the worker will be presumed unless there is evidence to the contrary.

The monthly minimum wage in Paraguay is 2,680,373 PYG.

In Paraguay, the work week generally consists of 48 hours a week, 8 hours per day. For employees who work between 8:00 pm and 6:00 am, the work week cannot exceed 42 hours and must be compensated at 130% of the employee’s regular pay rate.

Overtime

All work above the standard hours per week is paid as overtime and regulated by the employment contract/collective agreements. When an employee is requested to work overtime or work on holidays, there is a maximum of 57 hours a week and 3 hours a day.

All overtime hours above 48 hours a week are paid at an overtime compensation rate of 150% of the employee’s regular pay rate for overtime work performed during daytime hours and 200% for hours worked during the night or on a public holiday.

Employees are entitled to paid sick leave provided they have made a minimum of four weeks of Social Security payments. The leave is paid based on the employee’s salary for the four months preceding the sickness up to 26 weeks and can be extended by 24 weeks in exceptional circumstances. It is compensated by the employer and Social Security (IPS), each paying 50% of the employee’s regular income.

Maternity Leave

Employees are entitled to 18 weeks of fully paid maternity leave, compensated by Social Security (IPS) following the submission of a medical certificate.

The employer can grant an additional six weeks of leave to an employee who has suffered an illness during pregnancy or the delivery of the child. In the event of multiple births, a mother receives an additional 30 days of leave per child.

Adoptive mothers are granted 18 weeks of maternity leave if the adoptive child is below six months. If the child is older than six months, the entitlement is 12 weeks of sick leave.

Paternity Leave

The father/partner is entitled to 2 weeks of paid paternity leave after the child’s birth. Paternity leave is compensated by the IPS at the rate of 100% of the employee’s regular salary.

Parental Leave

There are no provisions in the law regarding parental leave.

The paid leave entitlement in Paraguay depends on the employee’s seniority:

• 12 working days of leave for the first 5 years of service

• 18 working days of paid leave for 5 to 10 years of service

• After ten years of service, an employee is entitled to 30 working days of paid leave

In the event of the death of an immediate family member, an employee is entitled to bereavement leave. For the death of a father, mother, spouse, or child, an employee is entitled to three days of leave.

In addition, an employee is entitled to three days of leave for their wedding.

The government decides each year if any public holidays falling on weekends lost are moved to a weekday in lieu.

Date Day Holiday

1 Jan 2024 - Monday - New Year’s Day
1 Mar 2024 - Friday - Martyrs Day
28 Mar 2024 - Thursday - Holy Thursday
29 Mar 2024 - Friday - Holy Friday
1 May 2024 - Wednesday - Labor Day
14 May 2024 - Tuesday - Independence Day
15 May 2024 - Wednesday - Independence Day Holiday
10 Jun 2024 - Monday - Chaco’s Peace
15 Aug 2024 - Thursday - Asuncion’s Day
29 Sep 2024 - Sunday - Boqueron’s Battle
8 Dec 2024 - Sunday - Ca’acupe’s Virgin Day
25 Dec 2024 - Wednesday - Christmas Day

Paraguay offers primary health care.

The termination process varies according to how the employment agreement and collective agreement are in place and is based on the type of contract and reason for termination. All notices of termination must be delivered by the employee in writing.

An employer cannot unlawfully dismiss employees employed for more than ten years and only for a just cause.

Notice Period

The mandatory notice period is one day.

Severance Pay

In Paraguay, the severance pay (if applicable) is dependent on the employee’s length of service.

Severance pay for employees is calculated as 15 days of regular salary for every year of service up to a maximum payment of 50% of the employee’s annual salary.

An employee with over 10 years of employment with a company, (if an employer is not able to prove a just cause to a labor court) may need to be reinstated or have the right to a payment twice the amount of the regular severance pay.

Probation Period

The probationary period is 30 days for unqualified employees or domestic workers and 60 days for qualified workers or apprentices.

Employer Payroll Contributions
16.50% - Social Security

16.50% - Total Employment Cost

Employee Payroll Contributions

9.00% - Social Security

9.00% - Total Employee Cost

Employee Income Tax

10% (Applicable to all resident employees in Paraguay with an annual income equal to or higher than 36 monthly minimum salaries (approximately 13,000 USD annually). The salary used is that which is in force on 1 January of every year).

Payroll Cycle

In Paraguay, the payroll frequency can be weekly, bi-weekly, or monthly. The employer must pay salaries at least once a month.

13th Salary

13th-month payments are mandatory in Paraguay and an additional month’s salary must be paid by the end of the year. This payment is generally referred to as a Christmas bonus equal to one-twelfth of all remuneration accrued during the year.

People traveling to Paraguay for work must obtain a business visa to enter the country unless their country of origin is exempt from visas to Paraguay.

Provisional Residence Permit – valid for six months and can be renewed for an additional six months, intended for employees working for foreign companies for short periods.

Temporary Residence Permit – valid for a year and can be renewed repeatedly for up to 6 years depending on employment area and reason for extending the stay. The application must include an employment contract with a business incorporated in Paraguay.

Permanent Residence Permit – allows the applicant to live and work in Paraguay indefinitely.

The application process can take up to 90 days.

The business visa is valid for six months and can be renewed for an additional six months. During that time, the candidate must apply for a resident permit, which allows for employment. The application must include employment confirmation.

The standard rate of VAT in Paraguay is 10%.