For anyone looking to register a business in Paraguay or already doing business there, understanding and complying with local employment law will be important to maintaining the good standing of your company and giving it the best possible chance of success. A map of Paraguay and some key cities. Employment law in Paraguay is overseen by the Ministry of Work, Employment, and Social Security, and while it shares a number of similarities with other countries in the region, it also includes many distinct features. For anyone planning a shorter-term or more limited-scale engagement with the Paraguayan market — or who only needs to employ a small number of executives locally — hiring through an employer of record (EOR) could be a good option. Because when you hire via an EOR in Paraguay, you avoid the need to form a local entity, while the provider guarantees your compliance with every aspect of compliance related to those staff. Below, a basic guide to employment law in Paraguay is provided, including standard working hours, the most common types of employment contracts used by investors, details on statutory leave allowances, and the contributions and deductions an employer must oversee. If you would like to hear more about how we can help you negotiate employment law in Paraguay, or otherwise support you doing business in this South American market, contact us today. Working hours under employment law in Paraguay According to employment law in Paraguay, a standard working week is 48 hours long for daytime work and 48 hours per week for nighttime work. For daytime work, each working day should be a maximum of eight hours long, while for night work it is seven hours, and employees should receive at least one rest day per week. Any supplementary hours worked on top of those hours must be paid in proportion to the employee’s standard rate of pay plus a supplementary addition based on the time of the additional hours. Extra hours worked overnight or during public holidays are paid double. Those extra hours cannot exceed of three per day and nine per week. Note that there are generally between nine and 14 national holidays that fall on weekdays per calendar year in Paraguay. Employment law in Paraguay: common employment contracts There are three main types of contract allowed under employment law in Paraguay that are used by foreign investors: Three main types of employment contract are used in Paraguay Indefinite-term employment contracts are the most common type of contract and run until both the employer and the employee mutually agree to termination, or until one party has the right to act unilaterally — such as in the event of the employee resigning or engaging in behaviour that that constitutes misconduct and justifies their removal under the terms of the contract. Fixed-term employment contracts can only be used when the circumstances warrant it, such as when employing someone for a particular task or project with a clear completion date. The period of employment must be explicitly stated within the contract. Learning contracts are intended for an employee or employees to learn skills relevant to a specific job and are generally issued to individuals between the ages of 16 and 18 years old. A learning contract should involve working for no more than 24 hours per week, and must include a salary of at least 60% of the minimum wage. Termination and severance An employee can have their contract terminated without notice during their probation period — which will generally last for between one and three months depending on the type of role, but can sometimes last for four months in the case of highly-qualified employees. Outside of the probation period, and in the absence of conduct warranting dismissal (such as gross misconduct as set out in the contract), employers must provide an employee with notice of dismissal, which will range from 30 to 90 days, depending on the employee’s length of service. A severance payment totaling 15 days of pay for each year of service must be paid to an employee who is dismissed under such conditions. Note that an employee is able to resign from their position with a single day of notice under employment law in Paraguay. Vacations, leave, and other absences under Paraguayan law After completing one year of employment with the same employer, an employee is entitled to 12 days of paid leave. This is extended to 18 days of leave after five years of service, and to 45 days after ten years of service. Note that, once an employee has completed ten years of service. under employment law in Paraguay, they cannot be removed from their role without proper justification. Standard maternity leave totals 18 weeks in Paraguay Maternity leaveNew mothers are entitled to maternity leave totaling 18 weeks, which can be extended by six weeks in the event of illness during the pregnancy or complications during the delivery. New fathers, meanwhile, are entitled to 14 days of paid paternity leave. Note that, in the event of an adoption, where the child is below six months of age, new adoptive mothers are entitled to 18 weeks of maternity leave, while for children above six months old the allowance totals 12 weeks of paid leave. Sick leaveEmployees are entitled to be paid in the event of missing work through illness, however they must present a document signed by a registered doctor. The cost of paid sick leave is covered by the government social security fund. Bereavement leaveIn the event of the death of an immediate family member — including a parent, sibling, spouse or partner, child, or grandchild — an employee is entitled to three days of bereavement leave. Statutory contributions under employment law in Paraguay A total of 9.5% of an employee’s salary is deducted to go towards social security and the pension system, which is managed by the social security fund, known by the acronym IPS. Employers must also contribute an amount equivalent to 16.5% of an employees salary to the IPS for the same purpose. Annual bonusLike in many countries in Latin America, under employment law in Paraguay, employees are entitled to an annual bonus equivalent to one full month of pay, which is paid in December. Frequently Asked Questions about Labor Laws in Paraguay In our experience, these are the common questions and doubtful points of our Clients. 1. What are the labor laws in Paraguay? The labor laws in Paraguay state that the standard working week is 48 hours for daytime work and 42 hours for nighttime work. Daytime work should not exceed eight hours per day, while nighttime work should not exceed seven hours per day. Additionally, employees are entitled to at least one rest day per week. 2. What are working conditions in Paraguay? Employees in Paraguay work 48 hours per week or 8 hours per day. Overtime is limited and employees are compensated for it. The minimum wage in Paraguay is adjusted regularly to ensure it covers the cost of living, which includes expenses for food, housing, clothing, transportation, security, culture, and recreation. 3. How many hours are in a standard work day in Paraguay? A standard work day in Paraguay consists of 8 hours. However, for employees who work between 8:00 pm and 6:00 am, the work week cannot exceed 48 hours and must be compensated at 130% of their regular pay rate. 4. What is the minimum salary in Paraguay? The minimum wage in Paraguay is currently 2680 PYG Thou/Month (368.379 USD/Month) as of July 2023. The maximum rate of minimum wage for employees is 2193 PYG Thou/Month, while the minimum rate is 20.52 PYG Thou/Month. This data is published monthly by the Central Bank. 5. How is overtime paid in Paraguay? Overtime in Paraguay is paid at different rates depending on the time of day and whether it falls on a public holiday. During daytime hours, overtime is paid at 150% of the regular pay rate. For overtime during night hours and public holidays, the rate is increased to 200% of the regular pay. It is important to note that the maximum overtime hours allowed are 3 hours per day and 9 hours per week. Additionally, employees who work on a rest day are entitled to a compensatory rest day. 6. What are the laws regarding employment termination in Paraguay? If…
