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Employment Law in Paraguay: a Guide


If you are looking to register a business in ParaguayIf you are already in the country, it is important that your business understands and complies with the local employment laws. This will ensure the company’s good standing and the highest chance for success.

A Biz Latin Hub graphic of a map of Paraguay and some of its main cities to accompany article on employment law in Paraguay
An interactive map showing Paraguay with key cities

The Paraguayan Employment Law Office oversees employment law. Ministry of Work, Employment, and Social SecurityIt shares many similarities with countries throughout the region. However, there are also distinct characteristics.

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. You know that you can’t just hire anyone. hire via an EOR in ParaguayThis allows you to avoid the necessity of forming a local entity while the provider ensures your compliance with all compliance issues related to staff.  

The following provides a guideline on employment law in Paraguay. This includes information about standard working hours, common employment contracts, how investors use them, details regarding statutory leave, as well as the deductions and contributions that employers must monitor.  

You can contact us to learn more about our services in Paraguay for employment law or support in doing business on this South American marketplace. contact us today 

Paraguay’s employment law regulates working hours

Paraguay employment law says that the standard work week should be 48 hours for daytime workers and 42 for night workers. 

Each day of work should not exceed eight hours. Night work should last seven hours. Employees should have at least one day off each 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. Double the pay for overtime hours during holidays and on nights.

Paraguay has between 9 and 12 holidays per year that are observed on weekdays.

Paraguay employment law: Common employment contracts

Foreign investors can use three types of contracts that Paraguay’s employment law allows:

A stock image of someone signing a contract, representing one of the three main types of employment contract under employment law in Paraguay
Paraguay has three main types of employment contractsYou can find it here
  1. 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.
  2. Fixed-term employment contractsOnly when circumstances permit it can be used, like when someone is being hired for a specific task or project that has a clearly defined completion date. In the contract, it must state clearly how long you will be employed.
  3. Contracts for learningThese are designed to help employees learn specific skills and can be issued to anyone between 16 and 18. Learning contracts should not be longer than 24 hours per week and pay at least 60% of minimum wage. 

Severance or termination

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 six 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. 

An employee must receive a severance pay of 15 days for every year served if they are dismissed in these circumstances.

Paraguay employment law provides that employees can resign with just a day’s notice.

Paraguayan law allows for vacations, leave and other absences

Employees are entitled to twelve days of paid vacation after one year working for the same employer. After five years, the employee is entitled to an additional 18-day leave and 30 days of paid vacation after ten years.

It is important to note that an employee who has served ten years must be rehired. Paraguay’s employment law prohibits them from being fired without a proper reason.

A stock photo of a pregnant woman representing a woman on maternity leave, which is usually 18 weeks under employment law in Paraguay
Paraguay has 18 weeks of standard maternity leaves

Leave for paternity or maternity
Mothers who have just given birth are eligible for 18 weeks of maternity leave. This can be increased by 6 weeks if there is any illness or complications. For 14 days, new fathers have the right to paid paternity leaves.

If the adoption is for a child under six months of the age, adoptive parents are eligible to 18 weeks of maternity pay. Children over six months receive 12 weeks paid leave.

Leave for sick
An employee can be entitled to payment in the case that they are unable to work due to illness. To do so, they will need a signed document from a physician. The government social security fund covers the cost of sick leave.

Bereavement leave
In 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. 

Paraguay’s employment law imposes statutory contributions

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. For the same reason, employers must contribute 16.5% to the IPS.

An annual bonus 
Paraguay has a similar employment law to those in Latin America. Employees are eligible for an annual bonus of one month’s pay. The payment is made in December.

Biz Latin Hub is here to help you do business in Paraguay

Biz Latin Hub has a bilingual workforce of support professionals who can help with any aspect of entering or doing business in Paraguay.

A wide variety of services are offered by us, which includes back-office support. company formation, accounting & taxation, corporate legal services, visa processing, and hiring & PEOWe can offer tailored support packages to meet every client’s needs.

Our teams are present in 16 Latin American and Caribbean markets, with trusted partners who expand our reach to nearly every corner of the area. We specialize in market entry in multiple jurisdictions.

Contact us today  to receive more information about how we can support you doing business in Chile.

Learn more about us team and expert authors

Biz Latin Hub's snapshot of employment law in Paraguay. Download the document below.
Biz Latin Hub’s snapshot of employment law in Paraguay


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