Paraguay
Knowledge Base
Frequently asked question, important data and information on EOR.
General information
$ 2,550,307 PYG per month
Labor Law
Laws that regulate Labor Relationship
Labor code
Onboarding guide
Requirements for a labor contract
• Place and date of execution; full name, age, sex, marital status, profession or occupation, nationality and address of the parties.
• Type of work or services to be rendered and the place or places of its provision, amount, form and term of payment of the agreed remuneration.
• The duration and division of the working day.
• Providing employee benefits such as quarters, food and uniforms, if the employer is obliged to provide them and estimates of their value and the terms agreed between the parties.
Pre-hire Medical exam
No
Types of contracts
• Indefinite: are the most common type of contract and run until both the employer and the employee mutually agree to termination.
• Fixed term: when employing someone for a particular task or project. The period of employment must be explicitly stated within the contract.
• Apprenticeships: 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. It should involve working for no more than 24 hours per week, and must include a salary of at least 60% of the minimum wage.
Probation Period
3 months, sometimes six for highly skilled workers.
Are offer letters mandatory in the country?
No
Are digital signatures in labor contracts valid?
Yes
Mandatory onboarding documents
• Life and residence certificate
• Single Tax ID (RUC)
• ID card
Statutory benefits
Annual Bonus
Paid at year end as a lump sum.
Additional bonus
No
Leaves (medical, maternity, paternity, etc.)
• Maternity leave: 18 weeks
• Adoptive mothers: 18 weeks if the adopted child is less than six months old. If the child is older than six months, it is 12 weeks.
• Paternity leave: 2 weeks
• Wedding: 3 days
• Death: 3 days
Annual Leave (days per year)
12 days, increasing to 18 after five years’ service and 30 after ten years.
How do vacation days expire?
Paid on termination. If year not completed, paid proportionally.
Article 221, Labor Code.
Official Holidays
• January 01 New year’s Day
• March 01 Heroes Day
• April 14 Maundy Thursday
• April 15 Good Friday
• May 01 Labor Day
• May 14 Paraguayan Independence
• May 15 Paraguayan Independence
• June 12 Chaco Armistice
• August 15 Founding of Asunción
• September 29 Boqueron Battle Victory Day
• December 08 Virgin of Caacupe
• December 25 Christmas Day
Working on holidays and Sundays
Double time
Number of Working hours
8 hours a day, 48 hours a week. 42 hours a week for night work.
Overtime
Time and half for day work; double time for night shifts.
Social Security (what does it cover)
• General health program
• Pension system
• Occupational accident
• Coverage for work accidents
• Unemployment insurance
• Housing promotion fund
Payroll
Salary payment currency
Paraguayan Guarani (PYG)
Can salary be paid in a different currency other than the local currency?
Yes
Payment frequency
• Monthly
• Weekly
• Bi-weekly
VAT percentage
10% standard
Income Tax
The general PIT rate is 10% for individuals with residence in Paraguay who obtain an annual income equal to or higher than 36 monthly minimum salaries (approximately 13,000 United States Dollars [USD] annually). The salary to be used is that which is in force on 1 January of every year. For individuals living abroad and deriving profits from activities performed inside the Paraguayan territory, the PIT rate is 20% over the net income of 50% of the perceived income (price of the services), which results in an effective tax rate of 10%. For more information see https://taxsummaries.pwc.com/paraguay/individual/taxes-on-personal-income
Tax Payer Identification Number
Single Taxpayers Registry – RUC(Registro Único del Contribuyente)
Offboarding
Voluntary resignation
The following are justified causes for termination of the contract by the unilateral will of the worker:
• Failure to pay the corresponding salary on the agreed or customary date and place
• The employer’s refusal to pay salary or resume work, in case of illegal suspension of the employment contract
• The requirement by the employer of tasks superior to the forces or professional capacity of the worker, contrary to the law, or good customs or alien to what is stipulated
• Acts of violence, threats, insults or ill-treatment by the employer or his representatives, family members and dependents, acting with the consent or tolerance of the former within the service and committed against the worker, his spouse, parents, children or siblings
• The same acts committed outside the service by the persons cited against the worker or his relatives, if they were of such seriousness that they make it impossible to fulfill the contract
• The damage intentionally caused by the employer, his representatives or dependents, in the tools or work supplies belonging to the worker
• The illegal reduction of salary by the employer. It is equivalent to it, the unjustified reduction of the legal working day or working days without the consent of the worker, if the full remuneration corresponding to the full working day or working days on which work was stopped is not paid.
• The imprudence or inexcusable carelessness of the employer that compromises the safety of the factory, office or place of work or of the people who are there
• Serious danger to the safety, organic integrity or health of the worker or his family, resulting from the employer’s non-compliance with the hygiene and safety measures established by laws, regulations or the competent authority
• The contagious disease of the employer, of a member of his family or of his representative in the direction of the works, as well as that of another worker, provided that the outgoing worker must remain in immediate contact with the sick person
• The immoral conduct of the employer during work
• The employer’s drunkenness during working hours that endangers safety or causes intolerable discomfort to the worker
• Work stoppage, declared illegal by the competent authority
• Any unilateral alteration of the employment contract by the employer not accepted by the worker, as well as serious violations of the internal labor regulations committed by the latter.
Article 84, Labor Code.
Contract termination
The following are causes for the termination of employment contracts:
• A contract clause placed for this reason
• Mutual consent
• The death of the worker or physical or mental incapacity
• Force majeure
• The expiration of the term or the completion of the work, in contracts entered into for a fixed term or function
• The death or incapacity of the employer
• The bankruptcy of the employer or the judicial liquidation of the company, except in the case that the trustee, in accordance with the pertinent legal procedures, decides that the business or exploitation must continue. If it continues, the liquidator may, if the circumstances so require, request the modification of the contract. The rehabilitated must contract with the same workers or union.
• The total closure of the company, or the definitive reduction of tasks
• The depletion of the subject matter of an extractive industry
• Dismissal of the worker by the employer with justified cause in accordance with the provisions of the Labor Code
• The withdrawal of the worker for justified reasons in accordance with the law
• The termination of the contract decreed by the competent authority
• For other causes of termination of contracts, in accordance with the provisions of common law, which are applicable to the employment contract
Article 78, Labor Code.
Justified Dismissal
The following are justified causes for termination of the contract by the unilateral will of the employer:
• Deception by the worker through certificates or false personal references about the capacity, moral conduct, or professional attitudes of the worker
• Theft, robbery, or other crime against personal property, committed by the worker in the workplace
• Acts of violence, threats, insults, or mistreatment of the worker towards the employer, his representatives, relatives, or heads of the company, office, or workshop, committed during work
• The commission of any of the same acts against co-workers, if with them the order in the workplace is disturbed
• The perpetration outside of the service, against the employer, his representatives, or relatives, of some of the acts listed in the previous subparagraph, if they were so serious that they made it impossible to fulfill the contract
• Material damages caused by the worker intentionally, due to negligence, imprudence, or serious misconduct, in buildings, works, machinery, tools, raw materials, products, and other work-related objects
• The commission by the worker of immoral acts in the workplace
• The disclosure by the worker of industrial or factory secrets or matters of a confidential nature that he knew because of his duties to the detriment of the company
• The fact of compromising the worker with his inexcusable imprudence or carelessness for the safety of the company, factory, workshop, or office, as well as that of the people who were there
• The attendance of the worker to his tasks in a state of drunkenness, or under the influence of any drug or narcotic, or carrying dangerous weapons, except those that, due to the nature of his work, were allowed
• The sentence of the worker to a custodial sentence
• The manifest refusal of the worker to adopt preventive measures or submit to the procedures indicated by the laws, regulations, competent authorities, or the employer, which tend to avoid work accidents and occupational diseases
• The worker’s lack of compliance, manifestly and repeatedly and to the detriment of the employer, of the rules that he or his delegates indicate for greater efficiency and performance in the work
• Work in reluctance or intentional decrease in work performance and incitement to other workers for the same purpose
• The loss of confidence of the employer in the worker who exercises a position of management, inspection, or surveillance. If said work had been promoted from a job ladder, he may return to it, unless there is another justified cause for dismissal
• Negotiation by the self-employed or employed worker, without the express permission of the employer, when it constitutes an act of competition to the company where he works
• Participate in a strike declared illegal by the competent authority
• The non-attendance of the worker to the contracted tasks for three consecutive days or four times a month, provided that it occurs without permission or justified cause
• Abandonment of work by the worker
• The repeated lack of punctuality of the worker in compliance with the work schedule, after having been warned by the employer or its delegates
• The interruption of tasks by the worker, without just cause, even if he remains in his post.
• The disobedience of the worker to the employer or his representatives, whenever it is the contracted service.
• Verification in the worker of contagious or mental illness or other ailments or organic disturbance, provided that they permanently disable him for the fulfillment of the contracted tasks or constitute a danger to third parties
• Serious violations by the worker of the clauses of the employment contract or provisions of the internal regulations of the workshop, approved by the competent authority
Article 81, Labor Code
Unjustified Dismissal
In case of unjustified dismissal the article 91 of the Labor Code says:
”In the event of dismissal without just cause ordered by the employer, the latter must pay the worker an indemnity equivalent to 15 daily wages for each year of service or fraction of six months, calculated in the manner mentioned in subparagraph b. ) of the following article.
In the event of the death of the worker, his heirs will be entitled, through the mere accreditation of the link, to compensation equivalent to half provided for in the previous paragraph; If the worker were single or widowed, the woman who had lived publicly with him, in apparent marriage for a minimum of two years prior to death, is equated to the widow.
Art. 92. The advance notice and indemnities that the previous articles deal with, will be governed by the following rules:
a) the amount thereof may not be subject to compensation, sale or assignment, nor embargo, except for half, for alimony;
b) the corresponding indemnity will be calculated based on the average of the wages earned by the worker, during the last six months that the contract is in force or shorter fraction of time, if said term had not been adjusted; and
c) the continuity of work is not considered interrupted by illness, leave, vacations, strikes, legal stoppages and other causes that according to this Code do not terminate the employment contract”
If the dismissal was unjustified, it will entitle the employee to receive compensation, to be determined by the Judge or Court, the amount of which may not exceed the value of the wages that should have been paid by the employer until the fulfillment of the contract. See unjustified dismissal.
Minimum Notice Period
30 days notice for one year’s service, increasing to 45 after one year, 60 after five and 90 days after ten years’ service.
Article 87, Labor Code.
Immigration
Visa process
1. To begin the process, the applicant must go to the Migration Department of the Ministry of the Interior in Paraguay.
2. Start the process at the Ministry. It is essential that the process is done in person (the follow-up can be followed by a legal representative).
3. Obtain the background certificate issued by INTERPOL. This office is in charge of receiving, processing and issuing Background Certificates for foreigners and some cases to nationals; to be presented before the Department of Identifications, Foreigners Registry, General Direction of Migration, Police Station, Banks and others where it is required.
Visa documents
• Valid identity card or passport (two authenticated copies).
• Certificate of Background issued by INTERPOL (original plus two authenticated copies).
• Application for regularization as a sworn statement.
• Proof of employment, issued by the company or institution that employs him/her, accrediting the work to be performed (in the event that a precarious work permit is required).
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