Paraguay PEO & Employer of Record

WeHG provides an International PEO and vglobal Employer of Record service in Paraguay to companies wishing to enter the Paraguay market or hire local/expat employees in this country.

Traditional approach demand establishing a subsidiary in Paraguay.  However our solution allows you to start the operations in Paraguay within days hence save time and money.  WeHG would recruit candidates on your behalf while you maintain full operational control of their work. So legally they would be our employees, on our local payroll, 100% compliant but will work on your behalf. .

Paraguay fast facts

Population, million: 7,132,538
Land area, sq. km: 406,752 km²
Capital: Asunción
Local currency: Paraguayan guaraní (PYG)

GDP per capita:$ 12,503
GDP in currency:$ 36.20 billion
Economic growth percentage: 4%
Inflation rate (consumer prices): 2.91%
Volume of export: $ 7.14 billion
Import of goods and services: $ 13.3 billion
Total population: 7,132,538
Population of working age (15-64): 43.68%

Paraguay, a landlocked country in South America, is bordered by Brazil to the east, Argentina to the southwest, and Bolivia to the northwest. It consists of 17 departments, with a separate district for the capital city of Asunción. The official languages of Paraguay are Spanish and Guaraní, and the currency is the guaraní (PYG).

Hiring, Negotiating and Doing Business in Paraguay

Necessity of written employment contract

Written contracts are typically used, although not specifically required. But it is best practice to put a strong, written contract in place, in Spanish, which spells out the terms of the employee’s compensation, benefits, and termination requirements

Paraguay Employment Contract

Types of employment agreements

Paraguayan Labour Law prohibits hiring fixed term contract workers for tasks of permanent nature. In accordance with the Labour Code, a fixed term contract may be concluded for 12 months for labourers and 60 months for employees. However, the maximum term of a fixed term contract is not provided under the law. The law still requires that a fixed term contracts may be executed only when it is required by the accidental or temporary nature of service to be performed or work to be executed.

Paraguay working hours

The standard work week in Paraguay is 48 hours, and overtime compensation is expected for excess hours.

Overtime

Overtime is paid at different rates:

• 150% of the regular pay rate for overtime during daytime hours
• 200% of the regular pay for overtime during night hours and public holidays.

Vacation leave in Paraguay

Employees are entitled to 12 days off if they’ve worked for a company for one to five years, 18 days off if they’ve worked there for five to 10 years, and 30 days off if they’ve worked for a company for more than 10 years. This allowance is typically used for personal time off or short-term illnesses, as well as vacations. Additionally, employees are entitled to 11 national holidays. Employees with a justified extended illness are also entitled to take medical leave, with their salary paid by the government.

Sick Leave: If an employee is ill, they are entitled to sick leave and are paid 50% of their regular pay by social security (IPS), and the other 50% is paid by the employer.

Bereavement leave: For the death of an immediate family member, an employee is entitled to 3 days of leave.

Paraguay Maternity Leave

New mothers may take up to 18 weeks of paid maternity leave, and new fathers are allowed up to 14 days of paid leave as well. In the event of multiple births, the woman receives an additional 30 days per child.

Paraguay Severance Laws

For an employee who has been employed for over 10 years cannot be terminated for unjust reasons, they must be terminated for a just cause.

Notice Period

Mandatory notice period is 1 day.

Severance Pay

• If the cause for termination is justified (misconduct or poor performance), the employee is not entitled to severance pay. It is important to note, though, that if the employee feels that they were unjustly terminated under the reason for just cause or misconduct on the part of the employer and the employer is not able to prove the reason for dismissal in a labor court, the employee is entitled to severance pay (15 days of wages for every year worked or up to half a year’s wages) as well as back pay from the date of dismissal to the date of the court ruling.
• An employee who is terminated without cause is entitled to 15 days of severance pay for every year of service. For an employee who has over 10 years of employment with a company- If an employer is not able to prove a just cause to a labor court, the employee might either be reinstated or would have the right to double the regular severance pay.

Paraguay Tax

The key number for businesses to remember with regard to taxation and payroll regulations is 10%. Nearly all taxes are set at this rate, which can make it easy to predict profits and coordinate finances. The corporate, income, and sales tax rates are all set at 10%. For certain individuals in the lowest tax bands, income is taxed at 8%. One notable exception is the country’s social security contribution, for which companies pay 16.5% and employees pay 9%. Taxes are automatically withheld from employee paychecks and paid to the relevant authorities by the employer.

Health Insurance Benefits in Paraguay

Additional Benefits in Paraguay

An additional 13th salary equivalent to one months’ salary is paid out in December (but must be before Christmas).

Paraguay Holidays

• New Year’s Day
• Heroes’ Day
• Maundy Thursday
• Good Friday
• Labor Day / May Day
• National Holiday
• Independence Day
• Chaco Armistice
• Founding of Asuncion
• Boqueron Battle Victory Day
• Virgin of Caacupé Day
• Christmas Day
• New Year’s Eve

Why Choose WeHireGlobally

WeHG takes care of all the onboarding hurdles, payroll, compensation and benefits, tax filing, and termination of employment. Our Employer of Record solution allows you to manage your overseas teams efficiently while minimizing cost and risk.