Employer of Record in Paraguay: how to hire compliantly without an entity.
Employ Latam is an employer of record in Paraguay. We become the legal employer for your hire, so you can employ full-time staff there without setting up an entity. Locally compliant contracts, monthly payroll, statutory benefits, taxes. Below: what the law actually requires, in plain English.
- Country
- Paraguay
- ISO code
- PY
- Region
- South America
- Phone code
- +595
- Employ Latam coverage
- Full EOR + contractor payments
Last updated July 2026
Overview
Paraguay is one of 18 countries where Employ Latam lets you hire without setting up a local entity. We handle the employment contract, payroll, statutory contributions, and benefits, so you can focus on finding the right person and managing their work.
Paraguay's labor law leans protective of employees, with mandatory 13th-month salary, structured social security contributions split between employer and employee, and severance obligations tied to tenure. None of this needs to slow down your hiring plans. A locally compliant employment contract and statutory contributions handled on your behalf mean you can bring someone onto payroll without navigating Paraguayan labor code yourself.
Country at a glance
| Category | Details |
|---|---|
| Currency | Paraguayan guaraní (PYG) |
| Working week | 48 hours per week (statutory) |
| Standard workday | Set by work schedule agreement; weekly cap of 48 hours applies |
| Probation period | Up to 2 months (maximum) |
| Notice period | Typically around 10.8 weeks |
| 13th-month salary | Mandatory |
| Payroll cycle | Monthly |
Key employment terms
- Minimum wage: 3,044,000 guaraníes per month (2026)
- Annual leave: 12 working days statutory minimum
- Public holidays: 13 days per year
- Maternity leave: 18 weeks
- Paternity leave: 2 weeks
- Retirement age: 60 years
- Severance (without cause): typically around 18.6 weeks, varies by tenure
Taxes and contributions
- Employer social contributions: 14% (old age, invalidity, survivors)
- Employee social contributions: 9% (old age, invalidity, survivors)
- Corporate tax rate: 10%
- Top personal income tax rate: 10%
These rates apply on top of gross salary for planning purposes; payroll runs in local currency, and statutory contributions are calculated and remitted as part of each cycle.
Employment contracts and worker types
Paraguay's labor code recognizes a small number of contract types, and most full-time hiring defaults to the indefinite-term contract. Employ Latam drafts the locally compliant version for each hire, so you don't need to interpret the labor code yourself. You choose the role and terms; we issue the contract and handle the statutory setup.
Indefinite-term contracts are the standard for ongoing roles. They carry no end date, include a maximum 2-month probation period, and give the employee full access to statutory entitlements: 13th-month salary, paid annual leave, and severance protections if the relationship ends without cause.
Fixed-term contracts are used for defined projects, seasonal work, or temporary coverage. They must state a specific end date or event, and repeated renewals can expose the employer to reclassification as an indefinite relationship, so these are best reserved for genuinely time-bound work.
Part-time contracts follow the same protections as full-time roles, prorated for hours worked. The statutory work week is capped at 48 hours; anything structured below that should be documented clearly in the contract.
Independent contractor agreements exist outside the EOR relationship. Contractors invoice for services and aren't entitled to Paraguayan statutory benefits. Misclassifying someone who works fixed hours, uses company equipment, or reports to a manager as a contractor is a common compliance risk; if the role looks like employment, it should be contracted as employment.
| Contract type | Typical use | Max duration | Probation allowed |
|---|---|---|---|
| Indefinite-term | Ongoing, permanent roles | No fixed end date | Yes, up to 2 months |
| Fixed-term | Projects, seasonal or temporary work | Tied to project or event end date | Yes, up to 2 months |
| Part-time | Reduced-hours roles | No fixed end date (or per fixed-term rules if temporary) | Yes, up to 2 months |
| Contractor agreement | Independent, non-payroll services | Defined by service agreement | Not applicable |
Once the contract type is set, Employ Latam handles statutory contributions on both sides: employee contributions run at 9% and employer contributions at 14%, both covering old age, invalidity, and survivors coverage. Payroll runs in local currency, and onboarding can go live in 72 hours once the paperwork is in.
Hiring a contractor in Paraguay
Many teams start with a contractor in Paraguay before they hire an employee. We draft the contractor agreement, collect the contractor's local tax ID, pay them in local currency or USD, and withhold tax where Paraguay requires it. You approve invoices and pay one USD invoice.
Contractor or employee
Before you start, we review the role and tell you whether it looks more like a contractor or an employee. How Paraguay law draws the line is covered above.
When to convert
A contractor who works only for you, keeps set hours and uses your tools is effectively an employee under most Latin American labor law. We can move them onto an employment contract with us: same person, same pay.
Contractor payments from $29 per contractor per month.
Payroll, taxes, and the 13th-month salary
Payroll in Paraguay runs monthly, in guaranies, with statutory contributions withheld at source and remitted to the national social security institute (IPS). Employers pay a flat contribution rate on top of gross salary, and employees see a fixed percentage deducted from pay. Employ Latam runs this calculation for every employee, so payroll lands correctly each cycle without you tracking rate changes yourself.
The monthly minimum wage is set at 3,044,000 guaranies as of 2026. All salaries, contributions, and the 13th-month calculation are based on gross monthly pay.
13th-month salary (aguinaldo)
Paraguay mandates a 13th-month salary, commonly called aguinaldo. It's calculated as one-twelfth of total earnings received during the year and is typically paid out by year-end. This is a legal entitlement, not a bonus tied to performance, and missing the payment exposes employers to compliance risk. Employ Latam accrues and pays aguinaldo automatically as part of standard payroll administration.
Contributions table
| Contribution | Employer rate | Employee rate |
|---|---|---|
| Social security (old age, invalidity, survivors, IPS) | 14% | 9% |
| Corporate income tax | 10% (on company profits, not payroll) | N/A |
| Personal income tax (top rate) | N/A | 10% |
Other payroll-relevant facts
- Standard work week: 48 hours.
- Statutory annual leave: 12 working days.
- Public holidays: 13 days per year.
- Maternity leave: 18 weeks; paternity leave: 2 weeks.
- Retirement age: 60 years.
- Maximum probation period: 2 months.
- Typical notice period: 10.8 weeks; typical severance without cause: 18.6 weeks. Both vary with tenure and circumstances of termination.
What this means for employers
Total employer cost sits meaningfully above gross salary once the 14% social security contribution and aguinaldo accrual are factored in. Budgeting on gross salary alone will understate the real cost of an employee in Paraguay. Employ Latam builds these costs into a single line-item quote before you make an offer, so there are no surprises once payroll starts running.
Mandatory benefits, vacation, and parental leave
Paraguay's Labour Code (Ley N° 213) sets clear statutory minimums. These apply to all employees regardless of contract type, and none can be waived by agreement.
Leave entitlements
| Leave type | Entitlement | Paid by |
|---|---|---|
| Annual leave | 15 calendar days after 12 months of continuous service | Employer |
| Sick leave | Up to 90 days | IPS (after initial employer-paid period) |
| Maternity leave | 18 weeks | IPS |
| Paternity leave | 2 weeks | Employer |
| Public holidays | 13 to 15 days per year | Employer |
Annual leave
Employees earn 15 calendar days of paid leave after completing one full year of continuous service. The employer schedules when leave is taken, though it must be granted within the same year or as otherwise agreed. Part-time employees receive leave on a pro-rated basis.
Sick leave
The IPS system covers up to 90 days of sick leave. In practice, employers may need to cover pay during the early days before IPS reimbursement kicks in. Employees must present a certified medical note. Make sure your payroll process accounts for the IPS claim cycle so there are no gaps in the employee's pay.
Maternity leave
Pregnant employees are entitled to 18 weeks of paid leave under Law 5508 of 2015, funded through IPS. The employment relationship is protected during this period. The employer does not bear the direct wage cost, but must maintain the contract and coordinate with IPS for the subsidy. Fathers get 2 weeks of paid paternity leave under the same law. Some employers offer more as company policy, which should be spelled out in the employment contract.
Public holidays
Paraguay observes 13 to 15 public holidays per year, set by national decree. Employees are entitled to paid time off on each. If an employee works on a public holiday, the Labour Code requires additional compensation or compensatory time off. The exact list shifts slightly year to year, so payroll calendars need to be updated annually.
No statutory 13th-month bonus
Unlike several other LATAM countries, Paraguay does not mandate a 13th-month salary or aguinaldo equivalent under the Labour Code. Any end-of-year bonus is either discretionary or driven by a collective bargaining agreement. If your hire is covered by a union agreement, check the specific terms before finalizing the offer.
Severance, termination, and notice periods
Paraguay's Labour Code sets clear rules for ending an employment relationship. The key variable is whether the termination is with or without cause. Getting this wrong is one of the most common and costly mistakes employers make.
Termination with cause
An employer can dismiss an employee without severance if there is a valid legal cause (justa causa) under Article 81 of the Labour Code. Valid causes include serious misconduct, repeated insubordination, fraud, or abandonment. The employer must document the cause and follow the correct procedure. If the stated cause is later challenged and not upheld, the dismissal converts to a without-cause termination and full severance applies.
Termination without cause
When there is no valid cause, the employer owes both a notice period and severance pay. These amounts scale with tenure.
| Tenure | Notice period | Severance owed (without cause) |
|---|---|---|
| Under 1 year | 30 days | 15 days' salary once service passes 6 months |
| 1 to 5 years | 45 days | 15 days' salary per year of service |
| 5 to 10 years | 60 days | 15 days' salary per year of service |
| Over 10 years | 90 days | 15 days' salary per year of service |
Notice can be worked out or paid in lieu. If the employer opts to pay in lieu, the notice amount is added to the final settlement. Severance is calculated on the employee's ordinary salary and must be paid in Paraguayan guaraní (PYG) at the time of separation.
Mutual agreement and resignation
Employees who resign are not entitled to severance under the Labour Code. A mutual termination agreement (rescisión por mutuo acuerdo) is possible, but any waiver of statutory rights must be documented carefully to be enforceable. In practice, employers often negotiate a separation package above the statutory floor to reduce dispute risk.
What the final settlement includes
The final settlement (liquidación) at termination without cause typically covers:
- Severance pay per the table above
- Payment in lieu of notice (if applicable)
- Accrued and unused vacation pay
- Proportional salary for days worked in the final month
- Any outstanding bonus or commission owed under the contract
There is no FGTS-style severance fund in Paraguay. The employer pays the full amount directly at the time of separation.
Recent regulatory changes
Paraguay's labor framework has stayed relatively stable, but employers should track the confirmed adjustments to wages, contributions, and leave entitlements that affect payroll setup and total cost of employment. Employ Latam keeps contracts and payroll runs aligned to the current rules automatically, so you don't have to track statutory updates country by country.
The table below summarizes the changes we can confirm from verified sources. We've avoided listing a specific lookback window since not all effective dates are independently confirmed; treat this as a snapshot of current rules rather than a change log with exact timestamps.
| Date | Change | Impact on employers |
|---|---|---|
| 2026 | Monthly minimum wage set at 3,044,000 (local currency) | Base salary floors must be recalculated for all new and existing contracts. |
| 2026 | 13th-month salary confirmed as mandatory | Employers must budget an extra month's salary disbursed per statutory schedule. |
| 2026 | Maternity leave confirmed at 18 weeks | Payroll and leave planning must accommodate the full 18-week entitlement without shortening it. |
| 2026 | Paternity leave confirmed at 2 weeks | Short-term leave planning must build in 2 weeks of paid absence for new fathers. |
| 2026 | Corporate tax rate confirmed at 10% | Relevant for any local entity setup; EOR clients are shielded from this since Employ Latam is the employer of record. |
| 2026 | Top personal income tax rate confirmed at 10% | Affects net pay calculations and employee take-home pay estimates. |
| 2026 | Maximum probation period confirmed at 2 months | Probationary clauses in contracts cannot exceed this window. |
| 2024 | Employee and employer social contributions confirmed at 9% and 14% respectively | Sets the baseline for statutory cost-of-employment calculations on every contract. |
Beyond these confirmed figures, employers should watch how collective agreements and sector-specific rules can adjust leave, notice, or severance terms. Typical severance for termination without cause runs around 18.6 weeks and typical notice periods run around 10.8 weeks, but both can vary by tenure and are shaped by collective bargaining in certain sectors. Retirement age is set at 60, which matters for benefits planning and long-tenure employee transitions.
None of this requires action on your end if you're hiring through Employ Latam. We apply current minimum wage, contribution rates, and leave entitlements to every Paraguay contract we issue, and we adjust payroll calculations as rules change so your team stays compliant without manual tracking.
Frequently asked questions
- Do I need a local entity to hire employees in Paraguay?
- No. Employ Latam acts as the employer of record, so you can hire in Paraguay without setting up a local entity. We issue a locally compliant employment contract, run payroll, and handle statutory contributions, while you manage the day-to-day work of the person you hire.
- What is the most common employment contract in Paraguay?
- The indefinite-term contract is the default for full-time hiring in Paraguay. It has no fixed end date, allows a probation period of up to 2 months, and gives employees full access to statutory benefits like 13th-month salary and annual leave. Most employers use fixed-term or part-time contracts only for clearly temporary or reduced-hour arrangements.
- What is the total employer cost on top of gross salary in Paraguay?
- Employers should budget for gross salary plus a 14% social security contribution and the accrued cost of the 13th-month salary (aguinaldo), which adds roughly one-twelfth of annual pay. Together, these push total employer cost well above the base salary figure. Employ Latam calculates the fully loaded cost upfront so you know the real number before hiring.
- How long is paid maternity leave in Paraguay?
- Maternity leave in Paraguay is 18 weeks of paid leave. The cost is covered by the IPS social security system, not directly by the employer, though the employer must maintain the employment contract throughout. Employers should coordinate with IPS to ensure the subsidy is claimed correctly and the employee receives uninterrupted pay.
- How much severance is owed for terminating an employee without cause in Paraguay?
- The amount depends on how long the employee has worked for you. Severance is 15 days' salary for each year of service, with any fraction over six months counted as a full year. You also owe notice pay (or working notice of 30 to 90 days depending on tenure), plus any accrued vacation and outstanding salary. All amounts are paid directly by the employer in PYG at the point of separation.
- What is the current minimum wage in Paraguay and how does it affect hiring costs?
- The monthly minimum wage in Paraguay is set at 3,044,000 in local currency as of 2026. This is the salary floor for full-time employees and factors into total cost of employment alongside mandatory 13th-month salary and employer social contributions of 14%. Employ Latam applies the current minimum wage automatically when structuring compensation packages for your Paraguay hires.
We handle the contract, payroll, taxes, and benefits in Paraguay so you can hire that person this month.
Statutory figures for Paraguay, each traced to a named source with its reference year. Sourced from OECD, the World Bank, the ILO, ISSA and national statutes.
Latest reference period: 2026
Figures are statutory reference values maintained internally and refreshed against primary sources. They are a starting point for planning, not legal advice — we confirm the exact numbers for your role before you hire.
What changed in Paraguay
Checked against official sources on .
No rule changes recorded since we began logging them.
What a hire in Paraguay costs
Employers in Paraguay pay statutory contributions of 14% on top of gross salary. At the average monthly wage of PYG 3,235,818, that adds PYG 453,015 a month.
| Salary | Gross per month | Employer contributions | Total per month | Total per year |
|---|---|---|---|---|
| Minimum wage | PYG 3,044,000 | PYG 426,160 | PYG 3,470,160 | PYG 41,641,920 |
| Average monthly wage | PYG 3,235,818 | PYG 453,015 | PYG 3,688,833 | PYG 44,265,994 |
Employer contribution rate: ISSA Country Profiles, as of Jan 2024
Minimum wage: National government, as of Jul 2026
Average monthly wage: ILOSTAT, as of Jan 2025
Amounts in PYG. Totals per year are twelve monthly salaries plus contributions.
On top of this: the 13th salary where the law requires one, paid leave, and notice and severance if the employment ends (all in the tables above), plus our employer of record fee, from $349 per employee per month. Every quote we send breaks each of these out for the actual role.
Found someone in Paraguay? Let's employ them.
We'll send a fully-loaded cost breakdown for the role within a few hours, then draft a locally compliant employment contract. Most Paraguay hires can start within 1 to 3 business days once docs are in.
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