The South American nation of Paraguay has had its share of difficulties in recent decades, but impressive recent growth, particularly in the agricultural sector, has driven its upward trajectory. Additionally, Paraguay is open to foreign investment, making it a great place to expand almost any business.
While Paraguay can be a great place to do business, many organizations find the system and rules confusing. The language barrier is a common hurdle, but administrative procedures, regional variations, cultural differences, and long waiting times can also hold businesses up and cause costs to spiral unexpectedly.
At New Horizons, we offer extensive outsourcing services to help businesses expand into Paraguay. Our professional employer organization (PEO), employer of record, and payroll services give you everything you need to seamlessly expand into Paraguay, even if you don’t have an established presence there.
Our in-house recruitment team can also find, recruit, and onboard your local employees, and take care of any ongoing HR administration. Our team will provide everything you need to expand into Paraguay quickly and efficiently, potentially saving you thousands in expansion costs.
Grow your presence in Paraguay, with help from New Horizons outsourcing
Establish and grow your business in Paraguay, whether or not you already have a Paraguayan subsidiary.
Hiring in Paraguay: Employment law overview
Employment contracts in Paraguay
In Paraguay, employment contracts can technically be either verbal or written, but we strongly recommend writing up a formal contract for every employee. These contracts should be written in Spanish and use the local currency of the Paraguayan guaraní. They should also cover all relevant details of the agreement, such as wage/salary, working hours, benefits, and so on.
Working hours in Paraguay
The standard working week for employees in Paraguay is 48 hours. For overtime work, workers should be paid at 150% to 200% of normal rates.
Public holidays in Paraguay
There are a number of nationally recognized public holidays in Paraguay. Most employees receive the following days as paid leave from work every year:
- Heroes’ Day
- Maundy Thursday
- New Year’s Eve
- Good Friday
- Founding of Asuncion
- Boqueron Battle Victory Day
- Independence Day
- Chaco Armistice
- Labor Day
- National Holiday
- Virgin of Caacupé Day
- Christmas Day
Paraguay vacation leave
Employees in Paraguay accrue paid vacation over time with an employer. For between one and five years of service, they receive 12 days of paid vacation. For five to ten years, they receive 18 days of vacation, and for over ten years of service they receive 30 days.
Paraguay sick leave
Female employees in Paraguay are entitled to 18 weeks of paid maternity leave. This leave is paid at 100% of the normal salary by the Instituto de Previsión Social (IPS), a state body.
Fathers in Paraguay are entitled to two weeks of paid paternity leave upon the birth of a child. This leave is compensated by the employer.
Terminations and severance in Paraguay
In general, employees in Paraguay are entitled to between one and three months of notice prior to termination, with the exact length depending on their length of service with the employer. Severance payments may also be required and are usually paid at a rate of 15 days of normal salary per year of service. Probation periods are limited to three months.
Taxation and withholdings in Paraguay
Employers and employees in Paraguay are required to pay a percentage of salaries to social security at rates of 16.5% and 9% respectively. Income tax is on a Pay As You Earn system, meaning employers must withhold it before paying salaries.
Income tax is generally charged at 10%. Corporate tax is also 10% in most cases.
Health coverage in Paraguay
There is a public healthcare system in Paraguay, but it is also common for employers to offer private medical insurance to employees.
Paraguay compensations & benefits
Compensation Laws in Paraguay
The mandatory minimum wage for full-time workers (in Jan 2021) is PYG2,192,839.
Benefit management in Paraguay
Establishing a Paraguayan benefits system for your workforce can be difficult as a foreign organization. With the language and cultural differences, and a complicated, unique collection of employment laws, running a comprehensive and compliant benefits system can take be very time-consuming
New Horizons offers an alternative to simplify your Paraguay benefits management. Our outsourcing services will cover your benefit setup and management, helping you focus on a faster and more successful expansion.
How can New Horizons assist your organization’s expansion into Paraguay?
New Horizons’ Paraguayan employer of record, PEO, and payroll services provide everything necessary for businesses to start trading in Paraguay. Our team will ensure that you are ready to go in as little as 48 hours, and could save you more than 80% in expansion costs, even if you have not yet established an entity in Paraguay.
We will take care of all of your expenses, payroll, legal compliance, and more in Paraguay, as well as all ongoing HR work. And as the only global PEO with a dedicated in-house recruitment team, we are also here to find and hire your local staff, using our Paraguayan subsidiary as employer of record for your hires so you don’t even need to register a Paraguayan entity.
Speak to our Paraguay experts today to find out how our custom outsourcing services can help you to seamlessly expand into Paraguay.