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As a global EOR expert, we manage payroll, employment contract best practices, statutory and market norm benefits, employee expenses, as well as severance and termination. You’ll have peace of mind knowing you have a team of dedicated employment experts assisting with every hire. G-P allows you to harness the talent of the brightest people in 180+ countries around the world, quickly and easily.
Hiring in Paraguay
When negotiating terms of an employment contract and offer letter with an employee in Paraguay, it may be useful to keep the following in mind.
Employment contracts in Paraguay
In Paraguay, it’s best practice to put a strong, written employment contract in place, in Spanish, which spells out the terms of the employee’s compensation, benefits, and termination requirements. An offer letter and employment contract in Paraguay should always state the salary and any compensation amounts in Paraguayan guaraní rather than another currency.
Working hours in Paraguay
In Paraguay, the regular workday cannot exceed 8 hours or 48 hours a week (when the work is performed during the daytime).
For work performed outside of the normal working hours, employers are obligated to pay the employee overtime. Employees are entitled to 1.5 times their regular wages for daytime overtime work and 2 times their normal wage for night work. Overtime hours cannot exceed 3 hours per day, or a total of 9 hours per week.
Every employee is entitled to at least 1 day of weekly rest, which is normally Sunday.
Holidays in Paraguay
Paraguay celebrates several public holidays for which employees are given the day off, including:
- New Year’s Day
- Heroes’ Day
- Maundy Thursday
- Good Friday
- Labor Day / May Day
- Independence Day
- Chaco Armistice
- Founding of Asunción
- Boquerón Battle Victory Day
- Virgin of Caacupé Day
- Christmas Day
- New Year’s Eve
Vacation days in Paraguay
Paraguay has 12 national holidays, and employees must get those days off with pay. Typically, employees will start earning vacation days after 1 year of employment and the number of paid vacation days is based on the years of service:
- From 1 to 5 years of service: 12 days
- 5 to 10 years of service: 18 days
- 10+ years of service: 30 days
Paraguay sick leave
In Paraguay, the social security system, known as Instituto de Previsión Social (IPS), provides coverage for sick leave. When an employee is unable to work due to illness, the IPS offers financial assistance, but there are specific conditions and requirements for this benefit.
Maternity/paternity leave in Paraguay
As a general rule, expecting employees are entitled to 18 weeks of maternity leave paid by the IPS at 100% of their normal salary. Maternity leave can be extended in certain circumstances.
Paternity leave is 2 weeks of paid time off after the birth of a child, which employers pay for.
Termination/severance in Paraguay
Probationary periods are permitted in Paraguay and can last up to 30 days for unskilled or domestic workers or 60 days for skilled workers and apprentices.
Employers may terminate an employee in Paraguay by providing prior written notice, which depends on the length of service and ranges from 30 to 90 days. In addition, employers must pay the employee 15 days of salary for each year of service as severance. Severance pay is not required in the case of termination for serious cause.
Paying taxes in Paraguay
Paraguay’s taxation laws set almost all contributions for employees at 10%, including corporate, income, and sales taxes. Individuals in the lowest tax bracket have an income tax requirement of 8%. The only exception is that employers pay 16.5%, and employees pay 9% to social security. The country uses a pay-as-you-earn (PAYE) system, so employers are responsible for deducting taxes from employees’ paychecks.
Why G-P?
At G-P, we help companies unlock the power of the everywhere workforce through our industry-leading global employment platform. Let us handle the complex and costly tasks involved in finding, hiring, onboarding, and paying your team members, anywhere in the world, with the speed and guaranteed global compliance your business needs.
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