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Global HR Compliance

Global HR Compliance in Paraguay

If you hire an international workforce or plan to hire, then the Hiring and Firing Workforce with Employer of Record in Paraguay Guide below will help you understand the nuances of labour legislation in the country.

Employer of Record Services in Paraguay

Employer of Record (EOR) services provide a strategic solution for companies looking to expand their operations internationally without the complexities of establishing a legal entity in a foreign country. An EOR serves as the legal employer for employment purposes, handling compliance with local labour laws, tax regulations, and employment contracts. This allows companies to focus on their core business activities while mitigating the risks and administrative burdens associated with international employment.

Key Responsibilities of an Employer of Record (EOR) in Paraguay

Compliance with Local Labour Laws

An EOR ensures that all employment practices comply with local legislation, including employee rights, working conditions, and termination procedures. This helps mitigate the risk of legal disputes and penalties.

Payroll Management in Paraguay

The Employer of Record (EOR) handles all aspects of payroll in Paraguay, including salary disbursement, tax deductions, social security contributions, and other statutory requirements. This ensures timely and accurate employee payments, maintaining their satisfaction and trust.

Tax Compliance

Tax regulations in Paraguay require meticulous attention to detail. An EOR ensures that all employment-related tax obligations are met. They handle tax filings and payments, reducing the administrative burden on the client company.

Employment Contracts in Paraguay

Drafting and managing employment contracts in line with local laws is a critical responsibility of an EOR. They ensure that contracts are legally compliant and include necessary clauses related to job roles, compensation, benefits, and termination conditions.

Employee Benefits Management in Paraguay

An EOR in Paraguay administers employee benefits such as health insurance, pension plans, and other perks mandated by Paraguayan law or agreed upon by the employer. This ensures that employees receive their entitled benefits, enhancing their well-being and loyalty.

Employee Onboarding and Offboarding in Paraguay

The EOR facilitates the onboarding process, ensuring that new hires are integrated smoothly and comply with all necessary legal requirements. Similarly, they handle the offboarding process, ensuring that terminations are conducted legally and ethically.

Hiring and Firing Workforce with Employer of Record in Paraguay Guide

Companies hire international workers for various reasons, but in most cases, they are:

  • Entering the foreign markets to sell company products. To do so, the company hires sales representatives to represent their product and sell it to their local client base.
  • Hiring a global talent with unique skills that is unavailable in the local market or costs the company less than the talent with similar skills hired in the home country.

Before entering a certain foreign market or engaging a global talent, it is crucial for the company to understand how it can make local hires and reward its workers on a monthly basis. Growing companies often face the challenge of paying benefits and bonuses to the commission-based independent sales representatives they are working with.

If you intend to hire and pay your foreign workforce in full compliance with labor laws and regulations of Paraguay, then the Global Employer of Record service from Acumen International may be the best way for you to go. We are an International PEO company and we specialize in global employment, meaning we can employ your employees in Paraguay and act as their legal employer on your behalf. We will payroll your foreign workforce monthly and provide benefits to them through our global network so you don’t have to set up your own legal entities there.

See the guide below for a general overview of labor rules and regulations in Paraguay or contact us if you need to employ workers in Paraguay or would like to get more details.

# Employment contracts
The contracts can be written or verbal. If the payment is more than the applicable legal minimum wage, the contract must be written, and there should be as many copies as the number of parties.

On this note, please bear in mind that verbal contracts are generally used whenever the employee’s work is temporal, not permanent. All employment relationships are considered to be contractual, whether or not they are formalized in writing.

Please find below the types of agreements considering the different criteria:
Agreement:

  • Written;
  • Oral;

Duration:

  • Definite Period;
  • Undefined Period;
  • Piece of work or to provide services;

Method of Payment:

  • Salary;
  • Daily;
  • Commission Basis;
  • Piece of work;
  • Participation;

According to the employees:

  • Individual;
  • Team;
  • Collective.

Minimum (Statutory) Employment Rules and Regulations in Paraguay

Working Hours in Paraguay

According to Article 194 of the Labour Code, the standard time of the daily office work cannot exceed eight hours per day or forty-eight hours per week unless the work is related to special cases anticipated.

Likewise, the working hours cannot exceed seven hours per day nor forty-two hours per week if the same is perform during the night. There is a specific regime for minor´s working hours. Section 123 of the Labour Code prohibits work of minors between 12 and 15 for more than four hours per day and 24 per week and between 15 and 18 for more than six hours per day and 36 hours per week.

Probation period in Paraguay

The time frame of the trial period varies according to the type of employee. Please note as follows:

  • Thirty working days for domestic work and not qualified employees.
  • Sixty working days for the qualified employees and apprentices.
  • As the case of a highly specialized technical employee, the parties could convene at a time different from above, according to the work to be performed.

During this period, either party can end the contract without assuming any responsibility. Likewise, during this period, the employee will have all the rights established in the law except for prior notice and dismissal compensation.

Annual Leave in Paraguay

Employees in Paraguay have the right to a paid vacation period after each year of continuous work for the same employer.
Holidays will depend on the seniority of the worker:

  • 1 year to 5 years = 12 working days;
  • 5 to 10 years = 18 working days;
  • 10 years or more = 30 working days.

Parental leave in Paraguay

Our Constitution protects parental rights, especially maternity rights. Now, if there is any risk of danger for the woman or son, the mother cannot provide services or perform duties during the pregnancy or lactating period. Also, the mother cannot work the night shift at industries, commercial establishments, or services after 10 PM.

Upon notification to the employer of the woman’s pregnancy and whilst the employee is on maternity license, a notice of dismissal and dismissal are considered null. The pregnant employee will have no less than 12 weeks for maternity license once the child is born. Likewise, our Constitution establishes the right to paternity, although no legislation has regulated this matter. Moreover, in order to support the family, the employer is obligated to pay an allowance to the employee, considering the number of children the employee has.

The law grants pregnant employees protection against arbitrary dismissal as long as they are aware of their pregnancy. Employees absent due to maternity and disability leave are entitled to collect their salary.

Sick leave in Paraguay

An employee who is ill or disabled and covered by a health insurance license cannot be fired. During the period of illness or disability, the social security system is obliged to pay wages.

Overtime 
Overtime is allowed under special circumstances, but it cannot exceed three hours per day, three days per week, or 57 hours per week, and employees must be paid extra. It is not allowed for employees under 18.

Paraguay’s Minimum Wage

  • President Mario Abdo Benítez signed Decree No. 9.584/23, establishing a 5.1% increase to the current minimum wage in Paraguay.
  • The new monthly minimum wage will be 2,680,373 Paraguayan guaraníes, approximately $383 USD, effective July 1, 2023.
  • This adjustment of 130,066 guaraníes (around $19) represents a 5.1% increase compared to the previous minimum wage.
  • The minimum wage increase is calculated based on the annual variation of the Consumer Price Index (CPI) and its impact on the national economy, as measured by the Central Bank of Paraguay.

Employee Dismissal in Paraguay

When a contract ends, either party (employer and employee) must duly notify the other party of the dismissal. The notice can be written or verbal, and the time frame depends on the years spent at the industry/firm/corporation.

Please note that for a cause to be considered justified, it has to be proven before the competent Labour Authority in Paraguay. If this is not done, it will be considered unjustified, and the employer will forced to pay the dismissal compensation along with the salary of one month to his employee. Moreover, the contract of an employee who has been working within the company over the last ten years without interruption can only end if the employer has proven a legal cause of dismissal before the Labour Authority.

If no justified cause is proven, the employer must reintegrate the employee into his work. If reintegration is not possible due to a misunderstanding with the employer or legal representative of the company and is proven before Labour Authorities, the employee is entitled to receive compensation.

This compensation will be equivalent to the double of the dismissal compensation he would have received if fired under unjustified cause. Harassed employees are entitled to terminate as with just cause the employment contract and pursue indemnification from their employers under the Labour Code. Employers may dismiss a harasser with just cause but must judicially prove such conduct.

In the case of terminating an employee for a justified cause not proved in a legal proceeding, the employer shall pay all salaries, compensation and fines levied upon them during the suspension of the contract or terminate the labour contract, in which case he is entitled to the indemnification for unfair dismissal. If the worker has achieved labour stability (10 years or more seniority), he cannot be subject to dismissal except by reason of just cause approved by the decision of a Judge in the Labour Jurisdiction.

Neither party to a labour contract may terminate the contract without prior notice. The prior notice must be given according to the following rules, depending on seniority:

  • Up to one year, 30 days;
  • up to five years, 45 days’;
  • Over ten years, 90 days’.

Acumen International can help you fast-track your possibilities of entering and expanding your business in Paraguay by providing you with our Employer of Record services. Our unique mix of PEO/EOR solutions will enable you to jumpstart your global operations immediately, cost-effectively and compliantly without needing to set up a legal entity first or afterwards.