Employer of Record in Paraguay

Employment Laws and Regulations in Paraguay

Employment Contracts

Employment in Paraguay is governed primarily by the Labour Code (Law 213/1993) and the 1992 Constitution, supplemented by Law 5508/2015 on maternity protection and Law 6380/2019 on the modernisation of the tax system. Article 44 of the Labour Code requires that contracts for work of more than ninety days be in writing, and in practice every EOR contract is written and in Spanish. Both indefinido (indefinite-term) and plazo fijo (fixed-term) contracts are permitted, though Paraguayan courts will recharacterise successive fixed-term renewals as indefinite where the underlying role is permanent. A three-month probation period (período de prueba) is the default for general workers under Article 58, extendable to six months for technical and management roles. Contracts must identify the parties, the position, the base salary, the workplace, the start date, and the working-time schedule, and must reference the Labour Code where mandatory clauses apply.

Working Hours and Overtime

Paraguay sets a maximum working week of forty-eight hours under Article 194 of the Labour Code, spread over eight hours per day for day work, seven hours per day (forty-two per week) for night work, and seven-and-a-half hours per day (forty-five per week) for mixed day-and-night schedules. Overtime is governed by Articles 234–236: weekday overtime is paid at a 50% premium (1.5 times the base hourly rate), while night, Sunday, and public-holiday work is paid at a 100% premium (2.0 times). Total hours including overtime must not exceed fifty-seven per week, and no employee may be required to work more than three overtime hours per day. Managerial and supervisory roles that involve confidential decision-making or independent authority are generally excluded from the weekly cap under Article 198, though they remain entitled to holiday and Sunday-work premiums.

Overtime pay forms part of the IPS contribution base and is treated as ordinary wages for IRP withholding. Employers should log overtime in the libro de sueldos y jornales and in monthly planilla laboral filings; MTESS inspectors treat missing overtime records as prima facie evidence of underpayment.

Minimum Wage

Paraguay’s national minimum wage is set annually by executive decree on the recommendation of the Consejo Nacional de Salarios Mínimos, and revised in line with inflation. For 2026 the minimum wage is PYG 2,899,408 per month for general workers on a full-time (48-hour) schedule, equivalent to approximately USD 390 at the April 2026 reference rate. The same floor applies across private-sector employment, with sector-specific minimums (for example, domestic work under Law 5407/2015) set as percentages of the general wage. Minors and apprentices under the age of eighteen receive at least 60% of the adult minimum during training periods. For a detailed breakdown of sectoral minimums and the IPS wage-base treatment, see our Paraguay minimum wage guide.

Probation Period

The Labour Code’s default probation period is thirty days for unskilled workers and up to sixty days for technical, specialised, and management roles under Article 58. During probation, either party may terminate the employment without cause and without the preaviso (notice) or indemnización (severance) that would otherwise apply, provided the probation clause is stated in the written contract. Probation does not extend IPS, IRP, or annual-leave accrual obligations; all of those begin from day one of employment. An EOR will ordinarily align the probation clause with the client’s internal policy while keeping it within the statutory limits.

Leave Entitlements

Paraguay’s statutory leave regime is set in Articles 218–237 of the Labour Code and in Law 5508/2015 on maternity. The Code ties annual-leave entitlement to tenure, gives maternity and paternity their own statutory minimums, and leaves sick leave largely to the IPS health-insurance system. EOR contracts should reference each entitlement explicitly to avoid disputes at termination, when unused annual leave must be paid out.

Annual Leave

Annual paid leave under Article 218 scales with tenure: twelve working days after one completed year of service, rising to eighteen working days after five years, and thirty working days after ten years. Accrual begins on the first day of employment, but the employee must complete twelve months of service before the first period can be taken. Leave must be scheduled by mutual agreement, usually during the low-activity season, and cannot be replaced by a cash payment except at termination. The annual-leave pay is based on the employee’s ordinary wage at the time leave is taken, including habitual bonuses but excluding the Aguinaldo.

Sick Leave

There is no employer-paid sick leave under the Labour Code. Instead, IPS-enrolled employees who have contributed for at least six months qualify for a subsidio por enfermedad (sick-leave subsidy) of 50% of average wages, payable from the fourth day of certified illness up to twenty-six weeks per episode, extendable to fifty-two weeks with medical justification. A certificado médico from an IPS-authorised physician is required, and the first three days are unpaid under the statute (though many employers and EOR contracts close that gap as a discretionary benefit). For long-term incapacity, IPS pays disability benefits under Law 98/1992.

Maternity Leave

Paraguay’s maternity regime is set in Law 5508/2015, which gives pregnant employees eighteen weeks of fully paid maternity leave: two weeks before the expected date of birth and sixteen weeks after. Pay is funded by IPS for enrolled employees who have contributed for at least six months; the employer tops up to 100% of ordinary wages where IPS benefit is capped. For non-enrolled employees, the employer carries the full paid-leave cost. Pregnant employees are protected from dismissal from the date pregnancy is notified to the employer until one year after the birth, under Article 136 of the Labour Code. Breastfeeding breaks of 90 minutes per working day are provided for the first six months after the employee’s return.

Paternity Leave

Law 5508/2015 also sets fourteen days of fully paid paternity leave, taken at the birth of a child or on the adoption of a child under three years old. The benefit is funded by the employer for all covered employees and cannot be replaced by monetary payment. Same-sex partners are not expressly covered by the statute, but EOR contracts often extend the same benefit to a non-birthing partner by policy.

Other Statutory Leave

The Labour Code provides several additional categories of statutory leave that apply alongside the headline categories above:

• Marriage leave: Three working days paid under Article 60(e).
• Bereavement leave: Four working days paid on the death of a spouse, child, or parent under Article 60(d).
• Study leave: Paid time off for university or equivalent examinations where the employee is enrolled in a recognised institution, limited to exam days.
• Voting and civic duty leave: Paid time off for national elections and jury-style civic duties.
• Union leave: Protected leave for recognised union representatives under the union’s statutes and Article 325 et seq.

The table below summarises the statutory leave framework applied by every EOR in Paraguay. The headline point for buyers is that annual leave accrues from day one (though it is first taken after twelve months), maternity is fully paid for 18 weeks, and paternity is 14 days, both among the more generous schedules in Latin America.

Statutory Employee Benefits

Beyond leave, the mandatory benefits landscape in Paraguay is centred on the Instituto de Previsión Social, which covers pension, health, maternity, disability, and survivor benefits for private-sector employees. The EOR is responsible for every item below:

• IPS pension contributions: 12.5% employer and 9.0% employee of gross wages, funding the contributory pension under Law 98/1992 and the Social Security Institute’s long-term reserves. No wage cap applies.
• IPS health contributions: 4.0% employer of gross wages, funding the IPS health network of hospitals and clinics that provide primary care, specialist care, and hospitalisation for enrolled employees and their families.
• MTESS training levy: 1.0% employer of gross wages, funding the Servicio Nacional de Promoción Profesional (SNPP) and the Sistema Nacional de Formación y Capacitación Laboral (SINAFOCAL) vocational training system.
• Aguinaldo (13th-month salary): One-twelfth of total wages earned during the calendar year, paid by 31 December under Article 243 of the Labour Code. This is a statutory entitlement, not a discretionary bonus, and is subject to IPS and IRP like ordinary wages.
• Public holiday pay: Employers observe the approximately twelve national holidays codified in the Labour Code and sector decrees, with paid time off standard for full-time employees and 2x premium for holidays worked.

Paraguay does not operate a separate unemployment insurance scheme; there is no statutory housing fund or mandatory private pension on top of IPS; and there is no statutory lunch or transport allowance. All exact contribution rates are set out in the employer and employee contribution tables in the payroll section below.

Recent Regulatory Updates (2026)

Paraguay’s employment framework has seen three material changes over the last eighteen months. The first is the 2026 minimum-wage adjustment to PYG 2,899,408 per month, set by executive decree on the recommendation of the Consejo Nacional de Salarios Mínimos in line with 2025 inflation. The second is the Dirección General de Migraciones’ tightened verification workflow, in force from 1 January 2026, which requires employers sponsoring foreign nationals to provide justification for extended absences during permit renewals and border checks. The third is the continued stability of the Impuesto a la Renta Personal at its 2019 Law 6380 parameters: an 80 million PYG annual threshold, 8% on the first 50 million PYG bracket, 9% on the next 150 million PYG bracket, and 10% on amounts above that. No IPS rate changes have been enacted for 2026, and Paraguay remains a relatively stable jurisdiction on statutory employer burden (Ministerio de Trabajo, Empleo y Seguridad Social).

Work Permits and Visas in Paraguay

Work Permit Requirements

Who Needs a Work Permit

Paraguayan nationals and permanent residents (residentes permanentes) need no permit to work in Paraguay. Citizens of the Mercosur bloc (Argentina, Brazil, Uruguay, and associated states) and the Asociación Latinoamericana de Integración (ALADI) benefit from streamlined residence procedures under the Mercosur Residence Agreement, but still need a residence card before starting employment. All other foreign nationals, including citizens of the United States, Canada, the European Union, the United Kingdom, and Asian countries, require a Short-Term Residence (valid up to one year) or Temporary Residence (valid two years, renewable) permit from the Dirección General de Migraciones, with work authorisation annotated on the card, before starting employment.

Eligibility and Required Documents

A Temporary Residence application with work authorisation typically requires the following documents, apostilled or legalised by a Paraguayan consulate in the country of origin:

• Passport valid for at least six months beyond the intended period of stay
• Signed employment contract with a Paraguayan-registered employer (the EOR, in this structure)
• Birth certificate and marriage certificate (if applicable), apostilled
• Police clearance (antecedentes penales) from the country of origin and any country of residence in the previous five years, apostilled
• Paraguayan police clearance from the Policía Nacional once the applicant is in country
• Medical certificate confirming fitness to work and freedom from communicable disease
• Proof of solvency (bank statements or employer payroll letter), showing sufficient means of support
• Dirección General de Migraciones application form and tasa (filing fee) paid in advance

Processing Time and Validity

Dirección General de Migraciones processing typically takes four to eight weeks once a complete file is lodged, with a decision issued on the Temporary Residence card. The initial Temporary Residence is usually issued for two years, renewable once for a further two years; at that point the employee may be eligible for Permanent Residence if the employment relationship continues. The employee must collect the residence card in person and register it with the Identification Directorate (Departamento de Identificaciones) to obtain the Paraguayan cédula de identidad that is required for IPS registration. Delays most often come from missing apostilles, incomplete medical certification, or police-clearance gaps.

Renewal Process

Renewal applications are filed with the Dirección General de Migraciones at least 30 days before the current permit expires. Documentation includes an updated employment contract, current passport, fresh medical certificate, and a justification for any extended absences during the prior period (a requirement tightened as of 1 January 2026). Employees with a valid renewal application submitted before expiry may continue working while the renewal is in process. The EOR coordinates renewals on behalf of the employee and the client.

Common Visa Types for Foreign Workers

Paraguay’s Dirección General de Migraciones issues a short catalogue of residence categories, each paired with the cédula de identidad issued by the Departamento de Identificaciones once residence is confirmed. The table below summarises the permits most commonly sponsored by an EOR for foreign hires.

The following non-employment permits also exist but do not authorise work:

• Tourist entry: For visits up to 90 days; no work rights attach.
• Student residence: For attendance at a Paraguayan university or post-graduate programme; part-time work rights require a separate authorisation.
• Independent Means / Rentista: For retirees and financially independent foreigners; does not authorise local employment.
• Transit entry: For passengers transiting Silvio Pettirossi International Airport; no work rights.

How an EOR Handles Work Permits

The EOR is the Paraguayan legal sponsor on the Temporary Residence application. It drafts the Spanish-language employment contract, prepares the solicitud de admisión with the Dirección General de Migraciones, liaises with the Identification Directorate to secure the cédula, and pays the filing tasas. The employee is responsible for collecting apostilled birth, marriage, and police-clearance documents from the country of origin, attending the Paraguayan medical examination, and presenting in person at the Migraciones office in Asunción. Because the Temporary Residence adds four to eight weeks before the employee can start, work-permit onboarding runs in parallel with contract drafting rather than after it. Mercosur citizens use an accelerated channel and can typically start work within three to four weeks.

Payroll, Taxes, and Social Security in Paraguay

Employer Contributions

Employer payroll burden in Paraguay is concentrated in the Instituto de Previsión Social (pension + health) and the MTESS training levy. There is no separate unemployment insurance contribution, no occupational-hazard surcharge, and no municipal wage surtax. The table below shows the statutory employer contributions that apply to all covered employees. For a deeper explanation of how each payroll tax component interacts with gross salary, see our Paraguay payroll tax guide.

Employee Contributions

Employees pay a matching IPS contribution plus IRP withholding once annual gross income crosses the 80 million PYG threshold. There is no employee share of the SNPP/SINAFOCAL levy. The table below shows the statutory deductions that appear on a 2026 Paraguayan payslip.

Income Tax

Paraguay operates a three-bracket progressive IRP under Law 6380/2019, applied to net annual income above a PYG 80 million threshold. The Aguinaldo is exempt from IRP, and allowable deductions include health and education expenses, IPS contributions, and certain family-related expenses, subject to documentation. Capital-income sources (dividends, interest, rents, royalties) are taxed separately at a flat 8%. The thresholds are set in Guaraní because Paraguay’s official currency is the Guaraní.

Payroll Cycle

Paraguayan payroll is paid in Guaraní by default, typically via direct deposit to a local bank or the Banco Nacional de Fomento network. Monthly payroll on the last business day of the month is by far the most common cycle; semi-monthly is permitted but rare. Payslips must itemise gross wages, IPS deductions, IRP withholding (where applicable), the Aguinaldo accrual, and net pay, and must be signed by the employee on receipt. The EOR files monthly IPS returns by the ninth business day of the following month, IRP withholding returns by the SET perpetual calendar schedule, and the planilla laboral with MTESS on the statutory annual submission date. USD-denominated salaries are permitted by contract in Paraguay, but IPS and IRP calculations must be performed in Guaraní at the BCP official reference rate, and wages must be paid in PYG equivalent.

13th Month Salary and Bonus Pay

Paraguay has a mandatory Aguinaldo (13th-month salary) under Article 243 of the Labour Code, equal to one-twelfth of all wages earned during the calendar year. It must be paid by 31 December each year; failure to pay triggers MTESS labour-inspection fines and opens a claim for payment plus interest. The Aguinaldo is subject to IPS (9% employee and 16.5% employer) but is exempt from IRP under Law 6380/2019, making it tax-efficient to employees near the 80 million PYG threshold. Discretionary 14th-month and performance bonuses are permitted and taxed as ordinary wages for both IPS and IRP. There is no statutory profit-sharing requirement.

Cost of Hiring Through an EOR in Paraguay

EOR Service Fees

EOR service fees in Paraguay typically fall in the USD 500 to USD 800 per employee per month range, billed as a flat monthly service fee. Included in that fee is the drafting of the Paraguay-compliant contrato de trabajo, monthly PYG payroll processing, IPS registration and contribution filing, IRP withholding and annual reconciliation, Aguinaldo accrual and 31 December payment, benefits administration, leave and overtime tracking, and ongoing HR advisory. Work-permit sponsorship for foreign nationals is usually billed separately as a one-time setup fee in the USD 1,500 to USD 3,000 range plus Dirección General de Migraciones tasas.

Total Employment Cost Breakdown

The example below shows the total cost to the client of placing a USD 40,000 annual salary employee in Paraguay through an EOR. Figures are shown in USD at a reference exchange rate of PYG 7,400 per USD for April 2026; all statutory contributions are calculated in PYG and converted for comparability. The statutory employer burden in Paraguay is 17.5% of gross wages (12.5% IPS pension + 4.0% IPS health + 1.0% SNPP), plus the Aguinaldo (approximately 8.33% of the annual wage), bringing the total mandatory on-cost to around 25.8% of gross salary before EOR fees.

At a USD 40,000 salary, the statutory employer burden (IPS + SNPP + Aguinaldo) is roughly 25.8% and the EOR service fee adds approximately 19.5% on top of gross salary. Because IPS contributions apply to gross wages without a statutory wage cap, the employer burden scales proportionally with salary: clients budgeting for senior hires at USD 80,000–USD 150,000 should assume the same 17.5% IPS + SNPP and 8.33% Aguinaldo applies to the full salary. Paraguay’s combined statutory load remains lower than that of Argentina, Brazil, or Uruguay at the same pay point, which is part of why the country is an attractive Southern Cone payroll destination.

Ready to hire in Paraguay? Get started with Remote People. We handle employment contracts, payroll, IPS contributions, IRP withholding, Aguinaldo, and full Paraguay compliance. No local entity needed.

Benefits of Using an EOR in Paraguay

Paraguay is an attractive jurisdiction for Latin American hiring because its statutory employer load is modest by regional standards, its top IRP rate is capped at 10%, and English-Spanish bilingual talent is well-supplied in Asunción and Ciudad del Este. The downside is that Paraguay’s compliance stack touches IPS, SET, Migraciones, and MTESS, with differing filing calendars and no single unified e-filing portal. An EOR collapses that complexity into a single monthly invoice:

• Speed to market: An EOR in Paraguay can have a Paraguay-resident employee on payroll in one to two weeks, compared with two to four months to register an SRL or SA, obtain a RUC (Registro Único del Contribuyente) number from SET, open a Guaraní bank account, and complete IPS patronal registration.
• Compliance assurance: The EOR is the legal employer and absorbs the risk of errors in IRP withholding, IPS remittance, MTESS planilla filing, and Dirección General de Migraciones permit renewal. Missing filings trigger interest plus fines of up to 10% of the underpayment and, in the case of IPS, exposure to employee benefit claims.
• Cost efficiency vs. local entity: For teams of fewer than ten employees, a monthly EOR fee of USD 500 to USD 800 per employee is far lower than the all-in cost of maintaining a Paraguayan corporation (formation fees, sworn-translator costs for the foreign-parent documents, annual MTESS and SET filings, and annual financial-statement preparation).
• Local expertise: An EOR in Paraguay knows the practical enforcement posture of the IPS and SET auditors, the grace periods available for late filings, and the market norms for salary benchmarking and probation clauses that a foreign HR team cannot easily replicate.
• Flexibility to scale up or down: The EOR relationship ends with a notice-period transition rather than a formal disolución y liquidación of a Paraguayan corporation, which in Paraguay can take six to twelve months and require newspaper publication.
• Risk mitigation: The EOR manages seguro de riesgo private cover for workplace injuries beyond the IPS contribution, ensures the Aguinaldo is paid on time, and handles the paternity, maternity, and annual-leave tracking that MTESS inspectors check during random audits.
• Employee experience: Employees receive a properly itemised PYG recibo de sueldo, IPS enrolment from day one, and access to the IPS hospital network for themselves and their dependants, which is a significant improvement over informal contractor arrangements and measurably improves retention.

For most buyers, the decision point is not whether an EOR is cheaper than hiring informally as a contractor; it is whether the compliance exposure of mis-classification, informal payment, or late IPS contributions is acceptable. In Paraguay, where MTESS and IPS routinely re-classify ongoing autonomo arrangements as employment and assess up to five years of back contributions with interest, the answer for any permanent or full-time role is almost always no.

Termination and Offboarding in Paraguay

Notice Periods

Paraguay’s statutory notice periods (preaviso) are codified in Article 88 of the Labour Code and scale with tenure. Notice must be given in writing and can be replaced by payment in lieu where the employer elects not to require the employee to work out the period. Notice is separate from, and additional to, severance indemnización. The same notice schedule applies to both employer and employee resignations once the employee has crossed the one-month threshold, though employees resigning before one year typically give fifteen days of notice by contract.

Exceptions to statutory notice include mutual agreement to shorter terms, justa causa summary dismissal for gross misconduct under Article 81 (theft, repeated insubordination, violence, intoxication at work), and the end of a fixed-term contract that expires on the agreed date. Where the employer fails to give notice, it must pay the indemnización sustitutiva de preaviso (severance in lieu of notice) equal to the wage for the notice period.

Severance Pay

Paraguay operates a statutory severance-pay regime (indemnización por despido injustificado) under Articles 91–94 of the Labour Code. The headline figure is fifteen days of wages per year of service, payable on dismissal without just cause, with fractions of a year over six months counting as a full year. The regime changes materially once the employee has completed ten years of continuous service, at which point the employee is protected by estabilidad laboral (stability of employment): dismissal without cause after ten years triggers double severance (30 days per year of service) or, at the employee’s election and subject to court approval, reinstatement with back pay.

Calculation Method

Severance is calculated on the employee’s average monthly wage over the last six months of service, including habitual overtime, commissions, and bonuses that are paid regularly, but excluding one-off discretionary payments. For employees below the ten-year threshold, the formula is fifteen daily wages multiplied by each completed year of service, with fractions over six months counted as a full year. For employees at or above ten years, the daily-wage multiplier doubles to thirty. The lump sum is paid at termination as part of the final liquidación alongside accrued annual leave and the proportional Aguinaldo for the current year.

Caps and Exceptions

The Labour Code does not cap severance at a maximum number of years, meaning long-tenure cases can generate large severance awards. The Code excludes severance where termination is for justa causa under Article 81 (gross misconduct, theft, repeated disobedience, intoxication at work, revealing commercial secrets, or serious disrespect), for resignation by the employee, for expiration of a fixed-term contract, or for termination during the probation period. Termination due to force majeure or employer insolvency may reduce severance to 50% of the statutory amount, subject to labour-court approval. An EOR will document the grounds for dismissal in writing to preserve any applicable exception.

Grounds for Termination

Paraguay law recognises termination for justa causa (gross misconduct, breach of contract, theft, violence, repeated disobedience, absence without justification), termination without cause (requiring preaviso and indemnización), mutual agreement (mutuo acuerdo), expiration of a fixed-term contract, force majeure, and the death or permanent incapacity of the employee. Protected categories include pregnant employees (protected from notification of pregnancy until twelve months after birth under Law 5508/2015), employees on IPS sick or maternity leave, union representatives (fuero sindical), and employees with ten or more years of service (estabilidad laboral). The EOR drafts the carta de preaviso, runs the final liquidación calculation, deregisters the employee with IPS, closes the IRP year for the employee, and issues the constancia de servicios that the employee needs for pension purposes.

EOR vs. Other Hiring Models in Paraguay

EOR vs. Setting Up a Local Entity

For most companies hiring fewer than fifteen employees in Paraguay, an EOR wins on setup time, upfront cash, ongoing compliance cost, and exit cost. Registering a Paraguayan SRL or SA requires a notarised escritura pública, registration with the Dirección General de los Registros Públicos, issuance of a RUC by SET, IPS patronal registration, MTESS workforce declaration, and opening a local bank account with apostilled foreign-parent documentation. The end-to-end process typically runs eight to sixteen weeks, and the cash outlay for professional fees and government tasas usually falls between USD 5,000 and USD 15,000.

The decisive factor for most buyers is the combination of setup time and exit cost. Eight to sixteen weeks before a new hire can be paid is rarely acceptable, and the Paraguayan dissolution process can run for more than half a year. The EOR model eliminates both friction points and is the right choice for engagements expected to last less than three years or involve fewer than fifteen hires. Buyers contemplating a maquila export operation under Law 1064/1997 or long-term manufacturing in Paraguay’s free zones will eventually outgrow the EOR; for everything else, the EOR is the better structure.

EOR vs. Hiring Independent Contractors

Hiring a Paraguayan worker as an autonomo (independent contractor) is appropriate for genuinely project-scoped work where the contractor sets their own hours, uses their own tools, and serves multiple clients. For full-time, ongoing, exclusive relationships, MTESS labour inspectors and SET tax auditors can (and regularly do) recharacterise the contractor arrangement as employment under the principio de primacía de la realidad, which prioritises the substance of the relationship over its form. Recharacterisation exposes the client to back IPS contributions, back IRP, MTESS fines, and potential severance claims for the entire historical period.

Paraguay’s misclassification risk is real and well-established in case law. For any role where the worker is exclusive to the client, follows the client’s schedule, uses the client’s tools, or is integrated into the client’s hierarchy, the EOR model is the appropriate structure. Remote People’s Paraguay contractor-of-record service is the right option for clearly project-scoped, non-exclusive engagements where the risk profile supports that structure.

EOR vs. PEO (Professional Employer Organization)

The Professional Employer Organization (PEO) model is well-established in the United States and depends on the client already operating its own entity in the relevant country. Paraguay has no formal PEO regulatory framework, but some domestic HR firms offer co-employment-style administration to foreign-parent groups that already have a Paraguayan SRL or SA. The practical distinction is simple: an EOR is the legal employer and does not require the client to have a Paraguayan entity; a PEO is a co-employment arrangement that only works if the client already has its own legal entity to co-employ with.

For a company entering Paraguay for the first time, the EOR is almost always the right structure because there is no local entity to co-employ with. PEO becomes a consideration only once the client has established a registered Paraguayan SRL or SA and wants to outsource day-to-day payroll and HR administration while retaining legal-employer status.

Public Holidays in Paraguay

Paraguay observes twelve national public holidays codified in the Labour Code and sector-specific decrees. When a holiday falls on a Tuesday or Thursday, the Executive commonly declares the intervening Monday or Friday a feriado puente (bridge day) by decree; EOR providers monitor the annual decree list to update the payroll calendar. Employers should calendar the holidays below for scheduling and factor public-holiday pay (2x base hourly rate if worked) into the monthly payroll run.

Public holidays affect payroll scheduling in two ways. First, holidays worked attract a 2x base-hourly-rate premium under Article 235 of the Labour Code, which the EOR builds into the monthly payroll run. Second, pay days falling on a public holiday are advanced to the preceding business day under standard Paraguayan payroll practice, so the monthly cycle calendar should be set at the start of the year and communicated to employees. The Executive Branch may also declare additional feriados puente during the year by decree, typically around Semana Santa and the end-of-year holidays.

How to Get Started with an EOR in Paraguay

Setting up a Paraguay team through an EOR follows a predictable sequence. Each step below takes one to five business days, and several run in parallel.

• First, scope the hire: Define the role, salary in PYG or USD, work location (Asunción, Ciudad del Este, Encarnación, or remote), start date, and whether the candidate is a Paraguayan national, a Mercosur national, or a non-Mercosur foreign national. This determines whether a Temporary Residence permit is required and which processing track applies.
• Second, sign the EOR service agreement: Execute the EOR service contract, which sets the monthly service fee, work-permit setup fee if applicable, and the scope of HR services. The EOR typically requires the first month of fees plus a deposit at signing.
• Third, issue the Paraguay employment contract: The EOR drafts the Spanish-language contrato de trabajo, incorporates the client’s specific benefits and IP-assignment clauses, and sends it to the employee for signature. The signed contract is the basis for IPS and SET registration.
• Fourth, register payroll and sponsor immigration if needed: The EOR enrols the employee with IPS, loads them into the payroll system, adds them to the monthly MTESS planilla laboral and SET IRP register, and sets up PYG direct deposit. For foreign nationals, the EOR files the Temporary Residence application with the Dirección General de Migraciones in parallel.
• Fifth, run the first payroll cycle: The employee starts work, the EOR issues the first itemised PYG recibo de sueldo on the next monthly cycle, and monthly IPS, IRP, and SNPP filings follow the standard calendar.

Contact Remote People to hire in Paraguay. We operate as your employer of record in Paraguay, run PYG (or contractually USD) payroll, handle IPS pension and health contributions, SNPP training levy, IRP withholding, Aguinaldo, and Temporary Residence work-permit sponsorship, and have your team onboarded in one to two weeks.

Where companies hiring in Paraguay expand next

Companies hiring in Paraguay commonly expand across South America, leveraging Spanish and Portuguese talent pools and regional trade frameworks. Most teams start with a team in Peru — overlapping Andean hiring and cost tier. Operations in Brazil typically follows, with the Andean corridor’s Spanish-speaking talent. Chile is a natural addition for aligned Andean-region cost and talent profile, and hiring in Colombia completes the regional picture with shared Andean-market workforce norms.