Hire Employees in Paraguay

Two routes exist. Registering a Paraguayan company gives you direct employment and permit sponsorship, and is quicker than much of the region at one to three months, but commits you to corporate tax, IPS registration and monthly MTESS filings.

An Employer of Record removes that lead time. The EOR is the legal employer in Paraguay, runs payroll, IPS contributions, IRP withholding and the aguinaldo, and carries the employment liability, while day-to-day direction stays with you.

Engaging someone as a contractor is a third option, but only where the work is genuinely independent — see the risk check further down this page.

Paraguay is the lowest-cost formal labour market in MERCOSUR and has attracted manufacturing under the maquila regime alongside agribusiness and back-office operations. Employer cost is simple by regional standards — a flat 16.5% with no ceiling — but the wage floor is anything but.

There is no single national minimum wage in practice. Alongside the general figure for unspecified activities, MTESS Resolution 670/2026 sets scales for more than 150 activities and professions — construction, press, banking, private security, river transport and cattle establishments among them — each with its own categories and amounts. Identify the escalafón that matches your declared activity before setting pay, and display the applicable scale visibly at the workplace.

Break-even rule of thumb: EOR fees begin to exceed the running cost of a small Paraguayan company somewhere between 15 and 20 employees. Model both before committing — see EOR vs Entity for the full comparison, and plan any later migration so employees keep seniority.

The employer contributes 16.5% of gross with no ceiling — 14% to the Instituto de Previsión Social and 2.5% to the Ministry of Public Health. The employee contributes 9%. Because nothing is capped, the percentage holds at every salary level, which is unusual: in most markets the effective employer rate falls away as pay rises.

The aguinaldo is exempt from IPS on both sides, and from income tax. That is a genuine saving and it is frequently missed in cost models built from a generic Latin American template, where the thirteenth month normally attracts contributions.

The family bonus is an additional employer cost that varies with the employee, not the salary. It is 5% of the minimum wage per child under 17 — with no age limit where the child has a disability — payable to employees earning up to two minimum wages. Like the aguinaldo, it is excluded from the contribution base.

The minimum contribution base is the legal minimum wage. Where an employee earns less, the employer must top the contribution up to 9% of the minimum. For part-time work the health insurance portion is completed to the floor while the pension fund is calculated on actual pay, so the two components diverge.

Gross monthly salaries for full-time roles in Asunción. Add a flat 16.5% for IPS, then the aguinaldo and any family bonus.

Benchmarks below are gross monthly salaries in guaraníes for full-time roles in Asunción. Add 16.5% for IPS, then the aguinaldo — which is itself exempt from contributions — and any family bonus.

Payroll is monthly. IPS contributions are calculated on total remuneration — ordinary salary, overtime, commissions, bonuses, premiums and any other regular payment — with the aguinaldo and the family bonus expressly excluded.

Two minimum wage values apply within 2026. The figure was ₲2,899,048 a month until 30 June and ₲3,044,000 from 1 July under Decreto 6225/2026, a 5% increase. Payroll must reflect the change from the July liquidation, and any calculator still carrying the earlier figure understates both the wage floor and the minimum contribution base.

The daily rate is calculated by dividing by 26 for day-rate workers and by 30 for monthly staff, which produces different figures from the same salary: ₲117,077 against ₲101,467 at the current minimum. Getting the divisor wrong distorts overtime and any partial month.

Night work attracts a 30% premium under the Código del Trabajo. Income tax is the IRP, from which the aguinaldo is exempt.

The IRP applies to individuals above an annual threshold, with rates rising by income band. The aguinaldo is expressly exempt, and IPS contributions reduce the taxable base.

The Código del Trabajo (Ley 213/1993, as amended) is the governing statute, supported by MTESS resolutions on wage scales and working time.

The working week is 48 hours over a maximum of eight hours a day, with 24 consecutive hours of weekly rest. Overtime carries a 50% surcharge by day and 100% at night or on a holiday.

Annual leave scales sharply with service: 12 working days for one to five years, 18 days for five to ten, and 30 days beyond ten years. Long-tenured staff therefore cost materially more in leave than recent hires.

Domestic work was equalised by Ley 5407/15 as amended by Ley 6338/19: full minimum wage, mandatory IPS at the same rates, aguinaldo, holidays and family bonus. The former regime permitting 60% of the minimum is repealed.

Written contracts are the norm and the terms cannot fall below the Código del Trabajo. Any clause worse than the statute is invalid and the statutory position applies instead.

Probation length depends on the role: 30 days for unqualified workers, 60 days for qualified or technical staff, and up to six months for senior management, which must be stated in writing. During probation the employee has full rights including IPS, but either party may end the contract without notice or indemnity.

Employers must enrol employees with the IPS from the start of the relationship and display the applicable wage scale at the workplace.

The working day is capped at eight hours and the week at 48, with 24 consecutive hours of weekly rest and statutory breaks for meals and rest.

Overtime carries a 50% surcharge during the day and 100% at night or on a public holiday. Night shift work attracts a 30% premium in its own right.

Specific sectors carry their own rules — road transport drivers, for instance, may not drive more than four hours without a 30-minute break, and a driver who also collects fares receives an additional 30%.

Paraguay observes 12 public holidays in 2026. Work on a public holiday attracts a 100% surcharge, so holiday cover costs double.

Paraguay observes 12 paid public holidays in 2026. Work on a public holiday attracts a 100% surcharge. Dates that fall at a weekend and any substitution rules are set out below; entitlement is separate from annual leave.

Maternity leave is 18 weeks — six before the birth and twelve after — administered through the IPS. Paternity leave is 14 days, among the more generous in the region.

Nursing mothers are entitled to one hour a day for breastfeeding for nine months following the end of maternity leave.

Marriage leave is three days. Sick leave and medical care are provided through the IPS on presentation of certification.

Notice runs from 30 to 90 days depending on length of service — 30 days below a year, 45 days up to five years and 60 days beyond — and may be paid in lieu.

Indemnity for unjustified dismissal is 15 days of salary per year of service, subject to a cap of eight minimum wages. It is separate from notice and from accrued leave.

IPS is not deducted from every element of a final settlement. It applies to outstanding salary and accrued holiday, but not to notice pay or indemnity, and the aguinaldo is exempt from everything. Deducting across the whole liquidación short-changes the employee.

Disputes go to the MTESS in the first instance, which operates an online complaints portal and can order retroactive payment and impose fines.

Foreign nationals need a residence permit carrying work authorisation, obtained through the Dirección General de Migraciones.

MERCOSUR nationals benefit from the regional residence agreement and face a lighter process. Paraguay is a MERCOSUR member and the EU-MERCOSUR agreement took effect in May 2026, which may ease mobility further over time.

Processing typically runs four to eight weeks. Foreign employees contribute to IPS on the same basis as nationals.

Applying only the general minimum wage is the most common error. MTESS Resolution 670/2026 sets scales for more than 150 activities, each with its own categories. Where a sectoral escalafón governs, paying the general figure is an infraction and the Inspectoría del Trabajo can order retroactive payment and fine the employer.

The wage adjustment lands mid-year. The Executive adjusts the minimum annually against BCP inflation, generally effective in July, so two values apply within one calendar year and payroll must change from the July run.

Treating the aguinaldo as contributory overstates cost. It is exempt from IPS on both sides and from IRP, as is the family bonus. Conversely, deducting IPS from notice pay or indemnity in a final settlement is an unlawful deduction.

Note also that the minimum contribution base is the minimum wage regardless of actual pay, and that an employee concluding contracts locally can create a taxable presence for a foreign entity.

Work backwards from the start date. For a local hire through an EOR, two to three weeks is realistic once identity documents, the signed contract and IPS enrolment are in hand. For a foreign national, add four to eight weeks for the residence permit.

Identify the applicable sectoral wage scale before making an offer. With over 150 escalafones in force, the general minimum is often not the governing figure, and the scale must be displayed at the workplace.

Enrol the employee with the IPS from day one, confirm whether the family bonus applies, and set the payroll divisor correctly — 26 for day-rate staff and 30 for monthly staff.