Employer of Record in Paraguay

An Employer of Record (EOR) in Paraguay is a company that legally hires employees on your behalf. This means you can build a team in Paraguay without setting up a local legal entity. The EOR handles all the essential HR tasks like payroll, taxes, benefits, and compliance with local labor laws. You manage your team's day-to-day work, while the EOR takes care of the employment paperwork and legal responsibilities. For companies looking to hire in Paraguay, a provider like Rivermate can act as your EOR.

How an Employer of Record (EOR) Works in Paraguay

Using an EOR simplifies the process of hiring in a new country. You find the talent, and the EOR puts them on their local, compliant payroll.

Here is how it typically works:

• You Find the Candidate: You recruit and select the person you want to hire in Paraguay.
• The EOR Hires Them: The EOR legally hires the employee through a local, compliant employment contract.
• Onboarding: The EOR manages the onboarding process, ensuring all paperwork is correct according to Paraguayan law.
• Payroll and Benefits: The EOR handles salary payments, taxes, social security contributions, and benefits administration.
• Ongoing Compliance: The EOR stays up-to-date with Paraguay's labor laws to ensure your employment practices remain compliant.
• You Manage Your Team: You direct the employee's daily tasks and responsibilities, just like any other member of your team.

Why use an Employer of Record in Paraguay

Using an EOR is a practical solution for companies that want to hire in Paraguay without the complexity of establishing a local business entity. It saves you time and reduces risk.

Here are some key benefits:

• Start Quickly: You can hire employees and start operating in Paraguay much faster than if you had to set up your own company.
• Reduce Costs: Avoid the significant expenses and administrative burdens associated with creating and maintaining a legal entity abroad.
• Ensure Compliance: EORs have local expertise. They navigate Paraguay's employment regulations for you, minimizing the risk of legal issues.
• Access Local Talent: Hire the best people for the job in Paraguay without geographic limitations.
• Focus on Your Business: You can concentrate on your core business goals while the EOR handles the complexities of local employment.

Rivermate's transparent pricing model eliminates complexity with a single, competitive monthly fee per employee. Unlike traditional PEO providers, our pricing in Paraguay includes comprehensive HR support, benefits administration, compliance management, and access to our proprietary dashboard for real-time workforce analytics. No hidden costs, no setup fees—just straightforward pricing that scales with your business needs while ensuring full legal compliance in Paraguay.

Hiring in Paraguay can be straightforward when you understand the local labor laws. The workforce is growing, with expanding sectors in agriculture, technology, and construction. To hire compliant talent, you need to know the rules around contracts, working hours, and employee classifications. This guide breaks down the essentials for you.

Employment contracts & must-have clauses

While you can make oral agreements, it's best to have a written employment contract in Spanish. This helps avoid confusion. Be sure to state all salary and compensation amounts in Paraguayan guaraní (PYG).

Your contract should always include:

• Your and your employee's details: Full names, addresses, and identification.
• Job specifics: A clear description of the role and responsibilities.
• Work location: Where the employee will be based.
• Start date: The first day of employment.
• Contract length: State if it is for a fixed term or is indefinite.
• Pay: The salary or wage, how often it's paid, and any extra benefits.
• Working hours: The daily and weekly work schedule.
• Probation period: The length of the trial period, if you have one.

Probation periods

In Paraguay, you can set a probation period to see if an employee is a good fit. The maximum length of this period depends on the type of job:

During the probation period, either you or the employee can end the contract without notice.

Working hours & overtime

A standard workweek in Paraguay is 48 hours, typically eight hours a day for six days. Night shifts are shorter, with a maximum of seven hours per day and 42 hours per week.

Anything beyond these standard hours is overtime. Overtime work is voluntary and has limits. An employee can work a maximum of three extra hours per day. Here is how you should pay for overtime:

• Daytime overtime: 150% of the regular hourly rate.
• Nighttime or holiday overtime: 200% of the regular hourly rate.

Public & regional holidays

Your employees in Paraguay are entitled to paid time off for public holidays. The country has several national holidays throughout the year.

Here are the public holidays for 2025:

• January 1: New Year's Day
• March 1: Heroes' Day
• April 17: Maundy Thursday
• April 18: Good Friday
• May 1: Labor Day
• May 14: National Holiday
• May 15: Independence Day
• June 12: Chaco Armistice Day
• August 15: Founding of Asunción Day
• September 29: Boquerón Battle Victory Day
• December 8: Virgin of Caacupé Day
• December 25: Christmas Day

Some holidays may be moved to a Monday to create a long weekend. Also, be aware of regional celebrations, like the Fiesta de San Juan in June, which can affect local business operations.

Hiring contractors in Paraguay

You can hire independent contractors for specific projects. This gives you flexibility and access to specialized skills. Contractors manage their own taxes and social security contributions.

However, you must classify workers correctly. If you treat a contractor like an employee, you risk misclassification. This can lead to fines and penalties. The authorities will look at how much control you have over the worker and if their job is a core part of your business.

An Employer of Record (EOR) can help you avoid these risks. An EOR acts as the legal employer for your workers in Paraguay. They handle compliant contracts, payroll, and benefits. This lets you hire talent in Paraguay without setting up a local entity, ensuring you follow all local labor laws.

In Paraguay, your approach to compensation and payroll needs to be straightforward and compliant. You pay your employees for their work while making sure you follow all the local rules for taxes and social security. This keeps your business running smoothly and your team happy.

Payroll cycles & wage structure

You can pay your employees weekly, bi-weekly, or monthly, but you must pay them at least once a month. Most companies choose a monthly cycle.

A unique part of the wage structure in Paraguay is the "Aguinaldo," or 13th-month salary. This is a mandatory bonus equal to one month's pay. You typically pay this to your employees in December.

Overtime & minimums

The standard work week is 48 hours, with a maximum of 8 hours per day. Anything beyond this is overtime. For work during the day, you must pay 150% of the regular wage. For work at night or on a public holiday, the rate increases to 200%.

As of 2025, the monthly minimum wage is 2,680,373 PYG.

Employer taxes and contributions

As an employer, you contribute to social security. These funds cover things like retirement, healthcare, and other social benefits for your employees. Your total contribution is 16.5% of the employee's salary.

Employee taxes and deductions

Your employees also contribute to social security from their wages. They also pay income tax if their earnings are high enough.

In Paraguay, you'll find a range of employee benefits and leave policies shaped by local laws. These are designed to support employees' well being and work life balance. Understanding these benefits is key to successfully managing your team in the country.

Statutory leave

Paraguay's laws provide several types of paid leave for employees.

• Annual Leave Your employees receive paid annual leave based on how long they have worked for you. It starts at 12 working days and increases with seniority. After five years, they get 18 days, and after ten years, they get 30 days.
• Sick Leave Employees can take paid sick leave for up to 26 weeks. To qualify, they need to have made at least four weeks of social security contributions. The payment is split equally between you and the social security system.
• Maternity Leave Mothers get 18 weeks of maternity leave, fully paid by social security.
• Paternity Leave Fathers are entitled to two weeks of paid paternity leave after the birth of a child, which the employer pays for.

Public holidays & regional holidays

Your team in Paraguay is entitled to paid time off for national holidays. Here are the public holidays for 2025:

Typical supplemental benefits

Beyond the standard requirements, you can offer other benefits to attract and retain talent. Below is a breakdown of statutory and non statutory benefits.

How an EOR can help with setting up benefits

Setting up employee benefits in a new country can be complex. An Employer of Record (EOR) simplifies this process for you.

An EOR acts as the legal employer for your team in Paraguay. They handle all the administrative tasks related to benefits and compensation. This includes everything from enrolling employees in the social security system to ensuring you comply with all local labor laws.

Using an EOR means you don't have to set up a legal entity in Paraguay to hire employees. This saves you time and resources. An EOR helps you offer competitive benefits packages that comply with local standards, making it easier to attract top talent.

Ending a work relationship in Paraguay has clear rules. You need to follow specific steps to make sure everything is fair and legal for both you and your employee. This process involves providing notice, paying severance when required, and completing all final paperwork correctly. Whether the termination is due to a mutual agreement or a decision by the company, understanding the local labor laws is key to a smooth process.

Notice periods

When you terminate an employee without a specific, legally justified cause, you must provide them with written notice. The amount of notice depends on how long the employee has worked for you.

Here is a breakdown of the minimum notice periods:

If you prefer the employee not to work during this notice period, you must pay them their salary for that time instead.

Severance pay

If you end an employment contract without a just cause, you are required to pay severance. A "just cause" typically involves serious issues like misconduct or a significant failure to perform duties. If the termination is for a justified reason, you generally do not have to pay severance.

For terminations without cause, the payment is calculated as 15 days of salary for each year the employee has worked with your company. It is important to calculate this correctly to stay compliant.

How Rivermate handles compliant exits

We make sure every termination process in Paraguay is handled correctly and respectfully. We manage the details so you don't have to worry about legal mistakes.

Here’s how we help:

• Review Contracts: We start by thoroughly reviewing the employment contract to understand the specific terms agreed upon.
• Ensure Compliance: We guide you through the complexities of Paraguayan labor law to ensure every step is compliant.
• Handle Paperwork: We prepare and provide all necessary written notices and final documents for the employee.
• Calculate Final Pay: We accurately calculate severance pay, outstanding salary, and any other required payments.
• Consult Experts: We work with local legal experts to navigate any complex situations and reduce risks.

Getting work authorization in Paraguay involves a few key steps. Generally, you will need a visa to enter the country and then apply for a residence permit, which allows you to work. The main option for foreign professionals is the temporary residence permit. This permit is valid for two years and can be renewed. After the initial two years, you can apply for permanent residency.

Employment visas & sponsorship realities

An Employer of Record (EOR) can sponsor work visas for full-time employees in Paraguay. To do this, the EOR must be a registered legal entity in the country. The EOR takes on the legal responsibility of employing your workers, including handling payroll, taxes, and benefits.

However, there are some important realities to keep in mind:

• EORs cannot sponsor visas for independent contractors or freelancers. These professionals are considered self-employed and must follow a different process to work legally in Paraguay.
• Visa quotas can be a factor. The ability to sponsor a foreign employee may be limited by national quotas.
• The process takes time. Expect the work permit process to take one to two months.

The most practical route for hiring full-time foreign talent is through an EOR. This approach simplifies the process and ensures compliance with local labor laws. For independent contractors, a different approach is needed, as they cannot be sponsored for a work visa by an EOR.

Business travel compliance

For short-term business visits, many nationalities can enter Paraguay without a visa for up to 90 days. This includes citizens of the United States, Canada, Australia, and New Zealand. These short-term visits are for business activities and do not permit you to work.

Permitted business activities include:

• Attending meetings
• Negotiating contracts
• Exploring business opportunities

It is important to have a return ticket and proof of sufficient funds for your stay. While a business visa is not required for many, you must comply with the 90-day limit and not engage in any form of employment.