Employment in Paraguay is governed by the Labour Code (Law 213/93) and supervised by the Ministry of Labour, Employment and Social Security (MTESS). Social security is run by the Instituto de Previsión Social (IPS). Here is what employers need to know about leave, pay, tax and ending employment.
The Labour Code sets paid annual leave that grows with length of service, and maternity and paternity leave are set by Law 5508/2015 on maternity protection. Leave during illness and maternity for insured workers is paid through IPS rather than by the employer.
Consecutive calendar days after each year of continuous service: 12 days up to 5 years, 18 days from 5 to 10 years and 30 days after 10 years. Leave starts on a Monday.
Paid maternity leave under Law 5508/2015. For workers insured with IPS, the benefit is paid by IPS rather than the employer.
Paid leave for the father after the birth of a child, paid by the employer.
Employees who are unable to work because of illness or accident receive a daily allowance from IPS once they meet its contribution requirements, based on a medical certificate. The employer does not pay salary for the period covered by IPS, but the job is protected while the employee is on sick leave.
Set up each Paraguayan leave type in IceHrm with its own accrual and approval rules, including annual leave that increases at 5 and 10 years of service. Employees see their live balance before they apply, and managers see who is away on a shared calendar. Leave management →
The minimum wage is adjusted each year, usually from July, by the Executive on the recommendation of the National Minimum Wage Council (CONASAM), based on inflation.
General minimum wage for unspecified activities from July 2026 (Decree 6225, a 5% increase). Separate minimums apply to specified activities.
Per day and per week. Night work is limited to 7 hours a day and 42 a week, and mixed shifts to 7.5 hours a day and 45 a week.
One twelfth of everything earned in the calendar year, paid before 31 December or pro rata when employment ends.
Employees receive a signed pay statement with each payment, showing earnings and deductions. Every worker is entitled to one day of weekly rest, normally Sunday.
Capture attendance and overtime in IceHrm and feed the hours straight into payroll, so daytime, night and holiday premiums reflect what was actually worked. Time & attendance →
Personal income tax (IRP) on income from personal services is charged at progressive rates on annual net income for the calendar year. Individuals whose gross income from personal services does not exceed PYG 80 million a year are not required to pay it.
| Annual net income | Rate |
|---|---|
| Up to PYG 50,000,000 | 8% |
| PYG 50,000,001 – PYG 150,000,000 | 9% |
| Over PYG 150,000,000 | 10% |
Employers must register every employee with IPS. Contributions are calculated on all pay in cash or kind, except the aguinaldo and family allowance, and the employer withholds the employee share and pays both to IPS each month. There are no other payroll taxes.
For commercial employers. Financial entities pay 17%.
Withheld from salary by the employer. Employees of financial entities contribute 11%.
The annual 13th salary is an additional cost of roughly one month of pay per year.
Build Paraguayan pay the way you already structure it, with your own salary components, deductions and formula columns, such as IPS contribution and aguinaldo accrual columns. Want to know how well IceHrm handles payroll calculations for Paraguay? Contact us or see Payroll →
An indefinite contract can be ended by either party with notice. An employer that dismisses without just cause must also pay severance. After 10 years of uninterrupted service with the same employer, the employee gains job stability and can then only be dismissed for a proven just cause.
| Length of service | Notice |
|---|---|
| After probation, up to 1 year | 30 days |
| More than 1 year, up to 5 years | 45 days |
| More than 5 years, up to 10 years | 60 days |
| More than 10 years | 90 days |
| Service | Severance |
|---|---|
| Each year of service, or fraction of 6 months or more | 15 days’ wages |
Final pay also includes the pro rata aguinaldo and any accrued, untaken annual leave. For employees with more than 10 years of service, an unjustified dismissal can lead to reinstatement or double severance.
Public holidays are paid days of rest. Some commemorations may be moved to a Monday by law in a given year, so check the official calendar each year.
Work on a public holiday is paid with a 100% premium on the ordinary daytime hourly rate.
Leave groups give each office its own holiday calendar, so you can update moved holidays once a year and everyone in Paraguay gets the right days off automatically. Holiday calendars →
Contracts can be indefinite, fixed-term or for a specific job. A contract can be written or verbal, but a written contract is the norm and, where there is none, the law and collective agreements fill in the terms.
The probation period is at most 30 days for domestic and unskilled workers and 60 days for skilled workers and apprentices. For highly specialised technical staff the parties may agree a different period. A fixed-term contract may not exceed 1 year for manual workers or 5 years for salaried employees.
Send contracts for e-signing, store them on the employee’s record, and track onboarding with task lists so registrations and probation reviews are not missed. Documents & e-signing →
This guide is general information to help you plan HR processes, not legal, tax or financial advice. Employment law and rates change regularly and awards, enterprise agreements and state rules may give employees more than the minimums shown here. Always confirm current requirements with the official sources or a qualified adviser.
Configure leave types, accrual rules and public holidays for Paraguay, keep employee records and contracts in one place, and run payroll with your own salary components. Want to know how IceHrm handles payroll calculations for Paraguay? Talk to us.
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