HR Software for Paraguay
Leave Policy
Maternity Leave
Employees are entitled to 18 weeks of paid maternity leave. The holiday is divided into a prenatal period of 2 weeks and a postnatal period of 16 weeks. During this period, Social Security (IPS) is responsible for payment.
It is at the employee’s discretion whether to take the 2 weeks of pregnancy leave after the birth.
The duration of this period may be extended in special circumstances.
You can use the leave module in IceHrm to manage maternity leave in Paraguay.
Paternity Leave
Employees are entitled to 14 calendar days of paid paternity leave after the birth of the child. The employee receives 100% of regular salary during this period and the employer is responsible for this compensation. The employee cannot extend the vacation.
Parental Leave
Parental leave is not regulated by law in Paraguay. However, employees may be entitled to maternity and paternity leave.
Sick Leave
Employees are entitled to paid sick leave after 36 days of employment. Sick leave is paid based on the employee’s salary for the last four months before the illness up to 26 weeks (as temporary working leave). It is paid by the social insurance (IPS) through the employer.
The employee receives 50% of his regular income.
Employees are entitled to sick leave upon presentation of a medical certificate.
Pay & Tax
Minimum Wage Requirements
In Paraguay, as of July 1, 2023, the minimum wage is PYG 2,680,373 per month, around $368.
Individual Income Tax
The individual income tax is between 8 and 10%. Income tax is calculated at progressive rates and is based on income for the calendar year. The calculation of personal income tax depends on the minimum wage set for the calendar year.
- Up to 50,000,000 PYG – 8%
- From PYG 50,000,000 to PYG 150,000,000 – 9%
- Over 150,000,000 PYG – 10%
Payroll Cost
The cost to the employer is generally estimated at 16.5% of the employee’s salary.
- Social Security (Instituto de Previsión Social) – 16.5%.
- Family allowance (Bonificación Familiar):
1. PYG 127,515.35 for salaries less than PYG 5,360,746.
2. PYG 0 for salaries higher than PYG 5,360,746.
Annual costs:
13th month salary (Christmas bonus) – 1 month salary
One-time fees:
Medical Examination – 1,090,440.3 PYG (~USD 150)
Overtime Pay & Maximum Hours
The standard working hours are 8 hours per day and 40 hours per week. The maximum working time per day remains 8 hours, with an extended working week until Saturday, for a total of 48 hours per week.
Pay for overtime is mandatory. Hours that go beyond the standard working hours agreed in the employment contract are considered overtime.
If an employee is asked to work overtime, the working hours may not exceed 3 hours per day or 57 hours per week.
All overtime over 48 hours will be paid as follows:
- 150% of the hourly rate, daytime
- 200% of the hourly rate, during the night or on public holidays
Termination
Termination Requirements
Terminations in Paraguay can be complex. The termination procedure differs depending on the employment contract, taking into account the type of contract and the reason for the termination.
It is necessary that the employee submits the termination in writing.
Employers are prohibited from unfairly dismissing employees who have been employed for more than ten years, and such dismissals are only permitted if there is a valid and justified reason.
Permissible terminations include:
- Dismissal of the employee for good reason or without good reason (with severance payment)
- Resignation of the employee or resignation for legitimate reasons
- By mutual agreement
- By expiry of the contract
Notice Period
The prescribed minimum notice period is one day and is increased depending on the length of the employment relationship;
- During the probationary period, no notice period
- After the probationary period and up to 1 year of service, 30 days
- More than 1 year and less than 5 years of service, 45 days
- Between 5 and 10 years of service, 60 days
- More than 10 years of service, 90 days
Severance for Employees
In Paraguay, employees who are dismissed due to dismissal or lack of suitability for the job are entitled to severance pay.
If an employee is dismissed without reason, regardless of whether he or she has previously resigned or not, the employer is obliged to pay severance pay. This compensation should amount to fifteen daily wages for each year of service or an equivalent fraction thereof for a period of six months.
After 10 years of employment, an employee can only be terminated for justified reasons.
Statutory Time Off
Paid Time Off
In Paraguay, both full-time and part-time employees are entitled to at least 12 working days of paid vacation (PTO).
The duration of the vacation increases with the length of service.
- Up to 5 years of service, 12 working days
- Between 5 and 10 years of service, 18 working days
- Over 10 years of service, 30 working days
Annual leave should be taken within 6 months of its accrual and annual leave not taken will be carried over to the following year.
Public Holidays
There are 9 national holidays in Paraguay. National holidays include:
- New Year
- Heroes Day
- Labor Day
- National Independence Day
- Peace of Chaco
- Foundation of Asunción
- Battle of Boquerón
- Virgin of Ca’acupé
- Christmas
Onboarding
Onboarding
Onboarding takes 3 working days. Compliance documents must be completed 1 day before the start date and a copy of the wet ink agreement is required as a medical examination within the first month of employment.
Additional Info
Employment Contract Details
The contracts must be written in Spanish and can be bilingual. They must be in writing and signed by both parties. A digital signature can be used for the signature.
A contract must contain the following:
- Completion
- Notice period
- Working hours
- Rewards
- Vacation
- Sick leave
- Responsibilities
- Confidentiality
Backdating contracts is not permitted.
Probation Period
The minimum duration of the probationary period is 30 days, the maximum duration of the probationary period is 60 days.