Paraguay Labour Law for Employers 2026

Minimum Wage and Working Hours

Minimum wage: Gs. 2,899,048 per month (approximately USD 397). Adjusted annually by executive decree based on inflation and cost-of-living indices.

Working hours:

• Daytime: 8 hours/day, 48 hours/week (6am to 8pm)
• Nighttime: 7 hours/day, 42 hours/week (8pm to 6am)
• Overtime: Maximum 3 hours/day beyond the standard shift. Paid at 50% above normal rate for daytime overtime, 100% above for nighttime overtime.

The Labour Code sets these limits as maximums - employers cannot contract for longer shifts without overtime compensation.

Annual Bonus (Aguinaldo)

Every employee is entitled to an annual bonus equal to 1/12 of all salaries paid during the year. This must be paid before December 31.

The aguinaldo applies to all employees regardless of contract type, seniority, or whether the employment relationship ended during the year. Partial-year employees receive a pro-rated amount.

Vacation and Leave

Vacation entitlement by seniority:

Vacation must be granted within 6 months after the employee's anniversary date. Employees receive their regular salary during vacation.

Other leave entitlements:

• Marriage: 3 business days
• Paternity: 14 business days
• Maternity: 18 weeks (126 calendar days)
• Death of immediate family: 3 business days

Severance and Termination

Paraguay's Labour Code provides specific protections for employees upon termination:

• Severance: 15 days of salary per year of service. This applies to employees dismissed without cause.
• Labour stability: After 10 years of continuous employment, workers gain judicial protection - they can only be dismissed through a court process with demonstrated cause.
• Notice periods (indefinite contracts):
  • 1 to 5 years of service: 30 days
  • 5 to 10 years: 45 days
  • 10+ years: 60 days
  • 10+ years with labour stability: 90 days

Employees terminated without proper notice are entitled to compensation equal to the salary for the notice period. The notice period is counted from the date the employee is notified in writing.

IPS Social Security

All employers must register with the Instituto de Previsión Social (IPS) and make monthly contributions:

• Employer contribution: 16.5% of total payroll
• Employee contribution: 9% of salary (withheld by employer)
• Total: 25.5% of salary

Registration process:

1. Obtain employer registration (inscripción patronal) through the IPS portal
2. Enroll in the REI electronic reporting system
3. File monthly declarations and payments electronically

IPS registration is mandatory - not optional. Failure to register and contribute can result in fines and enforcement actions. SUACE can coordinate IPS enrollment during company formation, but the employer is responsible for ongoing monthly compliance.

Commercial Patent (Patente Comercial)

The patente comercial is a municipal requirement for operating a business. Key details:

• Cost: Approximately Gs. 170,000 per year in Asunción (varies by municipality)
• Required documents: Sworn commerce declaration (Declaración Jurada Comercio), balance sheet, property use authorization (Uso de Suelo), property owner authorization, professional accountant certificate
• SUACE coordination: SUACE handles the commercial patent process for companies based in Asunción
• Other municipalities: Requirements and costs differ outside Asunción - check with the local municipality
• Annual renewal: The patent must be renewed each year

Foreign Directors

Under the Labour Code, foreign nationals serving as directors or managers of SRL and SA companies must have Paraguayan residency. This requirement does not apply to EAS companies in the same way - the EAS has more flexible rules for the legal representative.

Foreign founders planning to serve in management roles should factor the residency timeline into their business setup. See residency options for the different pathways available.