Background Checks

Employers may conduct background checks on a candidate’s education and criminal record. Certain types of checks, such as those involving adverse media or union membership, are restricted and typically require the candidate’s explicit consent and valid identification.

• Employers must verify the candidate’s legal right to work in Paraguay, which may involve checking national ID or passport documents.

Verification and New Hire Reporting

Right-to-Work Verification: Employers must confirm that the employee is legally authorized to work in Paraguay. For foreign nationals, this includes verifying visa and residency status. Social Security Registration: Employers must register the employee with the Instituto de Previsión Social (IPS) for health and pension coverage.

• Tax Registration: Employees must be registered with the Subsecretaría de Estado de Tributación (SET) for income tax purposes.
• New Hire Reporting: While Paraguay does not have a centralized “new hire report” system like some countries, employers are required to notify relevant authorities (e.g., IPS, Ministry of Labor) when onboarding new employees, especially foreign nationals.

Onboarding Process & Documentation

For Paraguayan citizens, employers typically collect:

• National ID (Cédula de Identidad)
• Tax Identification Number (RUC or RUC-like number for employees)
• Social Security registration (IPS – Instituto de Previsión Social)
• Signed employment contract
• Bank account details for salary payments

For foreign employees, additional documents are required:

• Valid passport
• Temporary or permanent residence visa
• Work permit or authorization
• Police clearance certificate from the home country
• Medical certificate
• Apostilled birth certificate
• Translations of all documents into Spanish, notarized

Healthcare

The primary health insurance system in Paraguay is administered by the Instituto de Previsión Social (IPS). This is a mandatory social security scheme that provides healthcare coverage for employees and their dependents.

Contributions
Both employers and employees are legally required to contribute to IPS on a monthly basis. These contributions fund not only healthcare services but also pensions and other social security benefits.

• Employer contribution: Approximately 16.5% of the employee’s salary
• Employee contribution: Approximately 9% of the employee’s salary

Note: These rates are subject to change and may vary slightly depending on specific employment conditions or reforms.

Private Health Insurance
While IPS provides essential healthcare services, many employees—especially in urban or professional sectors—expect access to private healthcare. To meet this demand, employers often offer supplementary private health insurance plans. These plans may include:

• Access to private hospitals and clinics
• Shorter wait times
• Specialist consultations
• Broader coverage options

Offering private health insurance is increasingly seen as a competitive advantage in attracting and retaining talent and is often considered a standard part of a modern benefits package.

Retirement

Paraguay’s mandatory retirement and pension system is also managed by IPS. Contributions made throughout an employee’s working life determine their future pension entitlements.

Eligibility and Calculation

• Pension eligibility is based on age and years of contributions.
• As of Law No. 7.446/2024, the pension calculation is transitioning from using the last 3 years of salary to the last 10 years, with adjustments based on the Consumer Price Index (IPC).
• This change is being phased in gradually over a 7-year period, increasing the reference period by one month each month.

Supplementary Pension Plans
While private pension plans are not widespread, some large employers or multinational companies may offer them as part of executive or specialized employee packages. However, for most workers, the IPS system remains the primary retirement framework.

Employer Compliance
Employers must ensure:

• Accurate and timely payment of IPS contributions
• Proper registration of employees with IPS
• Maintenance of contribution records for future pension claims

Social Security

At this time, Vensure does not have social security details available.

Employment Contract Details

Paraguayan labor law recognizes two primary types of employment contracts based on their duration: indefinite-term and fixed-term contracts. The choice between them depends on the nature of the job and the employer’s operational needs. However, indefinite-term contracts are considered the standard unless specific conditions justify a fixed-term arrangement.

• Indefinite-term contracts do not have a predetermined end date and continue until lawfully terminated by either party. They are typically used for ongoing roles and permanent positions.
• Fixed-term contracts have a clearly defined start and end date and are used for temporary or project-based roles. Common scenarios include seasonal work, specific projects, or temporary replacements. These contracts are legally limited in duration and are only valid when the work is inherently temporary. Misusing fixed-term contracts to avoid the obligations of indefinite contracts can result in the contract being reclassified as indefinite by labor authorities.

Essential Clauses
While oral employment agreements are legally valid in Paraguay, written contracts are strongly recommended to ensure clarity and legal protection for both parties. Paraguayan labor law requires that certain key elements be included in all written employment agreements:

• Identification of Parties: Full names, addresses, and identification details of both employer and employee.
• Start Date: The date the employment relationship begins.
• Job Description: A clear outline of the employee’s role, duties, and responsibilities.
• Workplace: The location where the work will be performed.
• Working Hours: Daily and weekly schedules, including any specific shift details.
• Remuneration: Salary or wage details, payment frequency (e.g., monthly, bi-weekly), and any additional benefits or allowances.
• Contract Duration: Indication of whether the contract is indefinite or fixed-term. If fixed-term, the end date must be specified.
• Probationary Period: If applicable, the duration and conditions of the probationary period.
• Signatures: Signatures of both the employer (or authorized representative) and the employee.

Additional clauses may address topics such as vacation entitlements, leave policies, social security contributions, and termination procedures, all of which contribute to a comprehensive and legally sound agreement.

Probation Period

The probationary period is set at 30 days for unskilled workers and domestic employees, and 60 days for skilled workers and apprentices.

Visas

Types:

• Business (≤90 days)
• Work (1 year, renewable)
• Investor (2 years, renewable)
• Tourist (≤90 days)
• Student
• Temporary/Permanent Residence

Documents: Passport, application form, photos, financial proof, specific documents per visa type.

Process: Apply at consulate, pay fees, attend interview (if needed), wait for approval.

Exemptions: Some nationalities are visa-exempt for short stays.

Independent Contractors

Paraguayan labor law distinguishes between employees and independent contractors based on the nature of the working relationship.

Key Characteristics of Independent Contractors

• Operate under civil or commercial contracts, not labor contracts. Have autonomy over how and when work is performed.
• Are not subject to direct supervision or control by the hiring party.
• Are responsible for their own taxes and social security contributions.

Legal Considerations

• Misclassification of employees as independent contractors to avoid labor obligations is prohibited.
• If a contractor relationship resembles an employment relationship (e.g., fixed schedule, subordination, exclusivity), labor authorities may reclassify it as an employment contract, triggering full labor rights and benefits.

Paid Time Off

Paid vacation leave in Paraguay is based on the employee’s length of service:

• 12 working days per year for employees with up to 5 years of service
• 18 working days per year for those with 5 to 10 years of service
• 30 working days per year for employees with more than 10 years of service

Leave must be granted consecutively unless otherwise agreed upon, and unused leave must be compensated if not taken.”

Public Holidays

Public holidays that fall on the weekend are moved to the following working day.

• New Year’s Day
• Martyrs’ Day
• Holy Thursday
• Holy Friday
• Labor Day
• Independence Day
• Independence Day Holiday
• Chaco’s Peace
• Asuncion’s Day
• Boqueron’s Battle
• Ca’acupe’s Virgin Day
• Christmas Day

Bereavement

In the event of the death of an immediate family member, Paraguayan labor law entitles employees to bereavement leave. Specifically, employees are granted three days of paid leave for the death of a parent, spouse, or child.

Maternity Leave

• Female employees are entitled to 18 weeks of fully paid maternity leave, covered by IPS upon submission of a medical certificate.
• An additional 6 weeks may be granted in cases of pregnancy-related illness or complications during childbirth.
• In the case of multiple births, an extra 30 days per additional child is granted.

Adoptive mothers receive:

• 18 weeks of leave if the child is under 6 months old
• 12 weeks if the child is older than 6 months

Paternity Leave

• Fathers or partners are entitled to 2 weeks of paid paternity leave following the birth of a child.
• This leave is fully compensated by IPS at 100% of the employee’s regular salary.

Parental Leave

Paraguayan labor law has no statutory parental leave (beyond maternity and paternity provisions).

Sick Leave

Employees are entitled to paid sick leave if they have contributed to the Instituto de Previsión Social (IPS) for at least four weeks.

Termination Requirements

Under Paraguayan labor law, employers must provide written notice when terminating an employee without just cause. The required notice period is based on the employee’s length of service with the company. 

If the employer opts not to have the employee work during the notice period, they are legally obligated to pay the employee the equivalent salary for that time.

Notice Period

Minimum Notice Periods by Length of Service: 

• Up to 1 year: 30 days 
• Over 1 year up to 5 years: 45 days 
• Over 5 years up to 10 years: 60 days 
• Over 10 years: 90 days 

Severance Pay

In Paraguay, severance pay is governed by labor law and is typically required when an employee is dismissed without just cause.

Standard Severance Calculation 

Employees are entitled to 15 days of regular salary for each year of service. 

The total severance amount is capped at 50% of the employee’s annual salary. 

Unemployment Insurance

Paraguay does not provide direct unemployment benefits through a government-run unemployment insurance program. Some employers may offer voluntary severance packages or outplacement support. Collective bargaining agreements may include additional protections or financial assistance for laid-off workers. 

Anti-Discrimination Practices

Paraguayan labor law strictly prohibits discrimination in employment across all stages of the employment relationship. Employers are legally obligated to ensure equal opportunities in hiring, promotion, training, compensation, and termination. Discriminatory practices in working conditions or dismissal are not permitted under any circumstances. Discrimination is prohibited on the basis of, but not limited to, the following:

• Race or ethnic origin
• Religion  
• Sex  
• Age  
• Disability  
• Political opinion  
• Social status 

Workplace Safety Standards

Employers in Paraguay are legally required to ensure a safe and healthy working environment for all employees. This responsibility includes proactively identifying workplace hazards, implementing preventive measures, and complying with industry-specific health and safety regulations.

Workers’ Compensation

Workers’ compensation is governed by labor and social security laws that aim to protect employees who suffer work-related injuries or illnesses. The system is primarily administered through the Instituto de Previsión Social (IPS), the national social security institution. Coverage

• All employees registered with IPS are covered for occupational accidents and diseases.
• Coverage includes both physical injuries and occupational illnesses that arise in the course of employment.

Employer Obligations

• Employers are required to register their employees with IPS and make regular contributions.
• They must also maintain a safe working environment and comply with occupational health and safety regulations.

Benefits Provided
Employees who suffer a work-related injury or illness may be entitled to:

• Medical care: Full coverage of treatment, hospitalization, and rehabilitation.
• Temporary disability benefits: A percentage of the employee’s salary is paid during the recovery period.
• Permanent disability compensation: If the injury results in permanent impairment, a lump sum or pension may be granted based on the degree of disability.
• Survivor benefits: In the event of a work-related death, dependents may receive compensation and funeral expenses.

Reporting and Claims Process

• The injury or illness must be reported to the employer and IPS immediately or within a short statutory period.
• IPS conducts an evaluation to determine the nature and extent of the injury and the corresponding benefits.

Labor Law Sanctions

Paraguayan labor law strictly prohibits discrimination in employment across all stages of the employment relationship. Employers are legally obligated to ensure equal opportunities in hiring, promotion, training, compensation, and termination. Discriminatory practices in working conditions or dismissal are not permitted under any circumstances. Discrimination is prohibited on the basis of, but not limited to, the following:

• Misclassification of Employees: If you label employees as “contractors” to avoid benefits, you’ll have to pay back wages, benefits, and face fines. Repeated violations can lead to legal action by the Ministry of Labor
• Non-Compliance with Minimum Wage: The legal minimum wage and paying less can result in fines and forced back payments to employees
• Social Security Contributions: You must register employees with the Instituto de Previsión Social (IPS). Failure to do so means paying all missed contributions, plus interest and fines
• Unlawful Termination: You can’t fire employees without a valid reason and proper process. Violations lead to mandatory severance payments or even reinstatement orders
• Violation of Working Hours and Overtime Rules: The legal workweek is 48 hours. If employees work more, you must pay overtime—or face penalties
• Discrimination or Harassment: Discrimination based on gender, race, disability, etc., is illegal. Offenders face fines, lawsuits, and possibly criminal charges