How To Pay Your Employees In Paraguay

Paraguay has become an attractive destination for not only investments but for businesses to operate in. There are great tax incentives that draw in investors from other countries.

But, when it comes to starting a business in a new country, there are many challenges you have to overcome and one that is most important is understanding how to pay your employees.

Paying employees

The laws that guide the way employees are pay are the Labour Code, Law 213/93, modified and partially updated by Law 496/95. The Labour Procedural Code, Law 742/61 and special laws are applied to legal matters regarding pay. These laws cover all matters related to labour and the relationship between employers and employees in Paraguay. Paying employees in Paraguay depends on the type of economic activity that the company performs since there are more than 70 laws and regulation decrees. With this many variables, it is important to have local knowledge before paying employees.

The standard work week in Paraguay is 48 hours for daily work and 42 hours for overnight work. There is overtime compensation paid for excess work with 50% paid for daytime overtime, 30% for overnight work, 100% for overnight overtime and 100% for public holidays. Employees are paid in the official currency of Paraguay, the Paraguayan guaraní (PYG). The national minimum is 2.11 million guaraníes per month (approximately $352). Wage growth in Paraguay is typically slow for most employees. Workers who are terminated without cause are entitled to 15 days of wages for each year worked. Employees that have worked for 10 years with the same employer have tenure are not allowed to be dismissed for unjust reasons.

Social Security

Employees in Paraguay contribute 9% monthly to Social Security (called IPS, in Spanish) while their employers contribute 16.5% of their gross salaries. The IPS is in charge of social security, medical services, retirement and pensions. Medical services extend to the employees' families...