Countries › Paraguay › Guide › 15. Exiting › Closing down with employees: closure notice, severance and stable workers

Closing down with employees: closure notice, severance and stable workers

Last verified: 2026-10-28 · Status: Stable

A total closure or definitive downsizing ends employment contracts only after written notice to the labor authority, which hears the workers before ruling; skip the notice and every worker is owed full dismissal severance whatever their seniority. Workers with ten years or more have job stability and are owed double severance on a verified closure. Reopening a similar business within a year means rehiring the same people or paying them severance.

USD figures use PYG 5,868.31 per US dollar, the Banco Central del Paraguay reference quotation for 28 October 2026 (bcp.gov.py cotización referencial). Minimum wage figures use Resolución MTESS 670/2026: monthly PYG 3,044,000, daily for monthly paid workers PYG 101,467 and daily minimum wage (jornal) PYG 117,077, from 1 July 2026. Conversions are for orientation only.

Key facts

Severance for unjustified dismissal (daily wages per year or fraction over six months)	15 daysCódigo del Trabajo art. 91 (Ley 496/1995), as of 2026-10-28 · in force
Severance multiplier on closure for workers with 10+ years	2 xCódigo del Trabajo art. 94 and 99, as of 2026-10-28 · in force
Years of uninterrupted service for job stability	10 yearsCódigo del Trabajo art. 94, as of 2026-10-28 · in force
Window in which reopening a similar business triggers rehiring or severance	1 yearCódigo del Trabajo art. 80, as of 2026-10-28 · in force
Minimum monthly wage	3044000 PYGRes. MTESS 670/2026, as of 2026-10-28 · in force

The rule

1. Closure needs prior written notice to the labor authority. Total closure of the company or definitive reduction of operations is a cause of termination only after written communication to the labor administrative authority, which gives the workers a summary hearing before issuing its resolution.
Cost to do it: No fee stated in the Code; legal and filing work is market priced.
Example: A plant closing on 31 August files the written notice with the Ministry of Labor well before that date so the resolution can issue. / Not a cash cost when done in time.Ley Nº 213/1993 Código del Trabajo, Art. 78 h), 1993-06-29 official text · verified 2026-10-28

2. No notice, full severance. If the closure notice is omitted, the employer must pay every worker the art. 91 severance whatever their seniority. If the employer opens a similar business within one year, directly or through another person, it must rehire the same workers or pay them art. 91 severance.
Cost to do it: Art. 91 severance per worker.
Example: Worker on PYG 6,000,000 a month with eight years (or seven years and seven months): 15 x 8 = 120 daily wages = PYG 24,000,000. / About US$4,090.Ley Nº 213/1993 Código del Trabajo, Art. 80, 1993-06-29 official text · verified 2026-10-28

3. Severance amount and base. Severance for dismissal without cause is fifteen daily wages per year of service or fraction over six months, computed on the average wage of the last six months (or the shorter period worked). Severance and notice payments cannot be set off, sold, assigned or attached, except half for maintenance orders.
Cost to do it: Per worker: 15 daily wages x years (fraction over six months counts as a year).
Example: Daily wage = PYG 6,000,000 / 30 = PYG 200,000; eight years = PYG 24,000,000. / About US$4,090.Ley Nº 213/1993 Código del Trabajo, art. 91 as amended by Ley Nº 496/1995, Art. 91 and 92, 1995-08-22 official text · verified 2026-10-28

4. Stable workers get double. A worker with ten uninterrupted years with the same employer acquires job stability. On total closure or definitive reduction of operations verified by the labor authority, the stable worker is owed double the severance for unjustified dismissal.
Cost to do it: Twice art. 91 severance for each stable worker.
Example: Same wage, twelve years: 2 x 15 x 12 = 360 daily wages = PYG 72,000,000. / About US$12,269.Ley Nº 213/1993 Código del Trabajo, Art. 94 and 99, 1993-06-29 official text · verified 2026-10-28

5. Bankruptcy, extractive exhaustion, force majeure. Bankruptcy of the employer or judicial liquidation (unless the trustee continues the business), exhaustion of an extractive industry and death or incapacity of the employer that forces the end of work give workers one month of wages up to five years of seniority, two months over five to ten years and three months over ten years. The same scale applies to permanent force majeure where an insured employer chooses not to rebuild.
Cost to do it: One to three months of wages per worker.
Example: Bankruptcy of the employer: worker on PYG 6,000,000 with seven years receives two months, PYG 12,000,000. / About US$2,045.Ley Nº 213/1993 Código del Trabajo, Art. 78 d), f), g), i), 79 and 80, 1993-06-29 official text · verified 2026-10-28

6. Selling instead of closing keeps the contracts. A change of employer does not affect employment contracts; the former employer is jointly liable with the new one for obligations arising before the substitution for six months from it, after which only the new employer is liable.
Cost to do it: No severance on a sale of the business; six month joint liability for the seller.
Example: A buyer of the business keeps the 40 staff on existing terms; the seller remains jointly liable for back pay claims for six months. / Not a cash cost unless claims arise.Ley Nº 213/1993 Código del Trabajo, Art. 28, 1993-06-29 official text · verified 2026-10-28

7. Company unions end with the company. The dissolution and definitive closure of the company extinguishes its company union.
Cost to do it: No cost.
Example: On final closure, the company union's registration lapses with the company. / Not a cash cost.Ley Nº 213/1993 Código del Trabajo, Art. 310, 1993-06-29 official text · verified 2026-10-28

Route	Worker with under 10 years	Worker with 10+ years (stable)
Closure with notice and resolution	Art. 80 sets no separate indemnity for this case	Double art. 91 severance (art. 99)
Closure without notice	Art. 91 severance whatever seniority	Art. 91 severance; double where art. 99 applies
Bankruptcy or judicial liquidation	1 month (to 5 years) or 2 months (over 5 to 10)	3 months
Sale of the business	Contract continues with buyer	Contract continues with buyer

What workers are owed by exit route (Código del Trabajo)

Worked example

Closure of a 20 person operation, all on PYG 6,000,000 a month: five stable workers with twelve years cost PYG 360,000,000 (about US$61,346) in double severance.

Step by step

Count seniority per worker and flag those at or near ten years.
File the written closure notice with the labor authority and attend the summary hearing.
Pay severance and all accrued wages and benefits, and give each worker the free signed certificate of service required by art. 93.
Settle IPS contributions to the last day worked.
Do not open a similar business within one year without rehiring or paying severance.

Common traps

Skipping the closure notice converts every termination into full severance.
Dismissing a worker in the six months before reaching stability to avoid it is abuse of right and a judge may order reinstatement (art. 102).
Severance is computed on the six month average, so recent raises and overtime increase it.
Payments above the legal minimum severance are not IRP exempt (Ley 6380 art. 56 num. 6).

Sources

← Closing with the tax authority: cessation notice, closing returns and RUC cancellationInsolvency: creditors' arrangement (convocatoria) and bankruptcy (quiebra) →

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