Countries › Paraguay › Guide › 7. Labor and employment › Dismissal and severance in Paraguay: notice, 15 days' pay per year, just causes, closures and the ten year stability rule

Dismissal and severance in Paraguay: notice, 15 days' pay per year, just causes, closures and the ten year stability rule

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

An indefinite contract can be ended without cause by giving 30 to 90 days' notice (or paying it) plus an indemnity of 15 daily wages per year of service or fraction over six months, with no cap. Dismissal for one of the just causes listed in the Code costs nothing beyond accrued pay, but the cause must be used within 30 days and, if not proved in court, adds up to a year's salary. Workers with ten years' service, pregnant women and new mothers, and union leaders can only be removed through prior court proof or not at all, and closures must be notified to the labor ministry first; dismissal claims lapse after 60 days.

USD figures use PYG 5,868.31 per US dollar, the Banco Central del Paraguay reference quotation in the planilla for Wednesday 28 October 2026. Conversions are for orientation only.

Key facts

Dismissal indemnity per year of service or fraction over six months	15 daily wagesCódigo del Trabajo art. 91 (Ley 496/1995), as of 2026-10-28 · in force
Cap on dismissal indemnity	none textCódigo del Trabajo art. 91 (Ley 496/1995), as of 2026-10-28 · in force
Indemnity base: average pay of the last	6 monthsCódigo del Trabajo art. 92 b, as of 2026-10-28 · in force
Minimum statutory notice (up to one year of service)	30 daysCódigo del Trabajo art. 87, as of 2026-10-28 · in force
Maximum statutory notice (over ten years of service)	90 daysCódigo del Trabajo art. 87, as of 2026-10-28 · in force
Years of service for job stability	10 yearsCódigo del Trabajo art. 94, as of 2026-10-28 · in force
Indemnity multiplier for stable workers when reinstatement fails or the workplace closes	2 xCódigo del Trabajo art. 97 to 99, as of 2026-10-28 · in force
Days to act after learning of a just cause	30 daysCódigo del Trabajo art. 401, as of 2026-10-28 · in force
Maximum extra salary if an alleged just cause is not proved	12 monthsCódigo del Trabajo art. 82, as of 2026-10-28 · in force
Deadline to claim dismissal indemnity or notice pay	60 daysCódigo del Trabajo art. 400, as of 2026-10-28 · in force
General prescription of labor claims	1 yearsCódigo del Trabajo art. 399, as of 2026-10-28 · in force

The rule

1. Ways a contract ends. A contract ends by causes stated in it if lawful; mutual consent formalized before a notary, a labor authority representative, the secretary of the labor court on duty or two witnesses; death or incapacity of the worker; permanent force majeure; expiry of the term or completion of the work; death or incapacity of the employer, bankruptcy or judicial liquidation where work cannot continue; total closure or permanent reduction of operations after written notice to the labor authority; exhaustion of an extractive activity; dismissal with just cause; justified resignation; or a decision of a competent authority. Expiry, mutual consent and contractual causes end the contract with no liability for either side.
Cost to do it: Mutual termination: no indemnity required by law, only accrued pay; formalities cost a notary fee if a notary is used.
Example: A negotiated exit signed before two witnesses or at MTESS is valid without indemnity, though in practice a payment is agreed. / Same.Ley Nº 213/1993 Código del Trabajo, Art. 78 and 79, 1993-06-29 official text · verified 2026-10-28

2. Notice and pay in lieu. Neither party may end an indefinite contract without prior notice, except for just cause: 30 days after probation up to one year of service, 45 days over one and up to five years, 60 days over five and up to ten years and 90 days over ten years; seniority includes the notice period if worked. Notice may be given in any form but must be proved in writing or authentically, or through the labor authority. During notice the worker keeps full pay and gets two paid hours a day or one day a week to look for work, or may take the time in one block. An employer that does not give proper notice pays salary for the notice period; a worker who resigns without notice owes half the salary for that period.
Cost to do it: 30 to 90 days of salary if notice is not worked.
Example: Dismissing a worker with 3 years 7 months of service on PYG 6,000,000 without working notice: 45 days, PYG 9,000,000. / About US$1,534.Ley Nº 213/1993 Código del Trabajo, Art. 87, 88, 89 and 90, 1993-06-29 official text · verified 2026-10-28

3. Indemnity for dismissal without just cause. Dismissal without just cause, with or without notice, costs an indemnity of 15 daily wages for each year of service or fraction over six months, calculated on the average pay of the last six months (or the shorter period worked). Notice and indemnity are computed on at least the minimum wage for unspecified activities or on higher contractual pay, cannot be offset, sold or assigned, and can be garnished only up to half for child support. On the worker's death the heirs collect the indemnity on proof of relationship. Early dismissal under a fixed term contract is compensated by damages up to the pay due to the end of the term.
Cost to do it: 15 daily wages per year of service or fraction over six months, uncapped.
Example: 3 years 7 months on PYG 6,000,000 (daily PYG 200,000): 4 periods x 15 = 60 daily wages, PYG 12,000,000. / About US$2,045.Ley Nº 213/1993 Código del Trabajo, as amended by Ley Nº 496/1995, Art. 91 and 189 (as amended by Ley 496/1995 art. 1), 83 and 92, 1995-08-22 official text · verified 2026-10-28

4. Just causes and their limits. The employer may dismiss without notice or indemnity for listed causes, including false references, theft or crimes against property at work, violence, threats or insults, intentional or grossly negligent damage, immoral acts, disclosing secrets, endangering safety, drunkenness or drugs at work, a prison sentence, refusing safety measures, repeated disobedience of work rules, deliberate slowdowns, loss of confidence in a manager, unauthorized competition, joining a strike declared illegal, absence for three consecutive days or four times a month without cause, abandonment after a written demand to return within at least three days, repeated lateness after warning, sexual harassment and serious breaches of the contract or approved internal rules. If a just cause alleged by the employer is not proved in court, the worker also gets the salaries from the filing of the claim to final judgment, which the court may reduce on equity and which can never exceed one year's salary. The employer loses the right to dismiss for a cause not used within 30 days of learning of it.
Cost to do it: Nothing beyond accrued pay if proved; if not proved, notice and indemnity plus up to 12 months of salary.
Example: An unproved theft accusation against a worker on PYG 6,000,000 can add up to PYG 72,000,000 on top of notice and indemnity. / Up to about US$12,269 extra.Ley Nº 213/1993 Código del Trabajo, as amended by Ley Nº 496/1995, Art. 81 (letter w as amended by Ley 496/1995 art. 1), 82 and 401, 1995-08-22 official text · verified 2026-10-28

5. Resignation. A worker who resigns for one of the employer faults listed in the Code (unpaid salary, illegal pay cuts, violence or harassment, safety dangers, unilateral changes to the contract and others) is entitled to the same indemnity and notice pay as for unjustified dismissal. A worker who quits without cause and causes harm is liable for up to half the dismissal indemnity, and one who quits without notice owes half the notice salary.
Cost to do it: Constructive dismissal costs the same as an unjustified dismissal.
Example: A worker who resigns because salary was paid late repeatedly can claim PYG 21,000,000 in the 3 year 7 month case. / About US$3,579.Ley Nº 213/1993 Código del Trabajo, as amended by Ley Nº 496/1995, Art. 84 (letter d as amended by Ley 496/1995 art. 1), 85, 86 and 90, 1995-08-22 official text · verified 2026-10-28

6. Ten year stability. A worker who completes ten uninterrupted years with the same employer gains job stability and can only be dismissed if the employer first proves a legal just cause in court, during which the worker is suspended; if the cause is not proved, the worker is reinstated with back pay or may choose double indemnity plus notice pay. If reinstatement is unworkable because of proven incompatibility, the indemnity is double. Double indemnity is also due if the establishment, branch or agency where the stable worker works closes without proven force majeure, or on total closure or permanent reduction of operations verified by the labor authority. A stable worker who retires may be rehired without seniority indemnity and with 90 days' notice; one who resigns abruptly loses indemnity and owes the employer the equivalent of the ordinary indemnity.
Cost to do it: Double indemnity, 30 daily wages per year of service, if reinstatement fails or the workplace closes.
Example: A stable worker with 12 years on PYG 6,000,000: double indemnity of 12 x 30 = 360 daily wages, PYG 72,000,000, plus 90 days' notice PYG 18,000,000. / About US$12,269 plus US$3,067.Ley Nº 213/1993 Código del Trabajo, Art. 94, 95, 96, 97, 98, 99 and 100, 1993-06-29 official text · verified 2026-10-28

7. Suspensions and closures. Contracts may be suspended for listed causes, including lack of raw materials or power, lack of means of payment, overproduction, unprofitable operations or force majeure, with notice to the workers and the labor authority as early as possible and justification of the economic causes before it; a suspension outside the legal causes gives the right to reinstatement with back pay or counts as unjustified dismissal. Total closure or permanent reduction needs prior written notice to the labor authority, which hears the workers before deciding. In force majeure closures where an insured employer does not rebuild, and in closures for the employer's death, bankruptcy or exhaustion of an extractive activity, workers get one month of salary up to five years of service, two months over five and up to ten, and three months over ten. If the closure notice is omitted, the full art. 91 indemnity is owed whatever the seniority, and an employer that opens a similar business within a year must rehire the same workers or pay the art. 91 indemnity.
Cost to do it: One to three months of salary in closures; full indemnity if the labor authority was not notified.
Example: A plant closure without notice to MTESS for a worker with 3 years 7 months on PYG 6,000,000: art. 91 indemnity PYG 12,000,000 instead of one month PYG 6,000,000. / About US$2,045 instead of US$1,022.Ley Nº 213/1993 Código del Trabajo, as amended by Ley Nº 496/1995, Art. 71, 72, 74 (as amended by Ley 496/1995 art. 1), 78 h, 79 and 80, 1995-08-22 official text · verified 2026-10-28

8. Protected workers, final settlement and deadlines. Notice and dismissal of a pregnant worker from notice of pregnancy and during maternity and breastfeeding leave are void, and the mother cannot be dismissed until one year after birth or adoption. Union leaders, organizers, negotiators and candidates covered by union stability can only be dismissed after the employer proves just cause in court. On any termination the employer pays proportional aguinaldo and accrued vacation (double if the dismissal follows the enjoyment period) and gives a free certificate of dates, work and last pay. Worker credits for the last six months and termination indemnities are privileged in insolvency. Claims for dismissal indemnity or notice pay prescribe 60 days after the separation; other labor claims prescribe in one year.
Cost to do it: Proportional aguinaldo and vacation are always due.
Example: Final settlement in October for a worker on PYG 6,000,000: aguinaldo for ten months PYG 5,000,000 plus any accrued vacation. / About US$852 aguinaldo.Ley Nº 213/1993 Código del Trabajo; Ley Nº 5508/2015, Código del Trabajo art. 93, 221, 244, 247, 321 (Ley 496/1995), 399 and 400; Ley 5508/2015 art. 15, 1993-06-29 official text · verified 2026-10-28

Service	Notice (days)	Indemnity (daily wages)	Total PYG	Total USD
5 months (after probation)	30	0	6,000,000	1,022
8 months	30	15	9,000,000	1,534
3 years 7 months	45	60	21,000,000	3,579
7 years 2 months	60	105	33,000,000	5,623
9 years 11 months	60	150	42,000,000	7,157
12 years, stable, reinstatement fails	90	360	90,000,000	15,337

Cost of dismissal without cause on PYG 6,000,000 a month, daily wage PYG 200,000 (Código del Trabajo art. 87, 90, 91 and 97; notice not worked; excludes aguinaldo and vacation; USD at PYG 5,868.31)

Worked example

A Colombian services group restructures its Asunción office and dismisses an analyst hired on 1 March 2023, on PYG 6,000,000 a month (US$1,022), on 31 October 2026 without cause, paying notice instead of having it worked.
Service is 3 years and 8 months: the fraction over six months counts as a full year, so indemnity is 4 x 15 = 60 daily wages of PYG 200,000, PYG 12,000,000 (Código del Trabajo art. 91 and 92).
Notice for over one and up to five years is 45 days, PYG 9,000,000 in lieu (art. 87 and 90). Proportional 2026 aguinaldo for ten months adds PYG 5,000,000 (art. 244), plus any accrued vacation.
Total before vacation: PYG 26,000,000 (US$4,431). The analyst has 60 days to sue over indemnity or notice (art. 400).

Step by step

Check protections first: ten years' service, pregnancy or maternity within the last year, union stability (art. 94, 318 to 321; Ley 5508/2015 art. 15).
If relying on a just cause, document it and act within 30 days; consider the risk of up to a year's extra salary if it is not proved (art. 82 and 401).
Give written notice (or notice through MTESS) of 30 to 90 days, or plan to pay in lieu (art. 87, 88 and 90).
Compute indemnity on the six month average pay, rounding fractions over six months up to a year (art. 91 and 92).
Pay notice, indemnity, proportional aguinaldo and vacation, issue the certificate of service and deregister the worker from IPS (art. 93, 221 and 244).
For closures or collective reductions, notify the labor authority in writing before acting (art. 78 h and 80).

Common traps

Severance has no cap and runs for the whole career; long serving staff become expensive well before ten years.
The ten year stability cliff turns a severance cost into a court process and possible double indemnity (art. 94 to 99).
Alleging a just cause you cannot prove adds up to a year's salary on top of notice and indemnity (art. 82).
Skipping the written notice to MTESS on a closure converts the cheaper one to three months' payment into the full art. 91 indemnity (art. 80).
The DNIT copy of the Code shows the 1993 wording of art. 91 (fraction of six months); since Ley 496/1995 only fractions over six months count.

Sources

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