Countries › Paraguay › Guide › 7. Labor and employment › Employing people in Paraguay: contracts, minimum wage, IPS contributions, leave, dismissal and the ten year stability rule

Employing people in Paraguay: contracts, minimum wage, IPS contributions, leave, dismissal and the ten year stability rule

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

Paraguay's Labor Code of 1993, amended in 1995, gives employers a predictable, formula based regime: written contracts above the minimum wage, probation of up to 60 days, a 48 hour week with a 50 percent overtime premium, a 13th month aguinaldo and 12 to 30 business days of vacation. The minimum wage is PYG 3,044,000 a month from 1 July 2026, and social security (IPS) costs the employer 16.5 percent and the worker 9 percent of salary. Dismissal without cause costs notice of 30 to 90 days plus 15 daily wages per year of service, workers with ten years' service gain stability with double indemnity, and dismissal claims must be filed within 60 days.

USD figures use PYG 5,847.90 per US dollar, the Banco Central del Paraguay reference quotation for 27 October 2026 (latest published planilla on the verification date). Conversions are for orientation only.

Key facts

Minimum wage, monthly, unspecified activities, from 1 July 2026	3044000 PYGDecreto 6225/2026 art. 2; Res. MTESS 670/2026 art. 1, as of 2026-07-01 · in force
Minimum daily wage for day laborers (jornal), from 1 July 2026	117077 PYGDecreto 6225/2026 art. 2; Res. MTESS 670/2026 art. 1, as of 2026-07-01 · in force
Minimum hourly wage, part time, day hours, from 1 July 2026	14635 PYGRes. MTESS 670/2026 art. 2, as of 2026-07-01 · in force
Minimum wage increase from 1 July 2026	5 %Decreto 6225/2026 art. 1, as of 2026-07-01 · in force
Maximum ordinary weekly hours, day work	48 hoursCódigo del Trabajo art. 194 (Ley 496/1995), as of 2026-10-28 · in force
Maximum ordinary daily hours, day work	8 hoursCódigo del Trabajo art. 194 (Ley 496/1995), as of 2026-10-28 · in force
Minimum overtime premium, day hours	50 %Código del Trabajo art. 234, as of 2026-10-28 · in force
Night work premium over day rate	30 %Código del Trabajo art. 234, as of 2026-10-28 · in force
Maximum probation period, skilled workers	60 daysCódigo del Trabajo art. 58, as of 2026-10-28 · in force
Year end bonus (aguinaldo), share of annual remuneration	1/12 fractionCódigo del Trabajo art. 243, as of 2026-10-28 · in force
Minimum paid vacation, up to five years' service	12 business daysCódigo del Trabajo art. 218 (Ley 496/1995), as of 2026-10-28 · in force
Minimum paid vacation, over ten years' service	30 business daysCódigo del Trabajo art. 218 (Ley 496/1995), as of 2026-10-28 · in force
Employer social security contribution (IPS), total	16.5 %Decreto Ley 1860/1950 art. 17 b) (Ley 98/1992) 14% plus 2.5% (art. 17 bis, Ley 7446/2024), as of 2026-10-28 · in force
Employee social security contribution (IPS)	9 %Decreto Ley 1860/1950 art. 17 a) (Ley 98/1992), as of 2026-10-28 · in force
Paid maternity leave	18 weeksLey 5508/2015 art. 11 (Ley 7534/2025), as of 2026-10-28 · in force
Paid paternity leave, employer paid	14 daysLey 5508/2015 art. 13 b) (2 weeks), as of 2026-10-28 · in force
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
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
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
Minimum founders for a company union	20 workersCódigo del Trabajo art. 292, as of 2026-10-28 · in force

The rule

1. The employment contract and its form. An employment contract exists whenever a worker performs work or services for an employer under its direction or dependence and for pay, and the law presumes a contract between whoever gives work or uses a service and whoever provides it. A contract can be verbal or written, but it must be in writing whenever the pay agreed is above the legal minimum wage for the job; verbal contracts are allowed for domestic service, casual or temporary work of up to 90 days and small specific jobs. A written contract must state, among other items, the work and place, the amount, form and period of pay, and the length and split of the working day. Contracts are of fixed term, indefinite or for a specific job; fixed term and specific job contracts are exceptions allowed only when the work is accidental or temporary, and contracts for permanent or continuous work are treated as indefinite even if they state a term. A fixed term cannot exceed one year for manual workers (obreros) or five years for employees (empleados), and continuing to work after expiry without objection extends it tacitly. Contract documents are exempt from all taxes and either party may ask the Labor Directorate to register them.
Cost to do it: No registry fee or stamp tax: contract documents are tax exempt and registration with the Labor Directorate is optional (art. 45). Professional drafting fees are not set by law.
Example: A software firm hires an analyst at PYG 11,695,800 a month, above the PYG 3,044,000 minimum wage: the contract must be in writing (art. 43) and is indefinite unless the work is genuinely temporary. / A US$2,000 a month hire must have a written contract; a one year fixed term contract for a permanent role is treated as indefinite on expiry if the work continues.Ley Nº 213/1993 Código del Trabajo, as amended by Ley Nº 496/1995, Art. 17, 19, 43, 44, 45, 46, 48, 49 and 50 (art. 17 as amended by Ley 496/1995 art. 1), 1993-06-29 official text · verified 2026-10-28

2. Probation period. Every contract starts with a probation period of at most 30 days for domestic staff and unskilled workers and 60 days for skilled workers and apprentices; for highly specialized technical workers the parties may agree a different period. Probation is paid and counts toward seniority, there is no new probation if the same parties sign a new contract for the same kind of work, and during probation either party can end the contract without liability: the worker has all benefits except notice and dismissal indemnity.
Cost to do it: Ending the contract during probation costs only pay earned plus proportional aguinaldo and vacation; no notice or indemnity is due (art. 60).
Example: A skilled hire at PYG 6,088,000 a month is let go on day 50: no notice and no indemnity, only salary for the days worked and the proportional aguinaldo. / A skilled hire at about US$1,040 a month dismissed within 60 days costs only accrued pay and proportional bonus.Ley Nº 213/1993 Código del Trabajo, Art. 58, 59 and 60, 1993-06-29 official text · verified 2026-10-28

3. Working hours, overtime and night work. Ordinary effective working time cannot exceed 8 hours a day or 48 hours a week for day work (6:00 to 20:00) and 7 hours a day or 42 hours a week for night work (20:00 to 6:00); a mixed shift is capped at 7.5 hours a day or 45 a week. Unhealthy, dangerous or rotating shift work is capped at 6 hours a day and 36 a week paid as an 8 hour day. Overtime is paid with at least a 50 percent premium on the ordinary rate, night work with a 30 percent premium over day work, night overtime with a 100 percent premium on the night hourly rate and work on public holidays with a 100 percent premium. A worker is only obliged to work overtime in the cases the Code lists (accidents, urgent repairs, temporary urgent demand, exceptional needs). Fines for forcing work beyond legal hours are set in minimum daily wages (jornales mínimos) per worker affected.
Cost to do it: Overtime: hourly rate x 1.5 by day, night hourly rate x 2 at night; holiday hours at x 2.
Example: Monthly salary PYG 11,695,800: daily wage PYG 389,860 (divided by 30) and day hourly rate PYG 48,733 (divided by 8, per Res. MTESS 670/2026 method). Ten day overtime hours cost PYG 730,988. / On US$2,000 a month, ten daytime overtime hours cost about US$125.Ley Nº 213/1993 Código del Trabajo, as amended by Ley Nº 496/1995, Art. 194, 195, 196 and 198 (as amended by Ley 496/1995 art. 1), 202 and 234; fines art. 386 and 387, 1995-08-22 official text · verified 2026-10-28

4. National minimum wage. Decreto Nº 6225 of 17 June 2026 raised private sector minimum wages by 5 percent over the amounts of Decreto Nº 4122/2025 from 1 July 2026, setting the legal minimum for unspecified activities at PYG 3,044,000 a month and PYG 117,077 a day for day laborers (jornaleros). Resolución MTESS Nº 670/2026 adds the derived values: PYG 101,467 daily and PYG 12,683 hourly for monthly paid workers, a night shift monthly minimum of PYG 3,957,200 (the 30 percent night premium), and PYG 14,635 per day hour for part time work. Daily pay for monthly workers is the monthly figure divided by 30; the day laborer rate is the monthly figure divided by 26. Separate higher minimums apply to specified activities and graded professions listed in the resolution's annex. Under the Code, the minimum wage is proposed by the tripartite Consejo Nacional de Salarios Mínimos (CONASAM) and automatically raises any contract that agreed less.
Cost to do it: Floor of PYG 3,044,000 a month per full time worker before employer IPS of 16.5 percent (PYG 502,260).
Example: Minimum wage worker: gross PYG 3,044,000, worker IPS 9 percent PYG 273,960, net PYG 2,770,040; employer cost PYG 3,546,260 a month. / About US$521 gross, US$474 net, and about US$606 total monthly employer cost.Decreto Nº 6225/2026 and Resolución MTESS Nº 670/2026; Ley Nº 213/1993 Código del Trabajo, Decreto 6225/2026 art. 1 and 2; Res. MTESS 670/2026 art. 1 and 2; Código del Trabajo art. 228, 252 (as amended by Ley 2199/2003 art. 4) and 259, 2026-06-17 official text · verified 2026-10-28 · changed: From 1 July 2026 the monthly minimum wage rose 5 percent to PYG 3,044,000 (Decreto 6225/2026), replacing the PYG 2,899,048 set by Decreto 4122 of 27 June 2025.

5. Year end bonus (aguinaldo). Every worker earns an annual complementary payment equal to one twelfth of all remuneration accrued in the calendar year (salary, overtime, commissions and other items), payable before 31 December or when the job ends if earlier. A worker who leaves, by resignation or dismissal, receives the proportional aguinaldo on top of any indemnity. The aguinaldo cannot be garnished. The family allowance of 5 percent of the minimum wage per child does not count toward the aguinaldo.
Cost to do it: In effect a 13th month: one twelfth of annual pay.
Example: A worker paid PYG 11,695,800 every month of 2026 plus PYG 2,000,000 of overtime receives an aguinaldo of PYG 11,862,467 by 31 December 2026. / On US$2,000 a month with no extras: a US$2,000 aguinaldo before year end.Ley Nº 213/1993 Código del Trabajo, Art. 243, 244, 245, 261 and 268, 1993-06-29 official text · verified 2026-10-28

6. Paid annual vacation. After each year of continuous service with the same employer, the minimum paid vacation is 12 business days for up to five years of seniority, 18 business days for more than five and up to ten years, and 30 business days for more than ten years (counted as business days since Ley 496/1995). Vacation starts on a Monday and is paid in advance. The employer sets the dates within six months after the right arises and gives 15 days' written notice; vacation granted late is paid double, vacation may be accumulated for two years only at the worker's request, and unused vacation is paid in cash on termination (double when owed because of dismissal after the period to take it). Employers must keep a vacation register; without it, the law presumes vacation was not granted.
Cost to do it: Paid time off of 12 to 30 business days a year; double pay if granted late (art. 223).
Example: A worker with three years' service at PYG 11,695,800 who is dismissed with 12 days of earned but unused vacation after the six month window is owed double compensation for those days. / Unused vacation owed on a dismissal after the window costs twice the normal vacation pay.Ley Nº 213/1993 Código del Trabajo, as amended by Ley Nº 496/1995, Art. 218 (as amended by Ley 496/1995 art. 1), 220, 221, 222, 223, 224 and 226, 1995-08-22 official text · verified 2026-10-28

7. Social security (IPS). Private sector employees must be registered by the employer with the Instituto de Previsión Social (IPS). The statutory monthly contribution is 9 percent of salary from the worker and 14 percent from the employer under the IPS charter as amended by Ley 98/1992, plus an additional 2.5 percent employer contribution that IPS collects for the Health Ministry and the Labor Ministry, for a total employer rate of 16.5 percent according to the Labor Ministry's social security guide. Ley 7446/2024 incorporated article 17 bis on that 2.5 percent, reallocates it gradually to the IPS sickness and maternity fund over five years and sets the sickness and maternity fund at 12 percent and administration at 1 percent of the contribution base. Contributions are declared on a monthly payroll filing and paid by the 1st to the 10th of the following month, with surcharges for late payment; the employer withholds and pays the worker's share.
Cost to do it: Employer 16.5 percent and worker 9 percent of salary: 25.5 percent in total.
Example: Salary PYG 11,695,800: employer IPS PYG 1,929,807 and worker IPS PYG 1,052,622 a month; monthly employer cost PYG 13,625,607 before aguinaldo. / On US$2,000 a month: US$330 employer and US$180 worker contribution; employer cost US$2,330 a month.Decreto Ley Nº 1860/1950 approved by Ley Nº 375/1956, art. 17 as amended by Ley Nº 98/1992; Ley Nº 7446/2024; MTESS social security guide, Decreto Ley 1860/1950 art. 17 a) and b) (Ley 98/1992 art. 2), art. 17 bis and 24 (Ley 7446/2024 art. 7, 8 and 9), 1992-12-03 official text · verified 2026-10-28 · changed: Ley 7446/2024, promulgated and published 30 December 2024, added art. 17 bis on the 2.5 percent employer contribution, reallocated it to the IPS sickness and maternity fund in 0.5 point annual steps over five years, cut administration funding to 1 percent and lengthened the pension reference period from 36 to 120 months.

8. Maternity and paternity leave. Every female worker, whatever her contract, is entitled to 18 uninterrupted weeks of maternity leave on presentation of an IPS or Health Ministry certificate, and may start it two weeks before birth; since Ley 7534/2025 the leave is 24 weeks for births before week 35, babies under 2,000 grams or needing special care, and one more month per child from the second child in multiple births. IPS pays a subsidy of 100 percent of pay; if the employer did not register the worker or is in arrears with IPS, the employer pays the full subsidy. Fathers get 2 weeks of paid paternity leave after the birth, paid by the employer and not waivable. Mothers also get a daily 90 minute breastfeeding permit during the first six months after returning.
Cost to do it: Maternity: no salary cost for a registered and up to date employer (IPS pays 100 percent). Paternity: two weeks of salary paid by the employer.
Example: A father earning PYG 11,695,800 a month takes 14 days of paternity leave: the employer pays about PYG 5,458,040 for the period. / Paternity leave on US$2,000 a month costs the employer about US$933.Ley Nº 5508/2015 Promoción, protección de la maternidad y apoyo a la lactancia materna, as amended by Ley Nº 6453/2019 and Ley Nº 7534/2025, Art. 11 (as amended by Ley 7534/2025), 12, 13 b) and 14, 2025-09-19 official text · verified 2026-10-28 · changed: Ley 7534/2025, promulgated 19 September 2025 and published 23 September 2025, rewrote art. 11 to add 24 week leave for premature or low weight births and extra time for multiple births.

9. Notice and dismissal indemnity. To end an indefinite contract either party must give notice of 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) or 90 days (over ten years), proved in writing; during notice the dismissed worker gets two paid hours a day or one day a week to look for work. An employer that skips notice pays salary for the notice period; a worker who resigns without notice owes half. Dismissal without just cause, with or without notice, also costs an indemnity of 15 daily wages for each year of service or fraction over six months, on the average pay of the last six months. Just causes for dismissal without liability are listed in the Code (for example fraud in references, theft, violence, intentional damage, disclosing secrets, drunkenness at work, sexual harassment). Early dismissal in a fixed term contract is compensated up to the pay due until the term ends. On any termination the employer must give a free certificate of service.
Cost to do it: 15 daily wages per year of service or fraction over six months, plus 30 to 90 days of salary if notice is not given, plus proportional aguinaldo and vacation.
Example: Five years and eight months of service at PYG 11,695,800 (daily wage PYG 389,860): 6 periods x 15 = 90 daily wages, PYG 35,087,400, plus PYG 23,391,600 for 60 days' notice if not worked: PYG 58,479,000 before aguinaldo and vacation. / Same case on US$2,000 a month: about US$6,000 indemnity plus US$4,000 in lieu of notice, US$10,000 in total.Ley Nº 213/1993 Código del Trabajo, as amended by Ley Nº 496/1995, Art. 81, 83, 84, 87, 88, 89, 90, 91 (as amended by Ley 496/1995 art. 1), 92 and 93, 1995-08-22 official text · verified 2026-10-28

10. Job stability after ten years. A worker who completes ten uninterrupted years with the same employer gains job stability and can then be dismissed only if the employer first proves a legal just cause before the labor judge (the worker is suspended while the case runs), if the worker opts for double indemnity instead of reinstatement, or on retirement. If a reinstatement order cannot be carried out because of proven incompatibility, the employer pays double the unjustified dismissal indemnity for the worker's seniority.
Cost to do it: Double indemnity: 30 daily wages per year of service where reinstatement is not feasible.
Example: Twelve years of service at PYG 11,695,800: double indemnity of 360 daily wages, PYG 140,349,600, plus 90 days' notice pay if not given. / Twelve years on US$2,000 a month: about US$24,000 of double indemnity before notice pay.Ley Nº 213/1993 Código del Trabajo, Art. 94, 95 and 97, 1993-06-29 official text · verified 2026-10-28

11. Unions and claim deadlines. Workers and employers may form unions without prior authorization. A company union needs at least 20 founding workers, a trade union 30 and an industry union 300; employers' unions need three members. Union leaders enjoy stability and can only be dismissed with prior proof of just cause, and a judge orders their reinstatement within 48 hours as an interim measure if it is violated. Labor claims prescribe after one year in general, but claims for missing notice and for unjustified dismissal indemnity prescribe after only 60 days from the dismissal; an employer that does not act within 30 days of learning of a just cause loses the right to dismiss for it.
Cost to do it: No fee to form a union; the cost risk for employers is the 60 day window in which dismissed workers can sue.
Example: A worker dismissed on 2 November 2026 who has not sued for indemnity or notice pay by early January 2027 (60 days) loses those claims; other claims run for one year. / The 60 day limit applies whatever the amount, whether a US$1,000 or US$100,000 claim.Ley Nº 213/1993 Código del Trabajo, as amended by Ley Nº 496/1995, Art. 283 and 318 to 321 (as amended by Ley 496/1995 art. 1), 292, 320, 399, 400 and 401, 1995-08-22 official text · verified 2026-10-28

Length of service	Notice (or pay in lieu)	Indemnity if dismissed without cause	Minimum paid vacation
Probation (30 or 60 days)	None	None	Proportional only
After probation up to 1 year	30 days	15 daily wages if over six months	12 business days after one year
Over 1 and up to 5 years	45 days	15 daily wages per year	12 business days
Over 5 and up to 10 years	60 days	15 daily wages per year	18 business days
Over 10 years	90 days	Stability: dismissal only for proven just cause; 30 daily wages per year if reinstatement fails	30 business days

Notice, indemnity and vacation by length of service (Código del Trabajo art. 87, 91 and 218 as amended by Ley 496/1995; read on 28 October 2026). Indemnity counts each full year plus any fraction over six months.

Item	Minimum wage worker	Worker on PYG 11,695,800
Gross salary	PYG 3,044,000 (US$521)	PYG 11,695,800 (US$2,000)
Employer IPS 16.5 percent	PYG 502,260 (US$86)	PYG 1,929,807 (US$330)
Worker IPS 9 percent (withheld)	PYG 273,960 (US$47)	PYG 1,052,622 (US$180)
Net pay to worker before any IRP	PYG 2,770,040 (US$474)	PYG 10,643,178 (US$1,820)
Employer cost per month before aguinaldo	PYG 3,546,260 (US$606)	PYG 13,625,607 (US$2,330)
Aguinaldo accrual (one twelfth)	PYG 253,667 a month	PYG 974,650 a month

Monthly cost of one employee at two pay levels (Decreto 6225/2026, Res. MTESS 670/2026, Ley 98/1992, MTESS guide; PYG 5,847.90 per US$).

Worked example

A Brazilian group sets up a Paraguayan S.A. and hires a sales manager on 1 March 2021 at PYG 11,695,800 a month (US$2,000). The written contract is indefinite and sets 8 hour days and a 48 hour week (Código del Trabajo art. 43, 46 and 194).
Each month the S.A. pays the salary, withholds 9 percent worker IPS (PYG 1,052,622) and pays it with its own 16.5 percent (PYG 1,929,807) to IPS by the 10th of the next month: employer cost PYG 13,625,607 (US$2,330). Each December it pays the aguinaldo of one twelfth of the year's pay, PYG 11,695,800 if pay was flat (art. 243).
On 1 November 2026, after five years and eight months, the S.A. dismisses the manager without cause and without working notice. It owes 90 daily wages of indemnity (six periods of 15, the eight month fraction counting as a year), PYG 35,087,400 (US$6,000), plus 60 days' salary in lieu of notice, PYG 23,391,600 (US$4,000), plus the proportional 2026 aguinaldo and any unused vacation (art. 87, 90, 91, 244 and 221).
The manager has 60 days from the dismissal to sue for indemnity and notice pay, and one year for other claims (art. 399 and 400). Had the manager reached ten years' service, the S.A. could only dismiss after proving a just cause in court, or pay double indemnity if reinstatement proved unworkable (art. 94 and 97).

Step by step

Before the first hire, have the company set up and registered with the tax authority (see Choosing an entity for company setup), and arrange its IPS employer access so contributions can be filed and paid.
Sign a written contract for any pay above the minimum wage, stating work, place, pay, hours and benefits; use fixed term or specific job contracts only for genuinely temporary work (art. 43, 46, 49 and 50).
Register each worker with IPS from the start of work; the employer files the registration (MTESS social security guide).
Check the applicable minimum: the PYG 3,044,000 general minimum or the higher specified activity and professional minimums in the annex of Res. MTESS 670/2026; pay night work at a 30 percent premium.
Run payroll monthly: give each worker a signed pay slip showing base pay, extras and deductions (art. 235), file the IPS payroll and pay contributions by the 10th of the following month.
Keep the vacation register, schedule vacation within six months of accrual with 15 days' written notice and pay it in advance (art. 220, 222 and 226).
Pay the aguinaldo before 31 December, or with the final settlement on termination (art. 243 and 244).
On dismissal, give written notice or pay in lieu, pay indemnity if there is no just cause, settle proportional aguinaldo and vacation and issue the certificate of service (art. 87 to 93). Act within 30 days of learning of a just cause (art. 401).

Common traps

Severance is not capped: indemnity of 15 daily wages per year runs for the whole career, and each fraction of service over six months counts as a full year (art. 91 as amended by Ley 496/1995).
The ten year stability rule is a cliff: after ten uninterrupted years a worker can only be dismissed for just cause proved in court, and if reinstatement is unworkable the indemnity doubles (art. 94, 95 and 97). Plan workforce reviews before that milestone.
Calling a permanent role fixed term does not work: contracts for permanent or continuous work are treated as indefinite on expiry, with seniority from the first day (art. 50).
Vacation is counted in business days, not calendar days, since Ley 496/1995; some published versions of the Code, including the DNIT copy, still show the 1993 calendar day and fraction of six months wording.
Granting vacation late costs double pay, and with no vacation register the law presumes vacation was never granted (art. 223 and 226).
If a worker is not registered with IPS or contributions are in arrears, the employer must pay the full maternity subsidy itself (Ley 5508/2015 art. 12).
Just cause must be used quickly: an employer that waits more than 30 days after learning of the misconduct loses the right to dismiss for it (art. 401).
Pay above the minimum wage requires a written contract; without one the worker's account of the relationship is presumed true unless disproved (art. 43 and 48).

Sources

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