Countries › Paraguay › Guide › 7. Labor and employment › Outsourcing, contractors and labor intermediaries in Paraguay: when the client is the employer

Outsourcing, contractors and labor intermediaries in Paraguay: when the client is the employer

Argentina. For full detail on Argentina, go to The Argentine Thread.

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

Paraguay has no dedicated outsourcing statute: the Labor Code decides by substance. A labor intermediary that hires people to work for a client, using the client's premises or equipment in the client's ordinary activities, acts as the client's representative and is jointly liable with it unless it discloses that it acts for the client. A genuine contractor that bears the risk, uses its own means and has managerial and technical autonomy, or does work outside the client's normal activities, is the employer, and an individual contractor working under orders, on fixed hours and for regular pay is presumed an employee.

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

Dedicated outsourcing or staffing agency statute	none found; Labor Code art. 25 and 26 apply textCódigo del Trabajo art. 25 and 26, as of 2026-10-28 · in force
Joint liability of an intermediary that does not disclose the employer	yes booleanCódigo del Trabajo art. 25, as of 2026-10-28 · in force
Employment presumed where subordinated work exists	yes booleanCódigo del Trabajo art. 19 and 48, as of 2026-10-28 · in force

The rule

1. Intermediaries. Intermediaries are people who hire the services of others to do work for an employer, even when they appear as independent businesses organizing certain workers, where the work uses the employer's premises, equipment, materials or other elements for its benefit and in its ordinary, inherent or connected activities. Intermediaries are treated as representatives of the employer and bind it towards the workers. Every intermediary must state its capacity and the name of the employer it acts for when hiring; otherwise it is jointly and severally liable with the employer for the legal and contractual obligations.
Cost to do it: Client bears the labor obligations of workers supplied through an intermediary.
Example: A labor agency supplying 10 drivers who drive the client's trucks on the client's routes leaves the client exposed to their pay, IPS and severance, for example PYG 50,000,000 a month in wages. / About US$8,520 a month.Ley Nº 213/1993 Código del Trabajo, Art. 25, 1993-06-29 official text · verified 2026-10-28

2. Genuine contractors are employers. Individuals or companies that perform work for others under a contract are not intermediaries but employers when they assume all the risks of doing it, with their own elements and managerial and technical autonomy, or when the work is outside the normal activities of whoever commissions it. If a worker, by agreement or custom, must bring an assistant, the worker's employer is also the assistant's employer, with the employer's prior consent.
Cost to do it: Contractor's own payroll; the client pays only the contract price.
Example: A cleaning company with its own staff, supervisors, products and equipment servicing an office building is the employer of its cleaners. / Same.Ley Nº 213/1993 Código del Trabajo, as amended by Ley Nº 496/1995, Art. 26 and 21 (as amended by Ley 496/1995 art. 1), 1995-08-22 official text · verified 2026-10-28

3. Employment is presumed. A contract is presumed between whoever gives work or uses a service and whoever provides it; without a written contract the employment relationship alleged by the worker is presumed if there is subordinated work, unless disproved. The MTESS social security guide lists the indicators of dependent work (hierarchical subordination, integration in the organization, attendance records, schedule and workplace set by the employer, equipment supplied, regular pay as main income, paid rest and vacation, no financial risk) against independent work (no subordination, free schedule and place, own tools, fees against invoices, own economic risk), and warns that disguised employment deprives workers of protection. Only executives with notorious independence are outside the Code.
Cost to do it: If reclassified: back IPS contributions (25.5 percent of pay), aguinaldo, vacation and severance.
Example: A freelancer billed PYG 5,000,000 a month for two years under fixed hours and supervision could trigger about PYG 30,600,000 in IPS contributions for the period, plus benefits. / About US$5,214 in contributions.Ley Nº 213/1993 Código del Trabajo, as amended by Ley Nº 496/1995, Art. 17 (as amended by Ley 496/1995 art. 1), 19, 23 and 48; MTESS guide section 2.4.3, 1995-08-22 official text · verified 2026-10-28

4. Team contracts. An employer may contract a group of workers to do a joint job for a global salary; the employer has rights and duties towards each member only if so agreed, a member who leaves early gets the proportional share, and the group leader acts as manager of the group's affairs, needs written authority to collect and share the global salary and must distribute it once collected.
Cost to do it: Global price paid to the team; share of pay to departing members.
Example: A crew of five installers hired for a global PYG 30,000,000 must have written authority for the leader to collect and split the pay. / About US$5,112 for the crew.Ley Nº 213/1993 Código del Trabajo, Art. 53, 54 and 55, 1993-06-29 official text · verified 2026-10-28

5. Social security consequences. The employer of record must register workers with IPS and pay contributions; if an employer has not registered a worker, IPS still provides work accident benefits and claims the amounts from the employer, and inspectors who confirm a complaint register the worker ex officio.
Cost to do it: Unpaid contributions, surcharges and reimbursement of IPS benefits.
Example: A contractor's unregistered worker injured on site is treated by IPS, which then pursues the employer of record. / Same.MTESS social security guide; Decreto Ley Nº 1860/1950 art. 48 and 49, MTESS guide sections 2.6 and 4.8.3, 1950-12-01 official text · verified 2026-10-28

Indicator	Points to intermediary (client is employer)	Points to contractor (contractor is employer)
Premises, equipment, materials	Client's	Contractor's own
Activity	Client's ordinary, inherent or connected activities	Outside client's normal activities, or a defined job
Risk	Client bears the business risk	Contractor assumes all risks
Direction	Client directs the work	Contractor has managerial and technical autonomy
Disclosure	Intermediary must name the client or is jointly liable	Not applicable

Intermediary or contractor? (Código del Trabajo art. 25 and 26 as amended by Ley 496/1995; MTESS guide section 2.4.3)

Worked example

An Argentine retailer opening in Ciudad del Este considers staffing its stores through a local agency that would hire 12 cashiers at PYG 5,000,000 each.
The cashiers would work in the retailer's stores, with its tills and under its managers, in its core activity: the agency is an intermediary, so the retailer is the employer in law and is jointly liable if the agency did not disclose that it acts for the retailer (Código del Trabajo art. 25).
By contrast, outsourcing security to a guard company with its own guards, supervisors, equipment and licences is more likely a genuine contract, with the guard company as employer (art. 26).
The retailer hires cashiers directly and outsources only security and cleaning, checking each provider's IPS payment receipts monthly.

Step by step

Map each outsourced service against art. 25 and 26: whose premises, tools, direction and risk.
Require providers to show IPS registration and monthly payment receipts for workers assigned to you.
Put disclosure, indemnity and audit clauses in service contracts; they do not remove statutory liability but help recovery.
Engage individual consultants only for genuinely independent work, invoiced, without fixed hours or supervision.

Common traps

There is no safe harbor: staffing core activities through an agency leaves the client as employer in substance (art. 25).
Long term freelancers on fixed hours are presumed employees, with back IPS and severance exposure (art. 19 and 48).
Ley 496/1995 rewrote art. 26; the DNIT copy of the Code shows the 1993 wording.

Sources

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