Paraguay Employment Guide

Minimum Wage Requirements in Paraguay

Effective July 1, 2023, Paraguay's national minimum wage stands at 2,798,309 PYG per month, equivalent to approximately 368 USD. This baseline compensation is crucial for employers to factor into their payroll planning when establishing operations in the country.

Personal Income Tax Structure

Paraguay employs a progressive income tax system, with rates ranging from 8% to 10% based on annual earnings calculated over the calendar year. The tax brackets are adjusted annually relative to the minimum wage. For instance, a multinational company like SailGlobal must apply these brackets when calculating withholdings for its employees based in Paraguay.

• Annual income up to 50,000,000 PYG: 8% tax rate
• Annual income between 50,000,000 PYG and 150,000,000 PYG: 9% tax rate
• Annual income exceeding 150,000,000 PYG: 10% tax rate

Employer Payroll Contributions and Costs

Beyond the gross salary, employers should anticipate additional payroll-related expenses averaging 16.5% of the employee's wage. These mandatory contributions include social security and family allowances, which are essential components of the total employment cost.

• Social Security (Instituto de Previsión Social): 16.5% of salary
• Family Allowance (Bonificación Familiar):
  • 139,915 PYG for employees earning less than 5,596,618 PYG monthly
  • Not applicable for employees earning above this threshold

Annual Additional Compensation:
13th Month Salary (Christmas Bonus): Equivalent to one month's pay
One-Time Hiring Expenses:
Medical Examination: Approximately 1,090,440 PYG (around 150 USD)

These figures serve as general guidelines. For precise calculations tailored to specific employment agreements, consulting with local experts such as SailGlobal is recommended to ensure full compliance.

Overtime Regulations and Maximum Working Hours

Paraguayan labor law defines the standard workweek as 40 hours, typically spread over five eight-hour days. While the workweek can extend to Saturdays, pushing the maximum to 48 hours, any hours worked beyond the standard schedule qualify as overtime.

Overtime compensation is mandatory. The law caps overtime at three hours per day or a total of 57 hours per week to protect employee well-being. Compensation for overtime exceeding 48 hours per week is structured as follows:

• Daytime Overtime: 150% of the standard hourly rate
• Nighttime or Holiday Overtime: 200% of the standard hourly rate

Practical Implications for International Employers

Consider a scenario where SailGlobal needs to deploy a project team to Asunción for a critical client deadline. Understanding these overtime rules is vital for budgeting and scheduling. If team members work 10 extra hours during the day in a week, the company must budget for 150% of their regular pay for those hours, impacting project costs significantly.