How to use an Employer of Record in Paraguay

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Hiring in South America, in Paraguay, for example, is not a straightforward process. To start with, you’ll have to set up a local entity in the country, get an employment permit and sort out other paperwork, make provisions for paying salaries, provide benefits, and remain in compliance with labor laws.

Before you’re cleared to hire your first Paraguayan employee, you’d have spent several weeks and spent a large amount of time and money in the process. Or you could use an employer of record. An employer of record hires your employees legally but in reality, they work for you. You’ll also get access to an array of services that are essential to international hiring — onboarding, benefits, taxes, global payroll, data security and IP protections, compliance, etc.

This article will explain how to use an employer of record to hire employees in Paraguay and manage payroll, benefits, and everything you need to stay compliant with Paraguayan laws.

Jump straight to a key chapter

Six steps to hiring employees in Paraguay using an employer of record
What are the benefits of using an employer of record in Paraguay?
How much does it cost to use an EOR in Paraguay?
Hiring in Paraguay
Get started with an employer of record for Paraguay

Six steps to hiring employees in Paraguay using an employer of record

Using an EOR can make the process of international hiring quick, simple, and easy.

But, how do you choose and get started with a partner that has the infrastructure to support your global hiring needs? Follow these six steps to find the right partner for your business.

Step 1: Weigh up the pros and cons of each potential partner

Make a list of the functions you need in place to hire remote employees in Paraguay, such as:

A local entity that’s qualified to hire in Paraguay
Benefits administration for rolling out healthcare, dental, vision, and pensions
Access to legal experts that’ll help you stay on top of changes to Paraguay’s laws
Intellectual property protection and data security
Quick onboarding and assistance with terminating employees
Reasonable pricing

The features your business needs to hire employees abroad will serve as a checklist you can use to vet and pick out the EORs that best suit your needs.

Step 2: Take the time to select the most appropriate EOR service provider

Some EOR providers use third-party entities owned by others to hire your employees. Relying on external arrangements can make their services costly, as you have no control over pricing. You may also get into trouble if the third-party company is faced with legal disputes or challenges. It’s safer to stick with EORs that own their local entities, as they’ll provide consistent billing with better liability protection.

Step 3: Check the reviews, testimonials, and coverage of your shortlist of providers

Reviews and testimonials on websites like Trustpilot, G2, and Saasworthy will help you gauge the quality of an EOR’s services, based on the experiences of their past and existing customers. Make sure you review online press coverage, the company website, and client testimonials to get a clear picture of the capabilities and services provided by the EOR.

Step 4: Ensure that the EOR solution for Paraguay will provide a best-in-class employee experience

Since the EOR hires employees on your behalf, they serve as the face of your brand. An employer of record should be able to give your employees a positive and engaging experience. They should be able to:

pay salaries on time
offer explanations for any deductions made from your employees’ paychecks, and
respond to employee queries quickly

Step 5: Work with your partner to make sure you always provide a fair and equitable compensation package

A UX designer in India makes under $10,676 (₹8,12,876) annually while the same role in San Francisco would cost you upwards of $98,000 or times more per year. So, how do you figure out attractive salaries for remote roles without breaking the bank?

Work alongside your EOR partner to help you figure out competitive salaries for the roles you’re hiring for, using a combination of market rates and the local cost of living. To attract top candidates, your chosen EOR should have the local expertise to put together an attractive benefits package, factoring in the specific labor laws of the location, as well as the individual’s experience, role, and level.

Step 6: Make sure your partner will guard your intellectual property and maintain data security for your business

Data security is essential, and your potential EOR should have robust security measures in place to protect your company and employee data. Likewise, an ideal EOR partner should have contracts ceding rights to any intellectual property your employees produce to your company to avoid costly litigation in foreign courts.

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What are the benefits of using an employer of record in Paraguay?

Using an employer of record can save you time and money spent on flying to and from Paraguay, setting up local subsidiaries, filing for employment permits, and reading the Paraguayan Labor Code over to ensure you’re not missing anything. An EOR does the legal legwork for you to stay compliant with local rules.

Beyond compliance, an EOR provides the infrastructure you need to hire employees abroad, at just a fraction of what owning an entity in the same country would cost you. An EOR can help you:

Maintain a local entity for hiring employees in Paraguay
Set up global payroll and benefits for your employees
Gibe you access to experienced global employment experts who can make sure you remain compliant with labor regulations
Set up quick onboarding procedures and help with terminating employees compliantly
Help you scale your remote team faster
Eliminate the risk of misclassifying your employees
Secure your intellectual property and invention rights, and have measures in place to protect your data.

The ideal EOR will make it easy, safe, and fast for you to hire, pay, and manage your workers in Paraguay while staying compliant with employment laws in the country.

How much does it cost to use an EOR in Paraguay?

You might be looking to use an employer of record to save money and not spend a ton of resources setting up your owned subsidiary. But EOR services are only cheaper if you opt for a partner that offers value at a lower cost.

Traditional EOR companies typically charge fees as high as $2,000 per employee per month, whereas newer EOR companies charge a bit less. You’ll have to be careful to ensure that lower-cost EORs are not using third-party entities, a risk you’d want to avoid.

Remote offers a comprehensive global employment solution for hiring in Paraguay and across the world for an affordable, flat rate. Our services include payroll solutions, benefits, time-off tracking, and access to a team of global employment experts that’ll guide you every step of your global hiring journey.

Hiring in Paraguay

Paraguay’s Labor Code of 1993 is the country’s primary employment law, and it specifies provisions for workers’ rights, labor protections, compensation, fair dismissals, and labor arbitration.

Employment contracts and agreements in Paraguay

Employment contracts can either be verbal or written, although it’s best to issue a contract written in Spanish, containing the terms of employment such as remuneration, benefits, annual vacation, provisions for termination, and the duration of the contract.

Labor compliance in Paraguay

Paraguay’s labor code is designed to protect employees from abuse and adverse working conditions. There are legal provisions in place to ensure:

Businesses provide safe and hygienic working environments for employees
Employees are protected from discrimination based on age, religion, sex, or race.
Employers pay their employees a 13th-month bonus equal to an entire month’s salary at Christmas time.
Working hours are limited to eight hours daily and 48 hours per week.
Employees who work overtime hours beyond 48 hours per week are compensated at 1.5 times an employee’s normal wage for daytime work and two times the normal wage for night work.

Payroll and payroll taxes in Paraguay

Employers are required to withhold income (10% on income higher than 36 monthly minimum salaries, i.e. $13,000 annually) and payroll taxes (social security: 9%) from their employees’ paychecks. Employers are also required to pay a 16.5% payroll contribution for social security.

Employment benefits and compensation in Paraguay

Paraguayan labor law provides for remuneration, compensation, and benefits for employees, often depending on their tenure.

Maternity leave

Expectant mothers are entitled to 18 weeks of fully paid maternity leave, with benefits paid by social security (IPS). This can be increased by six weeks if the mother suffers an illness or complications during pregnancy or delivery, and there’s an additional 30 days off per child for multiple births.

Adoptive mothers are also entitled to 18 weeks of maternity leave if the child is below six months old, and only 12 weeks if the child is older.

Paternity leave

Fathers are entitled to two weeks of parental leave after their child’s delivery, with benefits paid by social security.

Vacations and public holidays

All employees in Paraguay are entitled to paid vacation every year, depending on how long they’ve been working with an employer.

Up to one year of employment: 12 days leave
5+ years of employment: 18 days leave
10+ years of employment: 30 days leave

There are 13 paid public holidays on the Paraguayan calendar. Check out our guide to hiring in Paraguay for more details on holidays, paid time off, and parental leave.

Other benefits Remote can help you roll out

Remote’s vision is to help companies hire the best talent, no matter where in the world they are based. As part of that, Remote’s team of global employment experts can help you pay and offer your remote employees a modern stack of benefits that promote a better work-life balance.

Depending on your budget, Remote can help you roll out unique benefits such as:

Health insurance
Dental and vision insurance
Life insurance
401k retirement accounts

Learn more about how Remote can help your business stand out in a competitive market by offering country-specific global benefits designed around your employees’ lifestyles.

Severance pay and employee terminations in Paraguay

Employers can let workers go for just cause, such as dishonesty, fraud, or dereliction of duty, and are required to provide notice at least a day prior. Employees who’re let go without justification are entitled to 15 days’ pay for every year they’ve been working with the employer.

Workers who are dismissed for just cause are not entitled to any severance pay unless they appeal their termination, in which case they’ll be entitled to the normal severance pay.

Get started with an employer of record for Paraguay

Hiring a new team member in Paraguay is no longer difficult, thanks to employer of record services that can do the heavy lifting for you. A reliable EOR can help you scale global operations without you having to set up a local presence in the country.

Remote’s global employment solution will help you manage everything that you need to do hire international talent in Paraguay or beyond. This includes:

Reliable payroll for processing salaries and invoices
Benefits management that is country-specific and fully compliant
A streamlined onboarding experience for your employees
Assistance with terminating employees compliantly
Access to our team of global employment experts
Compliance with local employment laws
Enhanced security for your intellectual property and internal data

Global employment doesn’t have to be a burden. A trusted EOR like Remote makes it simple to hire and pay employees in Paraguay and globally. Ready to start onboarding employees? Get started with Remote and grow your business today!

Employer of Record & PEO —

20 min