Independent contractors or freelancers are self-employed individuals who provide services to companies as a non-employee. This is one of the most common ways companies tend to hire non-local designers, engineers, support reps, etc.
For legal and tax purposes, independent contractors are not classified as employees. They may work for multiple clients, set their own work hours, negotiate their pay rate, and decide how a job gets done.
For example, the IRS says that if an independent contractor or freelancer does work that can be controlled (what will be done and how it will be done) by an employer then they are, in fact, classified as an employee.
As you can imagine, hiring someone as an independent contractor versus an employee is a fine line to tread.
While there are benefits when you choose the contractor route, there are quite a few drawbacks to consider and you’ll need to weigh them carefully to determine the best fit for your company.
A foreign subsidiary is a company that operates overseas as part of a larger company who’s HQ is in another country.
Establishing a foreign entity is great for having an international presence and accessing new markets. Though, setting up a subsidiary in Paraguay can be expensive, stressful, and time-consuming. It's not for the faint of heart.
To set up a subsidiary in Paraguay, you have to:
If you're lucky, this process can take months. If you're not so lucky, it can take up to a year. And on average, it costs about $50k-$80k, all-in-all, to get setup. And that's just for Paraguay.
An employer-of-record (EOR) is a company that hires and pays an employee on behalf of another company.
An EOR is typically used to overcome the financial and regulatory hurdles that often come with employing remote workers.
Each country has its own payroll, employment, and work permit requirements for non-resident companies doing business in their jurisdiction. Meeting those demands can be a huge obstacle when it comes to hiring remotely.
At Panther, we help companies employ and pay people in over 160 countries, without having to set up a foreign subsidiary. Payroll, benefits, taxes, compliance, and more are all handled by us, at a fraction of the cost.
Outside of saving you months and tens of thousands of dollars, other advantages of using Panther are:
Because you no longer have to set up your own subsidiary, you’ll save a ton of time and tens of thousands of dollars using Panther.
Paying employees in Paraguay is not the same as paying workers in your own country. Employees have to be paid using Paraguay’s employment and payroll standards.
This means that you have to know, understand, and keep up with 1) fluctuating currency changes, and 2) local payroll and tax laws in the countries you’re looking to hire in.
Outside of the laws and regulations around payroll, there may be different conditions surrounding leave, overtime, termination, and more. As you can imagine, maintaining this kind of regulatory knowledge can be challenging. But it is crucial and necessary to follow local legislation.
After, you’ll have to determine the best way to pay your international employees. This can be done in a number of ways, including but not limited to:
One of the most challenging (and expensive) parts of paying international employees is setting up the infrastructure to do so.
Before you start to run payroll, you have to register your company as the local employer in the country the worker resides in. As you can see in the “Set up a subsidiary” section, this is a multi-step process that can take up to a year and put you on your way to bankruptcy.
Outside of EORs acting as the full admin employer, many also provide remote payroll.
For example, at Panther, in just 1-click, you’re able to pay your entire global team, anywhere in the world. We send you an invoice each month, charge you in US Dollars, and pay your employees the same amount in their local currency.
We factor in currency fluctuations and use the mid-market rate plus any applicable fee passed on by our provider at cost at the time of billing.
The standard full-time workweek is 48 hours.
For employees who work nights, the workweek is 42 hours.
For employees who work night hours, they are compensated at 130% of the regular pay rate.
Overtime is paid at different rates:
The pay date depends on the payroll frequency. Can be weekly, bi-weekly, or monthly, however, employees must be paid at least once a month.
An additional 13th salary equivalent to one months’ salary is paid out in December (but must be before Christmas).
PTO is calculated by the:
Annual leave allowance depends on how long an employee has been employed:
There are 13 public holidays.
The duration of sick leave entitlement provided to workers is dependent on how long they have been employed by their employer:
In Paraguay, maternity lasts for 18 weeks and is paid at a rate of 100% of the gross salary by IPS.
In the event of multiple births, the woman receives an additional 30 days per child.
A new father can take 2 weeks paid paternity leave after the delivery of the child. Paternity leave is also paid out by IPS at the rate of 100% of the gross salary.
No statutory law for parental leave.
For the death of an immediate family member, an employee is entitled to 3 days of leave.
In Paraguay, a notice of termination must be delivered to the employee in writing.
For an employee who has been employed for over 10 years cannot be terminated for unjust reasons, they must be terminated for a just cause.
The notice period in Paraguay is:
Mandatory notice period is 1 day.
If the cause for termination is justified (misconduct or poor performance), the employee is not entitled to severance pay.
It is important to note, though, that if the employee feels that they were unjustly terminated under the reason for just cause or misconduct on the part of the employer and the employer is not able to prove the reason for dismissal in a labor court, the employee is entitled to severance pay (15 days of wages for every year worked or up to half a year’s wages) as well as back pay from the date of dismissal to the date of the court ruling.
An employee who is terminated without cause is entitled to 15 days of severance pay for every year of service.
For an employee who has over 10 years of employment with a company- If an employer is not able to prove a just cause to a labor court, the employee might either be reinstated or would have the right to double the regular severance pay.
The probationary period is 30 days for unqualified employees or domestic workers and 60 days for qualified workers or apprentices.