PARAGUAY LAW AND PRACTICE Contributed by: Manuel Arias, Carla Sosa, Martin Carlevaro, Milena Sljivich, Alexander Berkemeyer and Antonio Villa Berkemeyer, BKM - Berkemeyer
10.3 Employment Protection Article 28 of the Labour Code regulates the principle of employer substitution in cases of company trans - fers, such as mergers, acquisitions or other changes in company ownership. This principle establishes the following. • Continuity of employment contracts – employees’ contracts continue with the new employer, mean - ing that ownership changes do not extinguish the labour contracts. • Responsibility of the new employer – the new employer assumes all labour obligations of the previous employer, including the payment of wages and accumulated benefits for employees. • No termination of employment contracts – unlike other legal systems, the employment contract in Paraguay does not terminate with a change of employer. However, if an employee does not wish to continue, they have the right to terminate the contract and receive the corresponding compensa - tion. For a foreign investor, this means that they must assume all pre-existing labour responsibilities upon acquiring a company in Paraguay, as the change of ownership does not affect employment contracts. It is crucial to ensure compliance with employees’ labour benefits, such as unpaid wages, severance payments and other acquired rights. This principle protects employees, ensuring that their labour rights remain intact even when the employer changes. 11. Intellectual Property and Data Protection 11.1 Intellectual Property Considerations for Approval of FDI IP is not an important aspect in screening FDI in Para - guay. 11.2 Intellectual Property Protections Paraguay offers a robust legal framework for intel - lectual property protection, having ratified and incor - porated various international treaties. The Dirección Nacional de Propiedad Intelectual oversees IP rights in the country.
Commitment to Tax Information Exchange Paraguay leads efforts in Latin America regarding tax information exchange, consolidating its role in imple - menting measures to facilitate co-operation between jurisdictions to combat tax evasion. 10. Employment and Labour 10.1 Employment and Labour Framework In Paraguay, labour and employment matters are gov - erned primarily by the Labour Code and the Consti - tution, which guarantee fundamental workers’ rights, such as the right to unionise, engage in collective bar - gaining, and strike. Paraguay has also ratified several international conventions backed by the International Labour Organisation (ILO) that protect workers from discrimination, ensure equal pay, and establish guide - lines related to freedom of association. However, in the private sector, unionisation and col - lective bargaining agreements are relatively rare, as companies typically adopt an internal work regula - tion to govern the employment relationship between the parties. In addition to these regulations, there are specific laws addressing the rights of working mothers and breastfeeding women, as well as issues related to workplace health and safety. 10.2 Employee Compensation In Paraguay, employee compensation generally fol - lows a system based on cash payments, which not only includes physical cash but also bank wire trans - fers, cheques and other methods that can be con - verted into cash. There are also mandatory benefits and statutory contributions, such as vacation and end-of-year bonuses. In the case of dismissal without cause, employees are entitled to receive severance payments and notice period compensation, both of which are calculated based on the employee’s tenure with the company. In the event of a merger or acquisition that involves a change of control or investment, the employer sub - stitution mechanism may apply, which means that employees retain their labour conditions and the terms of their employment contracts, without changes to their working conditions.
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