Drawing on participatory research, this article explores the state formalisation of Uruguayan clasificadores (waste‐pickers). It goes beyond the informal/formal binary, instead proposing the concepts of ‘para‐formality’ to describe economic activity that exists in parallel to regulated and taxed spheres, and ‘quasi‐formality’ to describe processes of formalisation that are supported by underlying informal practices. When unregulated, clasificadores enjoyed parallel services in health, finance and social security, implying that benefits of ‘formalisation’ must be explored ethnographically rather than assumed. The persistence of ‘quasi‐formal’ activity within formalised recycling plants complicates simple narratives of informal to formal transitions and suggests that the concept can be useful for the study of labour policies in Latin America and beyond