Employer Record in Panama

Basic information

Capital: Panama City

Time zone: GMT-6

Languages: Spanish

Currency code: PAB

Human Resources at a Glance 

Contract Terms

Contracts must be in Spanish and can be bilingual. They must be in writing and signed by both parties. A contract must include:

• Name, nationality, age, gender, civil status, address, ID
• If the employer is a company it must include the company name, address, name of its legal representative and the registration data in the Public Register.
• Names of the people who live with the employee and any dependents
• Start date and length of the employment
• Job description
• Workplace
• Regular work hours
• Salary, date and payment method
• Place and date of the execution of the contract
• Signatures of both parties

Guidelines Regarding Probation Period/Trial Period

Employees have a probation period of 90 days, this cannot be extended as it is the country maximum.

Regulations and Rules Regarding Working Hours

Standard working hours are eight hours per day, 40 hours per week. The standard workweek is from Monday to Friday. However, the standard workweek can be extended to 48 hours per week from Monday to Saturday.

Overtime is paid according to the following rates

Overtime payment is mandatory. Hours outside of standard work hours are considered overtime. Employees can work up to three extra hours per day. For additional hours, employees are paid:

• 125% of the hourly rate, on a standard day
• 150% of the hourly rate, after 6 pm
• 175% of the hourly rate for the night shift employees

Minimum Wage Requirements

The minimum wage will depend on the sector of the company and can range from USD 275 to USD 970.

Payroll Cost for Employers

The employer cost is generally estimated at 38% of the employee salary (inclusive of work-from-home allowance).

• Social security – 12.25%
• Educational security – 1.50%
• Professional risks – 2.10%
• 13th Salary – 8.33%
• Vacation pay – 9.09%
• Seniority premium – 1.92%
• Compensation – 0.33%
• Work-from-home Allowance USD 50

Termination

Grounds

Terminations in Panama can be complex. There is no at-will termination outside the probation period and termination must be done for just cause. In case the employee considers the termination an unfair dismissal, it will have up to 60 days to sue the employer for reinstatement for wrongful dismissal against.
The employment agreement can be terminated by:

• Voluntarily by the employee (Resignation)
• By mutual agreement
  • Must be in writing and should not waive any employment rights
• Dismissal with justified cause
• By the expiration of the contract
• For the completion of the work
• Due to the death of the employee
• Due to the death of the employer, when it entails the unavoidable termination of the contract.
• For the prolongation of the causes of suspension of the contracts, at request of the employee.
• Unilaterally by the employer:
  • For indefinite employment agreements must be for cause and in writing
    Special cases and circumstances may apply including requiring the employer to get authorization from the relevant administrative labor authority.

Notice Period

The minimum notice period is 15 days and will vary according to the reason for the termination:

• Generally, 15 days if the employee resigns
• Generally, 30 days if the employer terminates the employee
  Special cases and circumstances may apply, including having the notice signed by the relevant administrative labor authority. Notice can be replaced by paying the equivalent in salary.

Severance compensation

  The minimum notice period is 15 days and will vary according to the reason for the termination:

• Generally, 15 days if the employee resigns
• Generally, 30 days if the employer terminates the employee

Special cases and circumstances may apply, including having the notice signed by the relevant administrative labor authority. Notice can be replaced by paying the equivalent in salary.

Payment & leave Compensation & Holidays

SalaryPayment

Monthly

Payslip Payroll

No explicit provision.

Annual Leave

Both full-time and part-time employees are entitled to 30 calendar days of paid time off (PTO) a year. PTO accrues monthly at 2.72 days per month. Employees are eligible for 15 calendar days of annual leave after 5.5 months of work.

Sick Leave

Employees are entitled to paid sick leave for up to either 18 or 36 days depending on the seniority of the employee.

Maternity & Parental Leave

Pregnant employees who have worked for 60 consecutive days are entitled to 14 weeks of paid leave. Four weeks must be taken before the child’s birth. The employee will receive 100% of their average salary during this period, and Social Security will be responsible for this pay.

  The employee may extend leave unpaid at the employer’s sole discretion.

Parents are entitled to 12 weeks of parental leave, which either parent may take. This leave can be taken before the child reaches the age of 2 years. The leave can be taken all at once or in separate blocks of time and must be taken within the first year after the birth or adoption of the child.

Tax and Social Security Information

Personal Income Tax

The individual income tax ranges from 0% to 25%. Income tax is calculated according to progressive rates.

Gross Annual Income	Tax Rate (%)
Up to USD 11,000	0%
Up to USD 50,000	15%
Over USD 50,000	25%

Social security

• Pension Insurance
• Public Health Insurance
• Social Security
• Unemployment Insurance
• Work From Home Allowance
• Workers Compensation Insurance
• Private Healthcare – Allianz (optional)

Public Holidays 2024

Holidays	Date
New Year’s Day	1.1
Martyr’s Day	1.9
Carnival Day	2.13
Maundy Thursday	3.28
Good Friday	3.29
Labour Day	5.1
Independence Day	11.1
National Symbles Day	11.4
Colon Day	11.5
Shout in Villa de los Santos	11.10
Independence from Spain	11.28
Mother’s Day	12.8
National Day if Mourning	12.20
Christmas Day	12.25