Current Region & Language
Currency
US Dollar (USD)
Employer Taxes
Employer contributions are about 12.25% of gross salaries, mainly for social security.
Payroll Frequency
Biweekly or Monthly
Language
Spanish
Date Format
DD/MM/YYYY
Panama By The Numbers
4.5 million
Population
PAB 67 billion
GDP
10
National Holidays
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Weekly Working Hours
National Holidays
Leave
Employees are entitled to various types of leave, including holiday, sick, maternity, paternity, death, and marriage leave. Employees are granted public holidays as specified by the government. Sick leave is available, with the first 10 days paid in full and subsequent days paid at a reduced rate. Female employees are entitled to 50 days of maternity leave, with full pay for the first 30 days and half pay for the remaining days. Male employees are entitled to 3 days of paternity leave following the birth of a child. In the event of the death of a close family member, employees are given death leave, with the duration varying based on the relationship, such as 3 days for the death of a spouse. Employees are also entitled to up to 3 days of marriage leave in the event of their own marriage. These leave entitlements may vary according to the employer’s policies or any collective labor agreements in place.
Employment Contracts
Employers are required to provide written employment contracts and policies that outline the terms and conditions of employment, including job responsibilities, compensation, benefits, and workplace expectations, in compliance with applicable labor laws.
Types of Employment
Employees, temporary agency workers, and independent contractors are all recognized types of employment.
Employment Costs
There are no specific requirements regarding employment costs.
IC Class Factors
A number of factors are considered when determining the status of an independent contractor (IC). These factors include the degree of control exercised over the worker, the level of subordination to the employer, the exclusivity of the work arrangement, the economic risk assumed by the individual, their integration into the organization, and whether the work is subcontracted to others. Each of these factors plays a role in assessing whether a worker should be classified as an independent contractor or an employee.
Labor Leasing
There are no specific requirements regarding labor leasing.
Minimum Wage Requirements
The government sets the general minimum wage requirements normally every semester of each calendar year. Those are also set by Collective Bargaining Agreements.
Medical Benefits
Sick pay due to non-work-related illness or injury shall be paid by the Employer at a 100% rate and invoiced to the Client for the first 18 days of any period of absence. From the 22nd day onward, Social Security covers sick pay if illness or injury is work related, under specific rules. The Personnel is not covered between days 19-21.
Sick pay due to work-related illness or injury shall be paid by the Employer at a 100% rate and invoiced to the Client for the first 18 days of any period of absence. Social Security in Panama covers for sick leave pay at 70% of the average salary from the 1st day if illness or injury is work-related.
Probationary Periods
There is no probation for fixed-term contracts.
Probation for all personnel under an indefinite-term contract is for up to 3 months (only applicable for job positions which require certain skills or abilities, not applicable to basic entry level positions).
Termination Notice
Personnel must be provided with notice based on their length of employment. For personnel who have rendered services for less than two years, a 30-day notice is required. However, for personnel who have rendered services for over two years, no notice is required.
Severance
Severance is due in case of termination of an indefinite-term contract without just cause by the Employer and is equivalent to 3,4 weeks of salary for each year worked; plus a seniority premium equivalent to 1 week of salary per year of Service (or prorated amount).
For early termination of fixed-term contracts without just cause prior to the expiration of the term or the total completion of the work, the employer shall pay a severance equal to the salaries that the worker would have received during the remaining time of the contract.
For fixed-term contracts, if terminated prematurely, additional severance equivalent to the salaries for the remaining term is due.
Pre-hire Checks
Immigration checks are generally required for expatriates.
Personal information of Personnel, according to Data Protection Law, requires applicant’s consent.
Specific consent required for sensitive information such as a Personnel’s health information for health insurance benefit application process.
Credit Checks, criminal records, and drug tests possible only for specific job positions, according to the law.
Pregnancy tests prohibited by law, in any case.
Medical exams or health-related tests are not mandatory and are covered by the Employer, if requested.
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The information provided on this website is for general informational purposes only and is subject to change without notice. The content on this website is not intended to be a substitute for professional legal advice, diagnosis, or treatment. While we strive to keep the information up to date and accurate, People 2.0 makes no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability, or availability with respect to the website or the information, products, services, or related graphics contained on the website for any purpose. Any reliance you place on such information is therefore strictly at your own risk.
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