Panama Labor Law and Employment Policy Overview

Employment Law Overview

• Key Legislation:
  • Labor Code
  • Social Security Law
  • Occupational Risk Law
• Legal Characteristics:
  • Aims to protect employees' rights and benefits
  • Sets standards for minimum wage, working hours, vacations, and severance pay

Employment Contract Requirements

• Contract Types:
  • Fixed-term contracts
  • Indefinite-term contracts
  • Occasional contracts (temporary contracts)
• Contractual Provisions:
  • Must include names of employer and employee, job description, work location, working hours, salary, and payment method
• Language and Currency:
  • Contracts must be in Spanish
  • Salaries and payments must be in US dollars or Panamanian balboas

Working Hours Regulations

• Standard Working Hours:
  • 48 hours per week
• Rest Days and Breaks:
  • Minimum of 24 hours of rest per week
  • Minimum of 1 hour of rest per day

Vacation Policy

• Annual Leave:
  • 30 days of paid annual leave per year
• Public Holidays:
  • 13 national public holidays
• Special Leaves:
  • Sick leave: Up to 18 days per year
  • Maternity leave: 14 weeks of paid leave
  • Paternity leave: 3 days of paid leave

Employee Severance and Contract Termination

• Notice Period:
  • 30-90 days, depending on contract type
• Severance Pay:
  • 0.5-14.8 months of salary, depending on years of service
• Unfair Dismissal Protection:
  • Employees cannot be dismissed while pregnant, participating in union activities, or filing complaints against the employer

Tax Laws

• Personal Income Tax:

  • Salary Range (PAB)	Tax Rate
    0 - 11,000	0%
    11,00-50,000	15%
    5,000+	25%

• Social Security Contributions:

  • Employee: 6.75% of salary
  • Employer: 2.75% of salary
  • Government: 1.04% of salary

Health Insurance

• Insurance Policy:
  • Employees must participate in the national healthcare system
• Insurance Coverage:
  • Basic medical services

Compensation and Benefits

• Minimum Wage:
  • Varies by industry and job type
• Compensation Structure:
  • Salary, bonuses, allowances

Work Permits and Visas

• Permit Requirements:
  • Foreigners require a work permit or visa
• Application Process:
  • Contact the Panamanian Immigration Service

Confidentiality and Non-Compete Clauses

• Enforceability:
  • Enforceable, but must be reasonable and not unduly restrict employee's employment opportunities
• Common Provisions:
  • Confidentiality agreements: Protect employer's confidential information
  • Non-compete agreements: Restrict employee from engaging in competitive work after leaving employment

Training and Development

• Legal Requirements:
  • Safety training, skills enhancement, etc.
• Government Support:
  • Government-funded training programs

Workplace Diversity and Inclusion

• Legal Requirements:
  • Prohibits discrimination based on race, gender, religion, or other protected characteristics
• Enforcement Measures:
  • Government agencies responsible for investigating and resolving discrimination complaints

Remote Work Policy

• Legal Framework:
  • No specific legal framework governing remote work
• Tax and Insurance Implications:
  • Remote work may impact tax and social security obligations

Authoritative Website Addresses

• Ministry of Labor and Labor Development of Panama: https://www.mitradel.gob.pa/