According to Panama's Labor Code, the following categories of employees must receive a notice of 30 days or payment of 30 days' wages in lieu of notice before dismissal:
Employees who have worked for more than 2 years generally can only be fired for just cause.
Foreign nationals who wish to be employed in Panama are required to obtain a work permit. There are several different categories of work permits available, including specific permits available to foreign nationals working in the Canal Zone and the Colon Free Zone. Employees must submit their Certificate issued by the National Immigration Service and educational qualifications.
Foreign professional permits are granted for a term of 2 years, renewed for a term of 3 years, and extendable for the same term. The following document must be added to obtain an extension: proof of 9 paid installments of Social Security contributions. Employees who have stayed in Panama for more than 10 years can apply for indefinite-term work permit.
Panama's labor law stipulates that employees are entitled to 30 days of annual leave for every 11 continuous months of work, accrued at the rate of 1 day for every 11 days in the employer's service.
Employees are to be paid their average monthly, weekly, or daily salary for each day of annual leave. The sums that the employee must receive must be settled and paid 3 days in advance of the date on which the employee begins their annual leave.
Employees must enjoy their annual leave without interruption. The annual leave period may only be divided into a maximum of 2 equal parts when such division is allowed in a collective bargaining agreement or prior agreement with the employee. The employer must indicate, at least 2 months in advance, and after consultation with the employee, when the employee is to take annual leave.
In Panama, the labor law provides that the standard workweek is 48 hours, and the standard working day is 8 hours. Employees who work longer hours are eligible for overtime. Working hours for persons below 16 years of age cannot exceed 6 hours per day. Working hours for persons under 18 years of age cannot exceed 7 hours per day.
The maximum length of a night shift is 7 hours, and the corresponding maximum working week for night workers is 42 hours.
The maximum duration of the mixed day and night shift is 7.5 hours, and the respective maximum working week is 45 hours.
Night shifts of 7-hour and 7.5-hour mixed day/night shifts are to be remunerated as 8 hours of daytime work to calculate the legal minimum wage or to calculate wages paid in a company with a shift of work in several periods.
Panama's labor law provides a total of 14 weeks of paid maternity leave: 6 weeks before the delivery and 8 weeks following delivery. In no case may the total leave period be less than 14 weeks. If the due date is delayed, the prenatal period of leave is extended so the employee has the right to 8 weeks of leave after birth.
To qualify to receive state maternity benefits, an employee must have at least 9 months of contributions before the seventh month of pregnancy. Employees who qualify for the state maternity benefit are entitled to 100% of their average weekly earnings over the previous 9 months for the 14 weeks of maternity leave. If an employee does not qualify for state maternity benefits, the employer must pay the employee her regular wages during maternity leave.
Panama's labor law prohibits employers from paying a worker less than the mandatory minimum pay rate. The minimum wage is fixed by an executive decree on the recommendation of the National Minimum Wage Commission. The 2026-2027 minimum wages for Panama's different regions and industries are effective as of January 16, 2026.
There are 2 regions in Panama:
Region 1 includes the following:
Region 2 includes the rest of the country.
Panama sets over 60 different hourly minimum wages depending on the industry and whether the employer is located in Region 1 or 2. The hourly minimum wage ranges from PAB 1.64 (Panamanian balboas) for small-scale agricultural work to PAB 5.01 for cabin crew on international flights. The minimum wage for domestic workers is set at PAB 350 per month in Region 1 and PAB 320 per month in Region 2.
Panama's labor laws require employment contracts to specify the wage payment frequency: monthly, biweekly, or weekly.
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