Panama

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Country Snapshot

The GPS Country Snapshot includes 25 sections of information about labor law compliance in Panama. See a sample of popular sections below.

Termination of Employment

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 less than 2 years of continuous service with the employer
  • Domestic workers
  • Permanent or plant workers, those working in small businesses, or in the agricultural, livestock, agro-industrial, or manufacturing sectors
  • Employees in ships dedicated to international service
  • Apprentices
  • Establishment workers in retail merchandise sales and companies with five or fewer employees.

Employees who have worked for more than 2 years generally can only be fired for just cause.

Work Permits

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. 

Paid Annual Leave

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.

Working Hours

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 hours 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.

Maternity Leave

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.

Minimum Wage

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 2024 minimum wages for Panama's different regions and industries are effective as of January 10, 2024.

There are 2 regions in Panama:

Region 1 includes the following: 

Aguadulce Capira Guararé Pesé
Almirante Chame La Chorrera Portobelo
Anton Changuinola Las Tablas San Carlos
Arraiján Chepo Los Santos San Félix
Atalaya Chiriqui Grande Natá San Miguelito
Barú Chitré Omar Torrijos Herrera Santa Isabel
Bocas del Toro Colon Panama Santa María
Boquerón David Parita Santiago
Boquete Dolega Pedasí Taboga
Bugaba Donoso Penonomé Tierras Altas

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 4.95 for cabin crew on international flights. The minimum wage for domestic workers is set at PAB 340 per month in Region 1 and PAB 315 per month in Region 2. 

Panama's labor laws require employment contracts to specify if wage payment frequency is monthly, bi-weekly, or weekly.

Country Profile

The GPS Country Profile contains detailed information on over 60 topics related to labor law compliance within Panama.
  • Type of Employment Relationship
  • Permanent Employment
  • Fixed-Term or Specific-Purpose Contracts
  • Temporary Employment Contracts
  • Part-time Employment
  • Young Worker Employment
  • Vendors and Independent Contractors
  • Types of Contracts
  • Probationary Period
  • Termination of the Contract of Employment
  • Grounds for Termination
  • Notice of Dismissal
  • Fair Dismissal
  • Redundancy
  • Unfair Dismissal
  • Suspension of Contract of Employment
  • Severance Benefits
  • Hours of Work
  • Work Week and Timekeeping
  • Night Work and Shift Work
  • Overtime
  • Remote Work
  • Required Time Off
  • Public Holidays
  • Annual Leave
  • Sick Leave
  • Maternity
  • Other Forms of Leave
  • Social Insurance and Retirement
  • Social Security Contribution
  • National Retirement Scheme
  • Dependents’/Survivors Benefit
  • Life and Disability Insurance/Benefit
  • Statutory Allowances
  • Compensation and Benefits
  • Minimum Wage (Basic Wage)
  • Bonuses, Profit Sharing and Other Compensation
  • Medical Insurance
  • Work Environment
  • Workplace Safety and Health
  • Prohibition of Discrimination
  • Prohibition of Harassment
  • Data Protection and Privacy
  • Whistleblowers and Retaliation
  • Workers’ representation in the organization
  • Freedom of Association
  • Registration and Recognition of Unions
  • Trade Union Personality
  • Collective Bargaining and Agreements
  • Disputes and Settlements
  • Strikes and Lockouts
  • Unfair Labor Practices
  • Taxation of Compensation and Benefits
  • Income Tax
  • Taxation of Employee Benefits
  • Tax Filing and Payment Procedures
  • Double Tax Relief and Tax Treaties
  • Visas and Work Permits
  • Visas
  • Work Permits and Residence Permits

 Country Snapshot

Get the full Country Snapshot with 25 sections of information about labor law in Panama.