Panama

• New Year's Day
• New Year Holiday
• Martyrs' Day
• Carnival
• Holy Friday
• Labour Day
• Separation Day
• Colon Day
• Colon Day Holiday
• Los Santos Uprising Day
• Independence Day
• Mothers' Day
• Christmas Day

Working Hours

Employees can work up to eight hours a day, or 48 hours per week.

Minimum Wage

The President set the current minimum wage rates that became effective as of January 16th, 2024, after a consensus was not reached by the Minimum Wage Commission. The current rates will remain in effect for the next two years, with the next revision set for 2026.

The rates vary depending on sector and region, and the monthly minimum range is between $340 for domestic, small and middle-sized agricultural workers, to $ 636.80 for technicians.

Employee Tax

Annual income	Tax rate
Up to USD 11,000	0%
USD 11,001 - 50,000	15%
More than USD 50,000	25%
Social security contribution	9.75%
Education contribution	1.25%

Bonuses

Indefinite term employees are entitled to a seniority bonus when they are terminated.

Employment contracts in Panama should be written and distributed to the employer, employee, and the Ministry of Labour.

Contracts must include:

• Employee’s name and their dependents
• Job title and responsibilities
• Workplace
• Working hours
• Salary
• Contract length (if applicable)
• Date and location of contract signing

Most fixed-term contracts are permitted in Panama for up to one year.

Annual Leave

Minimum of 30 days' paid holiday per year.

Sick Leave

Up to 18 days’ paid sick leave per year.

Parental Leave

Maternity leave:

A female employee is entitled to maternity leave of at least fourteen (14) weeks. Maternity leave begins six (6) weeks before childbirth and it is mandatory for the initial 6 weeks to be taken. In cases of stillbirth, miscarriage, or pregnancy-related illnesses, maternity leave may be extended based on the health condition of the employee. An extended leave also applies to multiple births.

Paternity leave: 

According to Law 27 of May 23, 2017, male employees are entitled to three (3) days of paternity leave. The paternity leave is fully paid by the employer, and it starts from the date of the child’s birth. To be granted the leave, the employee must notify the employer at least one (1) week in advance of the spouse’s due date and produce the child’s birth certificate showing him as the father

Termination Process

Employers in Panama can terminate a contract, provided they give written notice in line with legal requirements. Employees with more than two years’ service can only be dismissed for a justifiable reason, as specified in the Labour Code.

Employees can also end a contract, by giving notice in line with their length of service.

Severance Pay

A seniority premium is paid regardless of the reason for termination. This is equivalent to one week’s wages for each year of service. Holiday pay and 13th-month bonuses are paid proportionally.

Employees with less than two years of service are also entitled to an advance notice payment equivalent to one month’s salary. Those with two years or more are entitled to an additional indemnity equivalent to 6.54% of all wages received during employment.

Under a Mauve Group Employer of Record solution, clients and workers can reap the benefits of Mauve’s Global Master Insurance Programme – a market-leading unified corporate insurance programme that connects all Mauve entities to its two preferred providers.

The insurance provides coverage in overseas locations through a combination of the master policy and its linked local policies, where required by law in certain jurisdictions.  The policies include:

• Employer’s Liability and Public Liability - £10,000,000 combined limit.
• Professional Indemnity - £5,000,000 limit.
• Worker’s Compensation – Limit is dependent on location of work.

For specific information about statutory and recommended insurances in your chosen country, get in touch with Mauve.