Panama
Introduction
General overview & country facts, as well as labour regulations.
Employer Contributions
These are additional costs incurred by employers over and above the employee’s monthly gross salary and/or bonus.
Employee Contributions
These are costs incurred by employees that reduce their monthly gross salary and/or bonus to determine their net “take home” pay.
Employment Terms
All you need to know about salary & bonuses, working hours & overtime, probation period, notice period & severance pay, as well as all leave types.
COUNTRY PLAYBOOK
Panama
Everything you need to know about payroll, benefits & hiring top talent in Panama
Currency
Panamanian Balboa (PAB) and United States Dollar (USD)
Salary payment frequency
Bi-weekly, Weekly
Capital
Panama City
Time Zone
GMT -5:00
Official Languages
Spanish
Is English spoken?
Yes
Quick Links
Introduction
General Overview & Economic Facts
- Panama, officially known as the Republic of Panama, is a country located on the Isthmus of Central and South America
- It spans an area of approximately 75,517 km2 (29,119 mi2) and has a population of approximately 4.3 million
- Panama is well established in terms of human development, with a ranking of 57th on the HDI (2019)
- It is regarded as a high-income country ranking 86th in terms of nominal GDP (2019) and 81st in terms of PPP
Why Employ In Panama?
- The main exports from Panama include copper ore, bananas, shrimp, pineapple, watermelons and coffee
- 116.59% of the population is between the ages of 15 and 24 years, with 40.31% of the population being between the ages of 25 and 54. Panama has a mix of a fairly youthful population, making it a favourable country to employ young, energetic employees, as well as a good country to hire more experienced employees
Overview Of The Labour Law
- The main sources of employment law in Panama are the Constitution and the Labour Code. The Constitution sets out the rights relating to employment agreements and the Labour Code regulates the employment relationships
- The labour regulations provides the minimum terms and conditions for employment including working hours, leave, notice periods and severance pay
- Panama’s labour laws provide protection for both employers and employees
Fun Country Facts
- Panama is the only country in the world where you can see the sun rise on the Atlantic and set on the Pacific from the same spot
- Panama was the first country outside the United States in which Coca Cola was sold
- The inventor of Murphy’s Law was born in Panama
Why Use Playroll Services For Panama?
- Employing in Panama requires companies to have their own legal entity in the country as well as managing payroll, employee benefits, taxes and legal compliance. This can get quite complicated, especially with the complexity of employment laws in Panama
- With Playroll’s Employer of Record services, your team will be employed by our established legal entities in each country
- We will take care of payroll, employee benefits, taxes, legal compliance and provide ongoing employee support, so that you can focus on growing your team
Employer Contributions
These are additional costs incurred by employers over and above the employee’s monthly gross salary and/or bonus.
Social Security
12.25%
Educational Insurance
1.50%
Professional Risk Tax
0.98% – 6.25%
Varies based on industry
Employee Contributions
These are costs incurred by employees that reduce their monthly gross salary and/or bonus to determine their net “take home” pay.
Social Security
9.75%
Educational Insurance
1.25%
Income Tax
Income Tax is ‘Pay As You Earn’
Income tax is calculate in tax units called Unidad Impositiva Tributaria (UIT). In 2022, one UIT is PEN 4600.00
Income bracket per annum in USD
0.00 – 11,000
0.00%
11,000.01 – 50,000.00
15.00%
50,000.01 or more
USD 5,850 + 25% on excess above USD 50,000.00
Employment Terms
General
Minimum Wage
- Varies based on industry and region
Working Hours
- Maximum of 8 hours per day and 48 hours per week
- Minimum meal interval of 30 minutes and a maximum of 2 hours
- Typical working hours are 08h00 to 17h00, Monday to Friday
Overtime
- Maximum of 3 hours per day and 9 hours per week
Notice Period
- As a general rule, there is no statutory notice period
- 30 days prior notice is required to dismiss certain categories of workers, excluded who are “just cause” dismissal rule
Probation Period
- Skilled employees- maximum 3 months
- Unskilled employees- no probation period
Bonus
- 1 month’s salary, paid in three equal parts during April, August and December
Public Holidays
- January 1st – New Year’s Day
- January 9th – Martyr’s Day
- March 1st – Carnival/Shrove Tuesday
- April 15th – Good Friday
- May 1st – Labour Day/May Day
- November 3rd – Independence Day
- November 4th- National Symbols Day
- November 5th – Colon Day
- November 10th – Shout in Villa de los Santos
- November 28th – Independence from Spain
- December 25th – Christmas Day
Leave
Paid Leave / Vacation Days
- Paid leave
- Paid by employer
- 30 calendar days
Maternity Leave
- Paid leave
- Paid by Social Security
- 14 weeks
Paternity Leave
- Paid leave
- Paid by employer
- 3 days
Adoption Leave
- Paid leave
- Paid by employer
- 4 weeks for mothers, 2 weeks for fathers
Start hiring in Panama today!