Hire and pay employees in
Panama, hassle-free

The individual income tax ranges from 0% to 25%. Income tax is calculated according to progressive rates.

• Social security - 12.25%
• Educational security - 1.50%
• Professional risks - 2.10%
• 13th Salary - 8.33%
• Vacation pay - 9.09%
• Seniority premium - 1.92%
• Compensation - 0.33%
• Work-from-home Allowance USD 50

These costs are provided as estimates and are intended solely for general informational purposes. To fully comprehend all associated costs and fees related to the terms of any employment agreement for this country, please contact our Sales team for a quote.

• 125% of the hourly rate, on a standard day
• 150% of the hourly rate, after 6 pm
• 175% of the hourly rate for the night shift employees

Standard working hours are eight hours per day, 40 hours per week. The standard workweek is from Monday to Friday. However, the standard workweek can be extended to 48 hours per week from Monday to Saturday. 

Terminations must respect complex rules and the rules of an employee’s employment country. The off-boarding is always handled by the Employer with the primary stakeholders. It may include ad-hoc fees as well as required or recommended steps on specific termination cases.

Terminations in Panama can be complex. There is no at-will termination outside the probation period and termination must be done for just cause. In case the employee considers the termination an unfair dismissal, it will have up to 60 days to sue the employer for reinstatement for wrongful dismissal against.

The employment agreement can be terminated by:

• Voluntarily by the employee (Resignation)
• By mutual agreement
• Must be in writing and should not waive any employment rights
• Dismissal with justified cause
• By the expiration of the contract
• For the completion of the work
• Due to the death of the employee 
• Due to the death of the employer, when it entails the unavoidable termination of the contract.
• For the prolongation of the causes of suspension of the contracts, at request of the employee.
• Unilaterally by the employer:
  
  
• For indefinite employment agreements must be for cause and in writing

Special cases and circumstances may apply including requiring the employer to get authorization from the relevant administrative labor authority.

• Generally, 15 days if the employee resigns
• Generally, 30 days if the employer terminates the employee

Contracts must be in Spanish and can be bilingual. They must be in writing and signed by both parties. A contract must include: 

• Name, nationality, age, gender, civil status, address, ID
• If the employer is a company it must include the company name, address, name of its legal representative and the registration data in the Public Register.
• Names of the people who live with the employee and any dependents
• Start date and length of the employment
• Job description
• Workplace
• Regular work hours
• Salary, date and payment method
• Place and date of the execution of the contract
• Signatures of both parties