Hire employees and contractors in Panama

Remote’s guide to employing in Panama.

  • Capital city

    Panama City

  • Currency

    Panamanian balboa
    (B/., PAB)

  • Population size

    4,176,869
    (est. 2018)

  • Languages spoken

    Spanish

  • Availability

    Remote-Owned Local Entity

    We own our own entity in the countries where we operate to shield your company from risk and provide you and your employees with the signature Remote experience.

Facts & Stats

The Republic of Panama (República del Panama) is a unitary presidential republic split across North and South America and that’s home to the famed Panama hat, a canal connecting the Atlantic and Pacific, and more biodiversity that the United States, Canada, and Europe combined.

Panama is a high-income economy with a strong performance in banking, commerce, tourism, and transportation, all of which has cemented its place as Latin America’s seventh strongest economy.

  • Capital city

    Panama City

  • Currency

    Panamanian balboa
    (B/., PAB)

  • Languages spoken

    Spanish

  • Population size

    4,176,869 (est. 2018)

  • Ease of doing business

    Easy

  • Cost of living index

    $$$ (2021)

  • Payroll frequency

    Monthly

  • VAT - standard rate

    7%

  • GDP - real growth rate

    3.0 (2019)

Grow your team in Panama with Remote

To employ in Panama, companies must own a local legal entity in the country or work with a global employment solution. Managing payroll, benefits, taxes, and compliance in Panama can get complicated, especially without established local relationships.

Remote’s global employment solution makes it easy for your company to employ workers in Panama quickly, efficiently, and in full compliance with all applicable labor laws. We take on the responsibility and legal risks of international employment so you can focus on hiring great talent and growing your business.

Risks
of misclassification

Employing in Panama

The Panamanian Labor Code of 1971 spells out provisions for employee protections and workers’ rights for Panama’s workforce of just under 2 million.

Employees in Panama enjoy protections against discrimination based on age, religion, sexual orientation, gender expression, and race.

Common questions that could come up during the hiring process include the minimum wage, overtime rates, and guaranteed paid time off. Remote can help you offer a complete, competitive, and compliant benefits package to your employees in Panama.

Public holidays

Date
Holiday Name
Extra information
Saturday, January 1, 2022New Year's Day
Monday, January 10, 2022Day off for Martyrs' DayOriginally January 9th
Tuesday, March 1, 2022Carnival Tuesday
Friday, April 15, 2022Good FridayVary every year
Monday, May 2, 2022Day off for Labor DayOriginally May 1st
Thursday, November 3, 2022Independence Day
Friday, November 4, 2022National Symbols Day
Saturday, November 5, 2022Colón Day
Thursday, November 10, 2022Uprising of Los Santos
Monday, November 28, 2022Independence Day from Spain
Thursday, December 8, 2022Mother's Day
Sunday, December 25, 2022Christmas Day
Monday, December 26, 2022Day off for Christmas

Minimum Wage

The Panamanian minimum wage is set based on certain variables, such as industry, organization headcount, and location. Overall, the minimum wage ranges from $275 to $971.28 per month.

Payroll Cycle

For customers of Remote, all employee payments will be made in equal monthly installments on or before the last working day of each calendar month, payable in arrears.

Wet Signature Requirement

Please note that Employment Agreements must be signed in Panama by a Panamanian national or legal resident. Documents cannot be signed digitally, they must be signed in wet-ink in the country. The document must be an original, so scanned signatures will not work.

Decimo Tercer Mes - 13th Salary

The 13th salary is mandatory in Panama and this payment accounts to one month of additional pay per year. It is paid out in three installments over April, August, and December.

Onboarding Time

We can help you get a new employee started in Panama fast. The minimum onboarding time we need is only 20 working days.

Our team ensures your employees are onboarded and paid as quickly as possible while keeping your business compliant with all local employment legislation. The minimum onboarding time begins after the employee submits all required information onto the Remote platform. The onboarding timeline is also dependent upon registration with local authorities.

For all non-nationals of the country of employment, the Right to Work assessment (if applicable) will add three extra days to the total time to onboard. There may be extra time required if we need to follow-up on the right to work assessment.

Please note, payroll cut-off dates can impact the actual first day of employment. Remote has a payroll cut-off date of the 10th of the month unless otherwise specified.

Competitive benefits package in Panama

At Remote, we’re obsessed with helping you craft the best possible employee experience for your team. We are leading the way in practicing “fair equity,” which means making sure employees everywhere have access to both the required and supplemental benefits they need to thrive (and that will allow you to attract the best local talent).

Our benefits packages in Panama are tailored to fulfill the local needs of your employees. Typically, our packages contain some or all of the following benefits:

  • Health Insurance
  • Dental Insurance
  • Vision Insurance
  • Mental Health Support
  • Pension or 401(K)
  • Life and Disability Insurance

Taxes in Panama

Learn how employment taxes affect your payroll and your employees’ paychecks in Panama.

  • Employer

    • 12.50% - Seguro Social (Social Security Contribution)

    • 8.33% - Decimo Tercer Mes (13th Salary)

    • 1.50% - Seguro Educativo (Educational Insurance)

    • 0.98% - Riesgo Profesional (Accident insurance)

    • 0.90% - Seguro Social del Décimo Tercer Mes (Social Security on 13th Month Compensation)

  • Employee

    • 9.75% - Social security

    • 0.98% - Riesgo Profesional (Accident insurance)

  • Personal Income Tax Rates

    • 0% - 0 - $11,000

    • 15% - $11,000 - $50,000

    • 25% - $50,000 and above

Types of leave

Paid time off

After spending an entire year working for an employer, workers are entitled to 30 days of paid leave annually.

Public holidays

There are 13 paid public holidays every year. Employees are entitled to double pay if they’re required to work on a public holiday.

Sick leave

Employees accrue 12 hours of sick leave for every 26 shifts worked (a shift is equal to 12 hours), equivalent to roughly one day of sick leave earned per month or 13 days of sick leave annually.

Maternity leave

Female employees are entitled to 14 weeks of fully paid maternity leave, starting six weeks before delivery, and paid for by the Social Security Fund.

Paternity/Parental leave

Fathers are entitled to three days of paid paternity leave, provided they tender notice at least one week before their leave is due to kick in.

Other leave

  • Adoption: Adoptive mothers are entitled to 28 days of leave, from the day their child is handed over to their legal custody.

Employment termination

Termination process

Panamanian labor law stipulates that long-term employment contracts can only be terminated with a written notice specifying a just cause, such as dishonesty, negligence, fraud, or any other work-related offenses. Employees can seek redress via a labor court if they deem that a termination has been made on an unjustified basis.

Notice period

Employers are only required to provide 30 days’ notice to employees dismissed without just cause.

Severance pay

Employees are only entitled to severance payments when a termination decision is due to redundancy.

  • Up to 6 months of employment: two weeks’ pay
  • Up to 9 months of employment: three weeks’ pay
  • Up to 1 year of employment: 1 months’ pay
  • Up to 2 years of employment: 3 months’ pay
  • Up to 4 years of employment: 4 months and two weeks’ pay
  • Up to 5 years of employment: 5 months and a week’s pay
  • Up to 10 years of employment: 9 months and three week’s pay
  • Up to 20 years of employment: 14.8 months’ pay

Probation periods

The maximum length of probation is 3 months.

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