Facts & Stats
- Capital city
Panamanian balboa (B/., PAB)
- Population size
- Ease of doing business
- Cost of living index
- Payroll frequency
- VAT - standard rate
- GDP - real growth rate
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.
Grow your team in Panama with Remote
Looking to employ workers in Panama? Companies hiring in Panama must either own a legal entity in the country or work with a global employment solutions provider, usually one that provides employer of record services.
Remote can employ your team in Panama on your behalf through our local legal entity in the country and handle payroll, benefits, taxes, and compliance for your Panama team. You can also pay contractors now in Panama with Remote in some currencies (talk to an expert now for full details).
Risks of misclassification
Panama, like many other countries, treats self-employed individuals or contractors and full-time employees differently. Misclassification of contractors in Panama may lead to fines and penalties for the offending company.
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.
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.
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.
We can help you get a new employee started in Panama fast. The minimum onboarding time we need is only 7 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.
13 Public holidays
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:
Mental Health Support
Pension or 401(K)
Life and Disability Insurance
Taxes in Panama
Learn how employment taxes and statutory fees affect your payroll and your employees’ paychecks in Panama.
Seguro Social (Social Security Contribution)
Decimo Tercer Mes (13th Salary)
Seguro Educativo (Educational Insurance)
Riesgo Profesional (Accident insurance)
Seguro Social del Décimo Tercer Mes (Social Security on 13th Month Compensation)
Types of Leave
After spending an entire year working for an employer, workers are entitled to 30 days of paid leave annually.
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.
Employers are only required to provide 30 days’ notice to employees dismissed without just cause.
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
The maximum length of probation is 3 months.