Panama: Labour Regulation

On this Page:

- PANAMA REGULATORY ENVIRONMENT
- PANAMA WORK PERMITS

Panama Regulatory Environment

The main piece of employment legislation in Panama is the Labour Code of 1971, which deals with labour relations and the rights and duties of employer and employee. The key concept of the Code is that of 'subordination', so that any relationship in which one party is subordinated to the other will fall within the terms of the Code, whether or not it is described as 'employment'.

There is a contract between employer and employee, whether written down or not, and it can include elements from a collective agreement. Unions are allowed, and can negotiate on behalf of employees collectively. Strikes are lawful under defined circumstances and after a majority vote. Conciliation is mandatory before a strike. However, only around 11% of private sector workers are unionised.

Employers can terminate employment during the first two years, but after that employees have the protection of the Code. Fixed-term contracts are possible. The Code lists 'just causes' for dismissal, and unlawful dismissal results in compensation payments, which are not very high.

There are minimum wage levels which vary according to the seniority of the employee. There are 11 public holidays per year, and the statutory paid vacation is 30 days.

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Panama Work Permits

The employment market is quite closely regulated in Panama: the law sets maximum percentages for the employment of foreigners in a business according to its sector. Usually the figure is 10%. However, foreign companies are allowed to fill senior positions with expatriates, up to a maximum of 15% of the staff. It may be possible to agree a higher percentage with the Ministry Of Labour, which is responsible for issuing work permits.

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