The employment contract must be written between the employer and the employee including all the employment benefits and terms.


The salaries are paid per month, paydays are at the end of each month.

HR & Labor

Employees are entitled to work 48 hours per week and 8 hours per day. They received a break from minimum 30 minutes to maximum two hours.


There are different types of working visas - Temporary permit for foreign personnel hired within 15% of the ordinary workforce Have 10 or more years of residency in Panama An executive of a company that produces merchandise abroad Works in a company that has less than 10 workers
For all of these cases, the employer must apply for the employee at the Ministry of Labor and Social Welfare and must be renewed each year.


Employees are entitled to 13th month bonus paid in 3 installments, in April, August and December

Minimum Wage

Minimum wage is $416 per month.

Pension Fund

Employer contributes 4% of the first 500 balboas earned per month.

Employee contributes 9.25% of the first 500 balboas earned per month. No monthly salary ceiling.

Severance Payments

Severance pay is counted at the rate of one week’s wages for each year the employee has worked for the company. The employee also receives vacation payment which is 30 days for each 11 consecutive months worked. In additional they also receive the 13th month payment.

Advance Notice

Employee must provide 15 days written notice.

Termination Procedure

If the employee has been in the company for less than 2 years, they will receive a month’s notice. If over 2 years, no notice is required.

Sick Days

Employees are entitled to 18 paid sick days.

Vacation Days

The employee is entitled to 30 days of vacation after working in the company for 11 consecutive months. If contract is terminated and the employee hasn’t used the vacation days, those days would be refunded.

Public Holidays

There are 13 paid public holidays.

Additional Employee Withholdings

1) Individual Social Security Account
2) Education Contribution

1) Employer contributes 4.25% of employee’s gross monthly earnings greater than 500 balboas.
2) Employer contributes 1.5%.

1) Employees contribute 8.16% of gross monthly earnings above 500 balboas.
2) Employee contributes 1.25%.


VAT is 7% standard rate.