Panama

Employment Contracts

Employment contracts in Panama can be either in writing or verbal. Written employment contracts must include:

• Name of employer and employee
• Probation period
• Job description
• Place of work
• Working hours
• Salary and form of payment
• Duration of the contract if it is for a definite term, or a specific project
• Other terms agreed by the parties

Fixed-term contracts must be in writing and cannot be used for permanent tasks or positions. They can be used for temporary replacement of an employee who is on leave or for a specific task, which is not permanent in the nature of the company. A fixed-term contract generally cannot exceed 12 months. However, the duration of a fixed-term contract for special services and technical skills can be for up to a maximum of three years with two renewals. If the employee continues to work after the end date, the employment contract is deemed to be a contract for an indefinite period.

The probation period may be for up to three months and must in writing.

Public Holidays

Panama observes the following holidays:

• New Year’s Day
• Martyrs’ Day
• Shrove Tuesday/Mardi Gras
• Good Friday
• Labor Day
• Separation Day
• Flag Day
• Colon Day
• Shout in Villa de Los Santos Day
• Independence Day
• Panama Mother’s Day
• Christmas Day

When the holidays fall on a weekend, it will be extended to the upcoming Monday.

Compensation

In Panama the minimum wage is established according to economic activity, occupation and size of the organization throughout the Panamanian national territory. Employees are entitled to a bonus known as 13th month salary, which is one month’s wages annually paid in three equal installments throughout the year, on the 15th of April, August and December.

Working Hours

The standard work period in Panama is 48 hours a week and eight hours a day. Night work is between 6:00 p.m. and 6:00 a.m. and is limited at 42 hours a week and seven hours a day. Working hours performed during the day and night are capped at 45 hours a week with 7.5 hours a day.

Working hours for young employees up 16 years of age are limited to 36 hours a week and six hours a day. Employees between 16 and 18 years of age are capped at 42 hours with seven hours a day.

Overtime cannot exceed nine hours a week and three hours a day.

Vacation Leave

Employees are entitled to 30 days of paid annual vacation after 11 continuous months of employment. Leave can be divided into two equivalent parts, if provided by collective agreement or an agreement between the employer and employee. Also, the parties can agree to accumulate up to two periods of vacation.

Employees must receive the payment before three days of the beginning of the vacation. Employers cannot pay compensation in lieu of vacation leave.

Sick Leave

Employees are entitled to paid sick leave for up to one year. This allowance is paid by social security (Caja de Seguro Social-CSS) from the fourth day of incapacity, for as long as it lasts, but not exceeding 26 weeks for the same illness. This period may be extended to one year with a medical certificate. The employer pays the first three days of the leave. The employee must have at a minimum of six months of contributions in the nine months immediately preceding the illness.

Maternity / Paternity Leave

Employees are entitled to at least 14 weeks of paid maternity leave. Up to six weeks can be taken before the expected due date. In the case of pregnancy related illness, miscarriage, still-birth or other pathological or abnormal delivery, the benefit can be extended as per the health condition with a medical certificate. Employees cannot be dismissed without justifiable reason during the first year following their return to work.

Adoptive mothers receive adoption leave of 28 days.

Female employees who are pregnant are not permitted to work on rest days or work overtime.

Male employees are entitled to three days paid paternity leave. The employer oversees the payment.

Employment Termination / Severance

Employment contracts may be terminated at the end of a fixed-term contract by mutual consent by the employer or the employee. Employers must pay any bonuses, accrued but unused vacation and salary on a prorated basis upon termination.Employers may terminate an employee during the probation period without notice or paying severance. The probation period cannot exceed three months.Employees cannot be dismissed for their involvement in trade union activities, strike or lodging a complaint against the employer.

Female employees in maternity leave can be terminated from employment only on justified grounds and with pre-approval of the judicial authorities.

Health Insurance Benefits

Compulsory healthcare is funded by payroll taxes and the general budget. Private healthcare is also available; however, it is the second option of primary care service.

The national health system provides basic health coverage.