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7. Labor and employment: Panama

Labor and employment in Panama: written contracts filed with MITRADEL, hourly minimum wages by activity and region under Decreto Ejecutivo 13 de 2025, working time and overtime surcharges, the thirteenth month salary, vacation and family leave, Caja de Seguro Social contributions rising under Ley 462 de 2025, dismissal rules with the seniority premium and the cesantía fund, unions and strikes, outsourcing and staffing, telework, the 90 percent national staff rule for foreign hires, the 2026 youth internship program and the forums for labor disputes, each tied to the official text.

Investor view. A dollarized economy, a fixed and predictable severance formula prefunded through the cesantía fund and new flexible youth internships make Panama workable for regional hubs, and employers who budget for the 2027 and 2029 social security steps and respect the national staffing ratios can scale with confidence.

• Employing people in Panama: what an employer must do and what a hire really costs under the Código de Trabajo and the 2025 social security reformHiring in Panama means a written contract filed with MITRADEL, registration with the Caja de Seguro Social, hourly minimum wages by activity and region, a thirteenth month salary and 30 days' vacation
• Employment contracts in Panama: written contracts filed with MITRADEL, one year fixed terms, three month probation and the presumption of an indefinite relationshipPanama's Código de Trabajo requires most employment contracts to be in writing, signed in three copies, with one copy sent to the Ministerio de Trabajo y Desarrollo Laboral (MITRADEL). Contracts are i
• Minimum wage in Panama 2026 and 2027: hourly rates by region, activity and company size under Decreto Ejecutivo 13 de 2025Panama has no single minimum wage: Decreto Ejecutivo 13 of 31 December 2025, in force from 16 January 2026, sets hourly minimums by economic activity, occupation, company size and two regions for 2026
• Working hours and overtime in Panama: 48 hour day week, 25 to 75 percent overtime surcharges, Sunday at 50 percent and national holidays at 150 percentThe Código de Trabajo caps the day shift at 8 hours and 48 a week, the night shift at 7 hours and 42 a week and the mixed shift at 7.5 hours and 45 a week. Overtime is voluntary except in emergencies
• Pay rules and the thirteenth month salary in Panama: what counts as salary, fortnightly payment, deductions and the décimo tercer mesSalary in Panama is broadly defined and must be paid in full at least every fortnight, in legal tender or, since 2020, by bank transfer at the employer's cost. Agreed salaries cannot be cut, even with
• Vacation and leave in Panama: 30 days per 11 months, 14 weeks of maternity leave, 3 days of paternity leave, sick leave fund and breastfeeding breaksWorkers earn 30 days of paid vacation for every 11 months of continuous work, which cannot be waived for money and can be accumulated for at most two periods. Pregnant workers get 14 weeks of paid mat
• Termination and severance in Panama: just cause, stability after two years, the seniority premium, 3.4 weeks per year indemnity and the cesantía fundIndefinite contracts can be ended by the employer only for a just cause listed in the Código de Trabajo, notified in writing, except for workers with under two years of service and a few other groups,
• Social security contributions in Panama: Caja de Seguro Social rates of 13.25 percent for employers rising to 15.25 percent, 9.75 percent for employees, and what is not salaryEmployers register with the Caja de Seguro Social and pay 13.25 percent of salaries until 28 February 2027, 14.25 percent until 28 February 2029 and 15.25 percent after that, while withholding 9.75 pe
• Unions, collective bargaining and strikes in Panama: one company union, a duty to bargain on request, agency fees and strikes that close the workplacePanama allows only one company union per company, and any employer with unionized workers must negotiate a collective agreement when the union asks. Agreements cover every worker in the categories the
• Outsourcing, subcontracting and temporary staffing in Panama: joint liability of the beneficiary, a ban on labor supply and two month agency placementsPanama treats genuine contractors with their own capital, equipment and management as employers, but makes the business that benefits from their work jointly liable for unpaid workers' claims when the
• Remote work in Panama: telework under Ley 126 de 2020, written and MITRADEL stamped agreements, reversibility, equipment and connectivity costsLey 126 of 2020 regulates telework as a form of employment: it must be agreed in writing at hiring or by addendum, an office based worker may freely refuse it, and the employer may always call the wor
• Hiring foreign workers in Panama: the 90 percent Panamanian staff rule, the 15 percent cap on foreign specialists, MITRADEL work permits and escalating finesPanamanian employers must keep at least 90 percent of ordinary staff Panamanian (or foreigners with a Panamanian spouse or ten years of residence), and foreign specialists or technicians may not excee
• Youth internship program in Panama: Ley 513 de 2026 lets companies take interns aged 18 to 25 for up to a year at B/.450 a month without an employment relationshipLey 513 of 20 March 2026 created a voluntary three year program under which private companies and non profits can take young people aged 18 to 25 (or minors with a secondary school diploma) as interns
• Labor disputes in Panama: Juntas de Conciliación y Decisión, labor courts, MITRADEL authorizations and the 60 working day deadlineDismissal claims in Panama go to the tripartite Juntas de Conciliación y Decisión, which must rule within three months; reinstatement cases for union officials and pregnant workers go to the labor cou

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