Countries › Panama › Guide › 7. Labor and employment › Labor disputes in Panama: Juntas de Conciliación y Decisión, labor courts, MITRADEL authorizations and the 60 working day deadline

Labor disputes in Panama: Juntas de Conciliación y Decisión, labor courts, MITRADEL authorizations and the 60 working day deadline

Last verified: 2026-10-29 · Status: Stable

Dismissal 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 courts, and economic dismissals need prior approval from MITRADEL. Workers have 60 working days to claim reinstatement or indemnity with back pay, and one year to claim only the indemnity and final benefits. Employers may ask a labor court for prior authorization to dismiss for disciplinary causes, which removes much of the litigation risk.

Panama's currency, the balboa (B/.), is at par with the US dollar, which circulates as legal tender; the Superintendencia de Bancos states that the balboa's value is on a par with the US dollar (checked 29 October 2026). USD figures therefore equal the balboa figures.

Key facts

Deadline to claim reinstatement or indemnity with back pay	60 working daysCódigo de Trabajo art. 221, as of 2026-10-29 · in force
Deadline to claim only the indemnity and end of employment benefits	1 yearsCódigo de Trabajo art. 221, as of 2026-10-29 · in force
Deadline for the Juntas de Conciliación y Decisión to rule	3 monthsCódigo de Trabajo art. 218, as of 2026-10-29 · in force
Days after which an unanswered economic dismissal request allows dismissal	60 calendar daysCódigo de Trabajo art. 215, as of 2026-10-29 · in force
Exchange rate used for USD conversions	1 PAB per USDBalboa at par with the US dollar (Superintendencia de Bancos), as of 2026-10-29 · in force

The rule

1. The Juntas de Conciliación y Decisión, within the special labor jurisdiction, have exclusive competence over claims for unjustified dismissal, claims for benefits up to a set amount (B/.1,500 when the law was enacted) and claims of any kind or amount by domestic workers. Each board has a workers' representative, an employers' representative and a government representative who chairs it.Ley 7 de 25 de febrero de 1975, arts. 1 and 2, 1975-02-25 official text · verified 2026-10-29

2. Reinstatement claims for violation of union protection (fuero sindical), maternity protection and similar cases are handled by the labor courts under the reinstatement procedure; dismissals for economic causes without the authorization required by Código de Trabajo art. 215 are handled by MITRADEL's Dirección General or regional directorates.Ley 7 de 1975, art. 7, 1975-02-25 official text · verified 2026-10-29

3. A dismissed worker on an indefinite contract may ask the Junta (or the labor court where no Junta sits) for reinstatement or the art. 225 indemnity. If the employer does not prove the just cause or prior authorization, the worker wins, with back pay of up to three months for workers hired after Ley 44 de 1995 (five months for those already employed then). The Juntas must rule within three months of the claim, and the judgment orders payment of the indemnity from the employer's cesantía fund or by the employer directly.Código de Trabajo art. 218 as replaced by Ley 44 de 1995 art. 33, art. 218, 1995-08-12 official text · verified 2026-10-29

4. A claim for unjustified dismissal seeking reinstatement or indemnity with back pay must be filed within 60 working days of separation; a claim only for the indemnity and other end of employment benefits must be filed within one year.Código de Trabajo art. 221 as replaced by Ley 8 de 30 de abril de 1981 art. 5, art. 221, 1981-04-30 official text · verified 2026-10-29

5. Before notifying a dismissal for disciplinary or non attributable causes (and numeral 1 of the economic causes), the employer may optionally obtain prior authorization from the labor courts through the summary procedure. Economic dismissals require prior proof before the administrative labor authority; if it does not decide within 60 calendar days the employer may dismiss, paying the indemnity.Código de Trabajo (Decreto de Gabinete 252 de 1971); art. 215 as added by Ley 8 de 1981, arts. 215 to 217, 1981-04-30 official text · verified 2026-10-29

6. Where reinstatement is ordered, the worker must be reinstated immediately or within the second working day after the decision is final, in the same conditions; an employer who refuses can be held in contempt. The employer may instead end the relationship by paying the indemnity plus a surcharge (25 percent for post 1995 hires if not up to date with the cesantía fund) and back pay within one month.Código de Trabajo art. 220; art. 219 as replaced by Ley 44 de 1995 art. 34, arts. 219 and 220, 1995-08-12 official text · verified 2026-10-29

7. Pregnant workers may only be dismissed for just cause with prior court authorization processed as a summary proceeding; union officials need prior authorization from the labor courts.Código de Trabajo (Decreto de Gabinete 252 de 1971), arts. 106 and 383, 1971-12-30 official text · verified 2026-10-29

8. While a worker is on sick leave or vacation, and during maternity leave, no measure, sanction or action under the Code may be started or notified, and limitation periods are suspended.Código de Trabajo arts. 60 and 107 as replaced by Ley 44 de 1995 arts. 7 and 14, arts. 60 and 107, 1995-08-12 official text · verified 2026-10-29

Matter	Forum	Key deadline
Unjustified dismissal claim	Junta de Conciliación y Decisión	Worker: 60 working days to file; Junta: 3 months to rule
Domestic worker claims of any kind	Junta de Conciliación y Decisión	As above
Reinstatement for union or maternity protection	Labor court (reinstatement procedure)	Not set in Ley 7 de 1975 or Código de Trabajo arts. 215 to 221
Economic dismissal authorization	MITRADEL Dirección General or regional directorate	60 calendar days, then deemed allowed
Optional prior authorization for disciplinary dismissal	Labor court, summary procedure	Not set in Ley 7 de 1975 or Código de Trabajo arts. 215 to 221

Which forum hears what, Ley 7 de 1975 and Código de Trabajo arts. 215 to 221.

Worked example

A retailer dismisses a store manager with four years of service for repeated unexcused absences, stating the dates in the dismissal letter.
The manager files with the Junta 45 working days later, within the 60 day limit. If the retailer cannot prove the absences, the Junta orders reinstatement or the indemnity with up to three months of back pay.
On a B/.1,600 (US$1,600) salary, three months of back pay alone is B/.4,800 (US$4,800), on top of the indemnity of 13.6 weeks (3.4 weeks times 4 years).

Step by step

Keep evidence of the cause before dismissing and state every cause in the written notice.
Consider the optional prior court authorization for disciplinary dismissals of key or contentious staff.
For economic dismissals, file with MITRADEL and wait for a decision or the 60 calendar day deadline.
Keep the cesantía fund current to cap the cost of a lost case.
Diary the worker's 60 working day and one year limitation periods after any separation.

Common traps

Causes not listed in the dismissal letter cannot be raised before the Junta.
Notifying a dismissal during vacation or sick leave makes it void and suspends limitation periods.
The monetary limit for other Junta claims was set in 1975 and may have been changed by later laws; check the current threshold before filing.
Reinstatement orders are enforceable with contempt sanctions against the employer.

Sources

← 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 relationship

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