Countries › Panama › Guide › 7. Labor and employment › Unions, collective bargaining and strikes in Panama: one company union, a duty to bargain on request, agency fees and strikes that close the workplace

Unions, collective bargaining and strikes in Panama: one company union, a duty to bargain on request, agency fees and strikes that close the workplace

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

Panama 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 they include, and non members who benefit pay the union dues, which the employer must deduct. A legal strike, declared by a majority after conciliation, stops all productive activity at the site and bars hiring replacements, so labor relations are a real operating risk in unionized sectors.

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

Maximum company unions per company	1 unionCódigo de Trabajo art. 346, as of 2026-10-29 · in force
Minimum number of workers to constitute a strike	5 workersCódigo de Trabajo art. 475, as of 2026-10-29 · in force
Strike notice (private sector)	5 calendar daysCódigo de Trabajo art. 490, as of 2026-10-29 · in force
Strike notice (public services)	8 calendar daysCódigo de Trabajo art. 490, as of 2026-10-29 · in force
Employer must negotiate a collective agreement when the union requests	yes Código de Trabajo art. 401, 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. Only one company union may operate in a single company. When several legal entities operate as one economic unit, the workers of all of them may form a single company union.Código de Trabajo (Decreto de Gabinete 252 de 1971), arts. 345 and 346, 1971-12-30 official text · verified 2026-10-29

2. A union registration request that is not rejected or objected to within 15 calendar days is deemed registered for all legal purposes, and MITRADEL must issue the certificates.Código de Trabajo art. 356 as replaced by Ley 44 de 1995 art. 44, art. 356, 1995-08-12 official text · verified 2026-10-29

3. Union protection (fuero sindical) covers members of unions being formed (until three months after registration), board members and alternates and union representatives (until one year after leaving office) and candidates from when the election list is notified. Protected workers cannot be dismissed, have their conditions changed unilaterally or be transferred in a way that hinders union duties without prior authorization from the labor courts based on a just cause.Código de Trabajo arts. 381, 383 and 384, numeral 2 of art. 381 as amended by Ley 44 de 1995, arts. 381, 383 and 384, 1995-08-12 official text · verified 2026-10-29

4. Every employer must deduct ordinary and extraordinary union dues from union members and pass them to the union monthly, on the union's request and proof of membership.Código de Trabajo art. 373 as worded by Ley 68 de 26 de octubre de 2010 art. 1, art. 373, 2010-10-26 official text · verified 2026-10-29

5. Every employer with workers who are union members must negotiate a collective agreement with that union when the union requests it. If the employer refuses, the workers may strike once conciliation is exhausted.Código de Trabajo art. 401 as replaced by Ley 8 de 30 de abril de 1981 art. 7, art. 401, 1981-04-30 official text · verified 2026-10-29

6. A collective agreement applies to everyone working in the categories it covers, union members or not. Non members who benefit must pay the union's ordinary and extraordinary dues for the agreement's term, deducted by the employer, unless the agreement provides otherwise.Código de Trabajo art. 405 as worded by Ley 68 de 2010 art. 2, art. 405, 2010-10-26 official text · verified 2026-10-29

7. A strike is the temporary abandonment of work agreed and carried out by five or more workers. It is legal if conciliation has been exhausted, a majority of the company's (or the establishment's) workers join, it pursues a lawful aim, notice is given and the public service rules are met; no prior declaration of legality is needed. A craft union strike approved by 60 percent of its members is also legal.Código de Trabajo (Decreto de Gabinete 252 de 1971), arts. 475 to 477, 1971-12-30 official text · verified 2026-10-29

8. The strike must be declared within 20 working days after conciliation ends, with at least five calendar days' notice (eight for public services), communicated to the labor inspectorate or Dirección de Trabajo, which notifies the employer.Código de Trabajo (Decreto de Gabinete 252 de 1971), arts. 490 and 492, 1971-12-30 official text · verified 2026-10-29

9. A strike stops productive activity at the business, and the labor authority orders police protection and ensures the production areas stay closed. Owners, directors, the general manager and confidential staff may enter but not to resume production. The employer cannot hire replacements except maintenance staff authorized to prevent irreparable damage. Within 24 hours the employer may ask for a count of strikers; if there is no majority the employer need not stop activity, but the strike is illegal only if a court so declares.Código de Trabajo art. 493 as worded by Ley 68 de 2010 art. 3; arts. 494, 495 and 497 as worded by Ley 68 de 2010, arts. 493 to 497, 2010-10-26 official text · verified 2026-10-29

Step	Timing	Effect
Conciliation before the labor authority	Must be exhausted first	Condition of legality
Declaration of strike	Within 20 working days after conciliation ends	Notified to the employer through the labor authority
Notice period	At least 5 calendar days (8 for public services)	Strike may begin after notice
Strike begins	Up to 3 working days after the 20 day window if declared within it	Production stops; no replacement hiring
Count of strikers	Employer may request within 24 hours	No majority: employer need not stop activity

Strike timeline under Código de Trabajo arts. 476, 490, 492 and 493.

Worked example

A manufacturer with 120 workers receives a union request to negotiate a first collective agreement. It must negotiate (art. 401).
If talks fail and conciliation ends, the union has 20 working days to declare a strike with at least five days' notice. If 61 or more workers join, the plant is closed by the labor authority and the company cannot hire temporary replacements to keep producing.
Once signed, the agreement covers all 120 workers in its categories, and non members pay union dues through payroll deduction for its term.

Step by step

Map whether any group of workers is organized or forming a union, and treat members of a union in formation as protected.
Set up payroll deduction of union dues once the union proves membership.
Respond to a request to bargain; refusal opens the way to a lawful strike.
Plan for a full stoppage in the event of a strike, since replacement hiring is banned.
Use the 24 hour window to request a count if you doubt majority support.

Common traps

Dismissing an employee who is on a union formation list or an election list without prior authorization is void.
The legal effect of a strike is a full stop of productive activity, not just the absence of strikers.
A strike without majority support is not illegal until a court declares it so.
Collective agreement terms apply to non members too, along with the dues deduction.

Sources

← 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 salaryOutsourcing, subcontracting and temporary staffing in Panama: joint liability of the beneficiary, a ban on labor supply and two month agency placements →

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