Countries › Panama › Guide › 16. What is normal abroad but not here › At least 90 percent of ordinary staff must be Panamanian

At least 90 percent of ordinary staff must be Panamanian

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

Abroad, employers usually hire any nationality once a work visa is granted. In Panama every employer must keep Panamanians (or foreigners with a Panamanian spouse or ten years of residence) at no less than 90 percent of ordinary staff, and foreign specialists or technicians may not exceed 15 percent of the workforce. Foreign hires need a labor ministry authorisation, specialists must be replaced by a Panamanian within five years, and fines escalate to B/.15,000 (US$15,000), doubled where ten or more workers are involved, and loss of the Aviso de Operación for repeat offenders.

Panama's currency, the balboa (B/.), is at par with the US dollar, which circulates freely; the Superintendencia de Bancos states that the balboa's value is on a par with the US dollar and that the dollar circulates without restrictions in commercial and financial transactions (checked 29 October 2026). USD figures therefore equal the balboa figures.

Key facts

Minimum share of Panamanian ordinary staff	90 %Código de Trabajo art. 17, as of 2026-10-29 · in force
Maximum foreign specialist or technical staff	15 %Código de Trabajo art. 17, as of 2026-10-29 · in force
Fine for a third offense on foreign hiring	15000 PABCódigo de Trabajo art. 20 numeral 3 (Ley 237 de 2021), as of 2026-10-29 · in force

The rule

1. Every employer must keep Panamanian workers, or foreigners with a Panamanian spouse or ten years of residence in the country, in a proportion of no less than 90 percent of ordinary workers, and may keep foreign specialist or technical staff not exceeding 15 percent of all workers. The salary percentages, overall and by category, cannot be lower than these proportions.
Cost to do it: No fee for the quota itself; the cost is the authorisation and, if breached, the fines in art. 20.
Example: An employer with 40 workers can have at most 6 foreign specialists (15 percent of 40), and at least 90 percent of the remaining ordinary staff must be Panamanian or qualifying foreigners. / If foreign staff earn 20 percent of the payroll while being 10 percent of headcount, the salary test in the second paragraph is breached.Código de Trabajo (Decreto de Gabinete 252 de 1971), art. 17, first and second paragraphs, 1971-12-30 official text · verified 2026-10-29

2. A higher proportion of foreign specialists or technicians may be allowed for a defined time on the recommendation of the relevant ministry and approval of the labor ministry. Employers that need foreign workers must obtain an authorisation from the labor ministry, after proof that the national percentages are kept and that the specialist is qualified and will perform specialist functions; it is issued for up to one year, extendable up to five years. Trusted staff of companies that only keep offices in Panama to direct transactions completed or taking effect abroad are excepted, with prior authorisation.
Cost to do it: Authorisation from the Ministerio de Trabajo y Desarrollo Laboral; the application fee is not in the Code (see the labor section page on foreign workers).
Example: A regional office that only manages transactions concluded abroad can ask for its trusted staff to be excluded from the 90 percent count. / Applies equally to a US$100,000 a year expatriate manager and a local hire.Código de Trabajo (Decreto de Gabinete 252 de 1971), art. 17, third to fifth paragraphs, 1971-12-30 official text · verified 2026-10-29

3. Employers authorised to hire foreign specialists or technicians must replace them with a Panamanian within a maximum of five years from the authorisation.
Cost to do it: Training a Panamanian successor is the practical cost.
Example: A foreign engineer authorised in 2026 must be replaced by a Panamanian by 2031. / Plan succession and training budgets into any five year expatriate assignment.Código de Trabajo (Decreto de Gabinete 252 de 1971), art. 18, 1971-12-30 official text · verified 2026-10-29

4. Breaches and false information are fined by the labor ministry: the first time B/.500 per foreign worker without a work permit; the second time B/.1,000 per such worker; the third time B/.15,000 regardless of the number of foreign workers, with a request to the Ministerio de Comercio e Industrias to suspend the Aviso de Operación temporarily; and the fourth time a request to cancel the Aviso de Operación definitively, besides immediate dismissal of the unauthorised foreign staff and payment of their final settlement. Fines are doubled where the breach involves ten or more workers.
Cost to do it: Fines of B/.500 or B/.1,000 per worker (US$500 or US$1,000), then B/.15,000 (US$15,000), doubled for ten or more workers.
Example: Three unauthorised foreign workers found on a first inspection cost B/.1,500 in fines. / A third offense costs US$15,000 and puts the business licence (Aviso de Operación) at risk.Código de Trabajo art. 20 as worded by Ley 59 de 2017 art. 1, numeral 3 as worded by Ley 237 de 15 de septiembre de 2021 art. 1, art. 20, 2021-09-16 official text · verified 2026-10-29 · changed: Ley 237 de 2021 raised the third offense fine from B/.10,000 (Ley 59 de 2017) to B/.15,000.

Offense	Fine	Extra consequence
First	B/.500 per foreign worker without permit	Dismissal of unauthorised staff
Second	B/.1,000 per foreign worker without permit	Dismissal of unauthorised staff
Third	B/.15,000 regardless of number	Request to suspend the Aviso de Operación
Fourth	Not stated as a fine	Request to cancel the Aviso de Operación definitively

Foreign worker fines (Código de Trabajo art. 20 as amended by Ley 59 de 2017 and Ley 237 de 2021), doubled for ten or more workers; B/. equals US$.

Worked example

A foreign group opens a Panamanian service company with 20 workers and wants 4 expatriates. 4 is 20 percent of the workforce, above the 15 percent cap, so either headcount grows to at least 27 (15 percent of 27 is 4.05) or the group asks for a temporary higher proportion under art. 17.
If 2 of the expatriates start before their permits are issued and an inspection finds them, the first offense fine is B/.1,000 (US$1,000).

Step by step

Count ordinary staff and specialist staff separately and test both the headcount and the payroll percentages.
Apply for the labor ministry authorisation before the foreign worker starts, and diary the one year renewal and the five year replacement deadline.
Check whether the immigration permit route (see immigration section) also needs the labor authorisation.
Budget a Panamanian successor and training plan for each specialist post.

Common traps

The 90 percent test also applies to salaries, so a few highly paid expatriates can breach it even when headcount is fine.
Foreigners married to a Panamanian or with ten years of residence count as nationals for the quota; other residents do not.
Fines count per worker on the first two offenses, so a larger unauthorised team multiplies the cost.
In economic dismissals Panamanians must be retained over foreigners after seniority (labor section), which affects restructuring plans.

Sources

← Retail trade is reserved to PanamaniansNo dismissal at will after two years of service →

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