Countries › Panama › Guide › 16. What is normal abroad but not here › A mandatory thirteenth month paid in three installments

A mandatory thirteenth month paid in three installments

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

Abroad, a year end bonus is usually discretionary or set by contract. In Panama every private employer must pay the décimo tercer mes, worth one day of salary for every eleven days worked, in three equal installments, two of them falling on 15 August and 15 December. The bonus is protected like salary and cannot be attached, and paid days off for illness, work accidents, maternity, leave and vacation count as days worked.

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

Thirteenth month (décimo tercer mes)	One day of salary per eleven days worked, paid in three equal installments textDecreto de Gabinete 221 de 1971 arts. 2 and 3, as of 2026-10-29 · in force

The rule

1. Every employer must pay its workers a special bonus called the décimo tercer mes, as an additional right to existing labor rules. It is calculated as one day of salary for every eleven days, or fraction, of effective work, continuous or not. Days the worker could not work because of occupational or non occupational illness, work accident, maternity, leave and vacation, duly proven, count as days worked.
Cost to do it: About one extra month of salary a year.
Example: 132 days worked at a daily salary of B/.50: 12 days of salary, B/.600 for the period. / About US$600.Decreto de Gabinete 221 de 18 de noviembre de 1971 (Gaceta Oficial 16989, 1 December 1971), arts. 1 and 2 and parágrafo, 1971-11-18 official text · verified 2026-10-29

2. The bonus is paid in three installments of 33 1/3 percent each; the decree fixes the second on 15 August and the third on 15 December of each year. It cannot be attached and enjoys the other protections and privileges of salary. The decree applies to all private activities and to public institutions that receive no subsidy from the central government.
Cost to do it: Cash flow peaks in August and December, plus the first installment earlier in the year.
Example: A payroll of B/.60,000 a month accrues roughly B/.20,000 per installment. / About US$20,000 three times a year.Decreto de Gabinete 221 de 18 de noviembre de 1971, arts. 3 and 4, 1971-11-18 official text · verified 2026-10-29

3. The second installment, due on 15 August, has been paid by the employer directly to the worker since 1984; it had previously been deposited for workers' housing programs.
Cost to do it: No extra cost; it changed the payee.
Example: The August installment goes into the worker's own account like ordinary pay. / Same in US dollars.Ley 17 de 22 de agosto de 1983 (Gaceta Oficial 19885), art. 1, 1983-08-22 official text · verified 2026-10-29 · changed: Ley 17 de 1983 moved the August installment from a deposit to direct payment to the worker from 1984.

Item	Rule
Amount	One day of salary for every 11 days worked
Installments	Three, 33 1/3 percent each
Fixed dates in the decree	15 August and 15 December
Days counted as worked	Illness, work accident, maternity, leave and vacation, if proven
Attachment	Not attachable

Thirteenth month at a glance (Decreto de Gabinete 221 de 1971; Ley 17 de 1983).

Worked example

An employee earning B/.1,650 a month (daily salary B/.55 on a 30 day month) works 121 days in the period covered by the August installment. 121 / 11 = 11 days of salary, B/.605 for the August installment (US$605).
A new hire who starts on 1 July receives a pro rata amount in August based on days worked since then.

Step by step

Accrue one twelfth of salary each month so the three installments do not hit cash unexpectedly.
Track sick, maternity and vacation days as days worked when computing each installment.
Pay the August and December installments by the 15th; check the current first installment date with the labor ministry calendar.
Include accrued but unpaid thirteenth month in every final settlement.

Common traps

The bonus is a legal right, not a discretionary bonus, so it cannot be replaced by a performance bonus.
Social security treatment of the installments follows the Caja de Seguro Social law, not the 1971 decree's original exemption wording; see the labor section page on social security contributions.
Global payroll systems that pay a single annual bonus in December will under pay and pay late.

Sources

← No dismissal at will after two years of serviceFortnightly pay and no salary cuts, even by agreement →

Get rule changes weekly

Free. One email a week from The LatAm Thread.

One more step after you press the button: we take you to Substack, where your email is already filled in. Confirm there to start. No spam, unsubscribe anytime, we never share your address. By subscribing you agree to the privacy policy.