Panamanian Balboa (PAB) & United States Dollar (USD)
Hire employees in Panama. No entity needed.
Usually, to hire in Panama, your business needs an entity. That means a local office, an address registered as a subsidiary, and an account with a local bank. All of this, plus navigating regional benefits, payroll, tax, and HR laws, can take months.
Panama also treats contractors differently than full-time employees, so misclassifying a contractor could lead to fines. Deel lets you hire employees in Panama quickly, easily, and compliantly. We even automate tax document collection, payroll, benefits, and more.
All the necessary benefits for Panama
built right in
Deel allows you to provide localized benefits for employees in Panama within minutes. All in one manageable online dashboard.
- Pension Insurance
- Public Health Insurance
- Unemployment Insurance
- Work From Home Allowance
- Workers Compensation Insurance
Our quickstart guide to hiring in Panama
Navigate the tabs below to learn everything you need to know about hiring an employee in Panama
Minimum Wage Requirements
Individual Income Tax
The individual income tax ranges from 0% to 25%. Income tax is calculated according to progressive rates.
|Gross Annual Income||Tax Rate (%)|
|Up to USD 11,000||0%|
|Up to USD 50,000||15%|
|Over USD 50,000||25%|
- Social security - 12.25%
- Educational security - 1.50%
- Professional risks - 2.10%
- 13th Salary - 8.33%
- Vacation pay - 9.09%
- Seniority premium - 1.92%
- Compensation - 0.33%
- Work-from-home Allowance USD 50
Overtime Pay & Maximum Hours
- 125% of the hourly rate, on a standard day
- 150% of the hourly rate, after 6 pm
- 175% of the hourly rate for the night shift employees
Standard working hours are eight hours per day, 40 hours per week. The standard workweek is from Monday to Friday. However, the standard workweek can be extended to 48 hours per week from Monday to Saturday.
The employee may extend leave unpaid at the employer's sole discretion.
Terminations must respect complex rules and the rules of an employee’s employment country. The off-boarding is always handled by the Employer with the primary stakeholders. It may include ad-hoc fees as well as required or recommended steps on specific termination cases.
Terminations in Panama can be complex. There is no at-will termination outside the probation period and termination must be done for just cause. In case the employee considers the termination an unfair dismissal, it will have up to 60 days to sue the employer for reinstatement for wrongful dismissal against.
The employment agreement can be terminated by:
- Voluntarily by the employee (Resignation)
- By mutual agreement
- Must be in writing and should not waive any employment rights
- Dismissal with justified cause
- By the expiration of the contract
- For the completion of the work
- Due to the death of the employee
- Due to the death of the employer, when it entails the unavoidable termination of the contract.
- For the prolongation of the causes of suspension of the contracts, at request of the employee.
- Unilaterally by the employer:
- For indefinite employment agreements must be for cause and in writing
Special cases and circumstances may apply including requiring the employer to get authorization from the relevant administrative labor authority.
- Generally, 15 days if the employee resigns
- Generally, 30 days if the employer terminates the employee
Special cases and circumstances may apply, including having the notice signed by the relevant administrative labor authority. Notice can be replaced by paying the equivalent in salary.
Severance for Employees
Severance pay is complex and will depend on the reason for the termination, type of contract (fixed-term or indefinite term), and length of the labor relationship.
Paid Time Off
- New Year's Day (1st January)
- Martyr's Day (9th January)
- Carnival Monday and Tuesday
- Good Friday
- Labor Day (1st May)
- Independence Day (11th November)
- Christmas Day (25th December)
Employment Contract Details
Contracts must be in Spanish and can be bilingual. They must be in writing and signed by both parties. A contract must include:
- Name, nationality, age, gender, civil status, address, ID
- If the employer is a company it must include the company name, address, name of its legal representative and the registration data in the Public Register.
- Names of the people who live with the employee and any dependents
- Start date and length of the employment
- Job description
- Regular work hours
- Salary, date and payment method
- Place and date of the execution of the contract
- Signatures of both parties
Probation periods help an employer and the employee ensure they're a hiring match, allowing a company to quickly decide if it's a fit or the employee to see if the job aligns with their career goals.
Hiring in Panama, hassle-free
With Deel, your business can easily hire employees in Panama. No more worrying about local laws, complex tax systems, or managing
international payroll. Deel takes care of everything in 150+ countries.
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