START OF THE EMPLOYMENT RELATIONSHIP

Who can work in Panama?

There are some professions that are reserved to Nationals by Law and that may hinder the intention of foreigners to apply to professional visas, as follows:
 

What are the main sorts of labour contract that exist in Panama?

Definite contracts, Indefinite contracts, and Contracts for a certain work.

What are the main features of each of them?

Definite contracts:  are those in which the end of the labour relationship is duly established in the contract.

Indefinite contracts:  are those in which there is no due date of the labour relationship.  However, they can be interrupted if there are causes related to a worker’s bad conduct.

Contracts for a certain work:  are those in which the duration of the labour relationship ends when the work, as agreed-upon, is done.

What information should employees be given in Panama?

Employees should know about the existence and understand the content of the Rules of Procedure or Bylaws, about their specific duties, rights, the social or private security plan, the existence of unions within the company, vacation system, incentives, in case they are not mentioned in the labour contract.

DURING THE EMPLOYMENT RELATIONSHIP

What are the main employment rights in Panama?

All employees have the right to salary, thirteenth month, vacations, payment for extra hours, seniority premium, and indemnity right (the last two when the labour relationship ends).

What are the maximum permitted daily, weekly, monthly and annual working hours?

Daily:  8 hours; Weekly:  48 hours; Monthly: 192 hours; Yearly: 2,304 hours.

After these maximum limits, payment for extra hours apply.

Are there any minimum number of hours required?

The minimum of weekly hours that an employee can work without causing inconveniences to the Company is 20 weekly hours.  Less than this amount will cause an immediate surcharge of 10 cents over minimum wage.

What is the minimum holiday entitlement?

Every person has the right of one day off per week; additionally, the following are public holidays:

• January 1st and 9th
• Tuesday of Carnival
• Good Friday
• May 1st
• November 3rd and 5th
• November 10th and 28th
• December 8th and 25th
• The day the President takes office.

Additionally, the Executive Branch can give other holidays (days of mandatory rest).  “Bridge holidays” are common in the country –  they are usually given a Monday when the special date is in the middle of the week and the purpose is to give a long weekend to the citizens. 

Also, days of remembrance or mourning, as deemed appropriate.  In both cases, these days are to be paid as usual, according to the Labour Code.  If a person works this day for the Company, it has to be paid according to the rate for holidays and days of mourning.

Can a contract be modified while still valid and in force? If so, under which circumstances?

Yes, it is possible to modify a labour contract while still valid and in force but only if the modifications do not affect the rights the employee has at the moment of the change.

Are any particular employment relationships subject to special protection?

• Electoral Immunity:  Persons who hold a public position, by means of election by the citizens or within a political party, can only be fired by judicial authorisation.
• Trade Union Immunity:  People who hold seats in trade unions can only be fired with a judicial authorisation.
• Maternity Immunity:  Pregnant women under an indefinite contract relation can only be fired with a judicial authorisation.
• People with chronic, reactive, or degenerative illnesses that may produce labour disability, can only be fired with a judicial authorisation.

Are there any obligations to consult with a works council and/or to undertake collective bargaining?

Yes, collective negotiations should be filed and approved by the Ministry of Work and Labour Development and can be subject to arbitration as a way to solve the collective conflicts.

END OF THE EMPLOYMENT RELATIONSHIP

When and how can an employer terminate an employment relationship?

An employer can terminate a labour relationship at any moment and without cause, paying the indemnity right established by Law.

However, the employer can terminate the relationship at any moment with cause, when the act committed by the worker is no older than two months starting with the exact day it happened.  In cases involving criminal conduct, this period starts from the date the Company was informed of the act.

When and how can an employee terminate an employment relationship?

An employee can terminate an employment relationship by just cause or without cause.  A just cause is when the employer commits any of the faults described in Article 223 of the Labour Code, amongst which are change of the labour conditions agreed upon, mistreatment, security and health issues, sexual harassment, etc.

Additionally, the employee can terminate the labour contract without just cause, according to Article 222 of the Labour Code, which determines that he/she has to give a 15-day notice (regular employee) or a 2-month notice (technical employee); otherwise, a week-worth may be discounted.

What are the economic consequences in each case?

In the case of layoff or termination of a contract without cause, the employer may indemnify the employee, according to the table established by the Labour Code, plus the pay due in relation to any vacations, thirteenth month, last fortnight of salary, and seniority There is a premium when it is an indefinite worker with more than two years of service.

In the case of layoff or termination of a contract with cause, the employer only has to pay the lawful rights, i.e. vacations, last fortnight of salary, thirteenth month, and seniority premium.

Are there any situations in which an employment relationship would terminate automatically and without the need for action by either party? If so, what are they?

There is no labour relationship that can terminate in an automatic form without the need of an action from the parties.