Your quick guide on talent and labor compliance norms in Panama
Capital
Panama City
Currency
Panamanian Balboa (PAB) or US Dollar (USD)
Languages
Spanish
Payroll Frequency
Monthly
GDP per Capita
$15,388.06
Employer Tax
13.75%
Talent Overview
Panama is the country that links Central and South America. It is ranked 65.4 in the freedom score, thus making it the 56th freest country in 2022. Panama has seen significant growth in GDP in 2021, with the country’s major contributors from services and industries. Out of 32, Panama holds the rank of 11th in the Americas region for economic development.
Major economic hubs:
Panama City, Chitre and Santiago
Skills in demand:
Engineer, HR Manager, Software engineer
Local Universities
The top local universities in Panama are as follows:
Local: 1
World: 1665
Local: 2
World: 1907
Local: 3
World: 4581
Local: 4
World: 6268
Local: 5
World: 6462
Salary Data
The salary of some of the common jobs in Panama are as follows:
| Job Title | Average Monthly Salary (PAB) | Average Monthly Salary (USD) |
| Financial Manager | 4170 PAB | 4170 USD |
| General Manager | 3460 PAB | 3460 USD |
| Business Development Manager | 3360 PAB | 3360 USD |
| Financial Analyst | 2690 PAB | 2690 USD |
| Business Analyst | 2640 PAB | 2640 USD |
| Project Manager | 2310 PAB | 2310 USD |
Talent Sourcing Tips
Konzerta, Panama Jobs, LinkedIn
1,034,000
It is important to know about the employment laws, benefits, social security, deductions, and allowances in Panama before onboarding an individual. This section contains all the necessary information.
The language of the employment contract must be in Spanish or any other language both parties can understand, as stated by the Panama Labor Law.
The probation period in Panama is 30 to 90 days.
| Date | Name | Type |
| 1 Jan | New Year’s Day | National holiday |
| 9 Jan | Martyr’s Day | National holiday |
| 13 Feb | Carnival / Shrove Tuesday / Pancake Day | National holiday |
| 29 Mar | Good Friday | National holiday, Christian |
| 1 May | Labor Day / May Day | National holiday |
| 3 Nov | Independence Day | National holiday |
| 4 Nov | National Symbols Day | National holiday |
| 5 Nov | Colón Day | National holiday |
| 10 Nov | Shout in Villa de los Santos | National holiday |
| 28 Nov | Independence from Spain | National holiday |
| 8 Dec | Mother’s Day | National holiday |
| 20 Dec | National Day of Mourning | National holiday |
| 25 Dec | Christmas Day | National holiday, Christian |
| Type of Leave | Time Period | Mandatory |
| Annual/Earned Leave | 30 days | Yes |
| Sick Leave | 18 days | Yes |
| Maternity Leave | 14 weeks | Yes |
Payroll
Payroll Cycle
The payroll cycle in Panama is Monthly.
Minimum Wage
The minimum wage in Panama ranges from 1.91 PAB to 3.20 PAB per hour.
Overtime Pay
The overtime pay in Panama is 125% of the regular wage if the overtime is done in a working day, whereas the 150% for the work on a holiday or rest day. If the overtime is done at night shift, the pay increases to 175% of the regular wage.
Bonus
The 13th-month pay is mandatory in Panama, and it is given in three installments, April 15, August 15, and December 15.
Taxes
| Fund | Contribution |
| Social Security Tax | 12.25% |
| Education Insurance Tax | 1.5% |
| Fund | Contribution |
| Social Security Tax | 9.75% |
| Education Insurance Tax | 1.25% |
| Annual Taxable Income | Tax on Column 1 | Tax on excess |
| 0 to 11,000 PAB | 0 | 0 |
| 11,000 to 50,000 PAB | 0 | 15% |
| Above 50,000 PAB | 5,850 | 25% |
The standard rate of Value Added Tax in Panama is 7%.
Offboarding & Termination
Termination in Panama depends on the employment agreement between both parties or a collective agreement. Both the parties can terminate the contract based on mutual agreement or with a proper reason of dismissal from the employer.
The notice period in Panama is 30 days.
In Panama, the severance pay is 3.4 weeks for each year worked. However, severance pay is only provided if there is an unjustified dismissal.
Visa and Immigration
According to the National Immigration Service Panama, any individual who needs a work visa or permit, needs to present all the personal documents along with an employer offer letter. However the documents must be translated into spanish language. The work permit allows an individual to stay for 9 months within the country, which further can be renewed.
