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hire in Panama

Panama PEO &
Employer of Record

SALARY PAYMENT IN Panamanian Balboa (PAB)

CONTRACT LANGUAGE  Spanish / English

PAYROLL TAX  21% – 22%

PAYROLL CYCLE Monthly

TIME TO HIRE 24 hours

Hire and pay talents
with Horizons in
180+ countries

Simple, compliant hiring with Horizons PEO

Hire in Panama

Horizons ensures day-to-day guidance to help your business navigate Panama labor laws and regulations. Horizons also ensures payroll is processed weekly or fortnightly (the standard periods in Panama ), and that taxes are withheld as required.

As the Panama Employer of Record, Horizons is responsible for employee income tax withholding, payment of payroll taxes to state authorities, and submission of tax returns to the Panama Tax Office. 

Partnering with our Panama PEO is the quickest and most cost-effective way to enter the Panama market.

Facts & Stats

PEO Platform Hire in Panama, and pay employees through our platform or app. PEO Cost Our Panama PEO solution is the most affordable on the market. Time-to-hire Fast onboarding in Panama, hire in as little as 24 hours.
Contracts We draft labor contracts compliant with Panama labor law. Local Benefits We administer all mandatory benefits and contributions in Panama. 180+ Countries It doesn’t stop with Panama — we are an international PEO
stay compliant with Panama labor laws

Employment Laws

Panama employment contracts

Contracts of employment can be either verbal or written in Panama, but we always recommend producing formal written contracts every time you hire. These contracts should contain all necessary details of the employment arrangement, such as working hours, entitlements, benefits, salary, and so on. They should also be written in Spanish and reference either US dollars or Panamanian balboa (although US dollars are generally preferable).

Fixed-term
Probationary period3 months (standard)
Termination notice period30 – 90 days (standard)
Severance

0.5 months’ salary: 0 – 6 months’ service

0.75 months’ salary: 6 – 9 months’ service

1 month’s salary: 9 months’ – 1 year’s service

3 months’ salary: 1 – 2 years’ service

4.5 months’ salary: 2 – 4 years’ service

5.2 months’ salary: 4 – 5 years’ service

9.75 months’ salary: 5 – 10 years’ service

14.8 months’ salary: 10 – 20 years’ service

Indefinite
Probationary period3 months (standard)
Termination notice period30 – 90 days (standard)
Severance

0.5 months’ salary: 0 – 6 months’ service

0.75 months’ salary: 6 – 9 months’ service

1 month’s salary: 9 months’ – 1 year’s service

3 months’ salary: 1 – 2 years’ service

4.5 months’ salary: 2 – 4 years’ service

5.2 months’ salary: 4 – 5 years’ service

9.75 months’ salary: 5 – 10 years’ service

14.8 months’ salary: 10 – 20 years’ service

Working hours in Panama

The standard working week for employees in Panama is 44 hours spread across five days. Any time worked beyond this should be compensated at 125% of normal pay, or 175% for evening shifts.

Hire compliantly in Panama without a local entity.

Quick, compliant hiring in 24 hours—no subsidiary required.

National holidays in Panama

There are several annual public holidays in Panama, and employees generally receive the following as paid leave from work:

Panama has a range of national public holidays that are celebrated annually. In 2023 these holidays are:
Date Holiday name
1 Jan Sunday New Year’s Day
9 Jan Monday Martyr’s Day
21 Feb Tuesday Carnival / Shrove Tuesday / Pancake Day
7 Apr Friday Good Friday
1 May Monday Labor Day / May Day
3 Nov Friday Independence Day
4 Nov Saturday National Symbols Day
5 Nov Sunday Colón Day
10 Nov Friday Shout in Villa de los Santos
28 Nov Tuesday Independence from Spain
8 Dec Friday Mother’s Day
20 Dec Wednesday National Day of Mourning
25 Dec Monday Christmas Day

Vacation in Panama

Employees in Panama are generally entitled to 30 days of paid vacation leave annually.

Panama's healthcare system

Sick leave in Panama

Employees in Panama can usually take up to 18 days of paid sick leave each year.

Maternity and paternity leave in Panama

Female employees in Panama are entitled to 14 weeks of paid maternity leave, with up to six weeks before the birth and eight after. Fathers in Panama can take up to three days of paid paternity leave for the birth of a child.

Employee severance and terminations in Panama

Employees in Panama are generally entitled to 30 days of notice prior to termination of their employment contract. Severance payments, if applicable, usually equal around three to four weeks of pay for every year of service with an employer. Probation periods are limited to three months.

Tax laws and withholdings in Panama

Employers and most employees in Panama must both contribute to social insurance for the employees. Contributions equal 6.75% of salary for employees and 2.75% for employers. The government also contributes 1.04%.

Panama’s territorial income tax laws are very favorable for many, particularly foreign workers. Panamanian sourced income is taxed progressively at rates of between 0% and 25%.

Corporate tax in Panama is also territorial in nature, and Panama-sourced income is taxed at a rate of 25%.

Health insurance in Panama

Panama has a public healthcare system, although many employers do provide private insurance as part of their benefits packages.

hassle-free Panama compensation & benefits

Compensation & Benefits

Compensation laws in Panama
Minimum wages in Panama vary significantly based on the type of work, such as agricultural, manufacturing, construction, and so on. For this reason, it is important to understand which rates apply to your workers whenever hiring in Panama.
Benefit management in Panama

It can be difficult to understand and set up employee benefits in Panama, and it can require a lot of time, effort, and investment on the part of employers. However, it is crucial that you adhere to compensation and benefits laws as you can be subject to large fines and legal issues if you fail to.

Horizons can help you bypass this element of your Panama expansion by offering benefit system outsourcing that can save you time and money. Our experts will advise you on the best course of action and take care of your benefit setup and management, helping you focus on the rest of your expansion.

Hire in Panama in 24h
without your own local entity.

With Horizons, you get quick service, transparent pricing, and expert support.

FAQs

A Panama PEO and a Panama EOR are two types of companies which specialize in providing human resources services to businesses in Panama.

The main difference between a Panama PEO and a Panama EOR is in the scope of their services.

Panama PEOs provide a full range of HR services, including payroll, benefits administration, and employee recruiting—all under one roof as a co-employer. Engaging a Panama PEO is essentially outsourcing your HR duties in Panama.

Panama EORs actually take over as the legal employer of your employees based abroad. Panama EORs become responsible for labor compliance for your employees in Panama.

At Horizons, we offer both PEO and EOR services in Panama. Get in touch now and let us know what service you are seeking.

A PEO in Panama can feasibly hire both local and foreign nationals to work in Panama.

However, the ability of Horizons to sponsor your foreign national employee in Panama may be limited due to visa quotas practiced in many countries.

Contact us with your requirements and our Global Mobility team with review the case and get back to you within 2 business days.

In most cases, Horizons’ Panama PEO can hire & onboard your employee within 24 hours. The actual start date of the employee will depend on their notice period obligation to their previous employer as well as any relevant hiring rules in Panama.

It is possible to get a work visa in Panama. Horizons’ Global Mobility team is a dedicated team of work visa experts. They assess the details of each case to determine feasibility and costs before Horizons applies for the work visa on behalf of your employee. If the Global Mobility team determines that your case is feasible, the process is smooth and transparent. Visa spots in Panama are limited, however—get started today to secure your employees’ visa spot.