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Panama

Republic of Panama

Civil lawUnitary presidential republicReviewed· 2026-08-02
Capital
Panama City
Population
4,400,000
Languages
Spanish
Currency
PAB

Panama · Employment

Employment in Panama

What the atlas records on employment in Panama, checked against the primary sources cited below.

Employment

Labour Code with strong reinstatement rights

Reviewed· 2026-08-02

The 1971 Labour Code is protective and difficult to contract out of. After two years of service a worker generally cannot be dismissed without justified cause, and an unjustified dismissal can lead to reinstatement with back pay rather than merely damages.

Key rules

  • Décimo tercer mes (thirteenth month) is paid in three instalments in April, August and December.
  • Severance (indemnización) accrues by service bracket, plus a prima de antigüedad of one week per year.
  • The ordinary week is 48 hours; overtime is paid at 25% to 75% premiums depending on when it is worked.
  • Foreign employees are capped at 10% of the workforce, or 15% for technical specialists.
  • Claims go to the Juntas de Conciliación y Decisión or the labour courts depending on value.

Governing law

  • Código de Trabajo (Decreto de Gabinete 252 de 1971)Principal employment statute.
  • Ley 51 de 2005Social security (CSS) contributions and benefits.

In practice

Written contracts must be registered with MITRADEL. Trial periods are limited to three months and must be in writing to be effective, which employers frequently get wrong.

Sources

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Employment in Panama | LawLegiance