Hire and pay employees 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.

The average onboarding time frame in Panama is 3 days with Deel.

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Currency

Panamanian Balboa (PAB) The payout currency for Deel EOR is United States Dollar (USD)

Capital

Panama City

Official Language

Spanish

Payroll Cycle

Monthly

Onboard, pay and manage employees in Panama with Deel.

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.

Deel lets you hire employees in Panama quickly, easily, and compliantly. We even automate tax document collection, payroll, benefits, and more. For your existing direct employees, we can manage your entire payroll operation from end-to-end.

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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
Social Security
Unemployment Insurance
Work From Home Allowance
Workers Compensation Insurance
Private Healthcare - Allianz (optional)

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

The minimum wage will depend on the sector of the company and can range from USD 275 to USD 970. For Deel, the minimum monthly wage is USD 611.52.

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%

Payroll Cost

The employer cost is generally estimated at 38% of the employee salary (inclusive of work-from-home allowance).

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

Overtime payment is mandatory. Hours outside of standard work hours are considered overtime. Employees can work up to three extra hours per day. For additional hours, employees are paid:

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.

Maternity Leave

Pregnant employees who have worked for 60 consecutive days are entitled to 14 weeks of paid leave. Four weeks must be taken before the child's birth. The employee will receive 100% of their average salary during this period, and Social Security will be responsible for this pay.

The employee may extend leave unpaid at the employer's sole discretion.

Paternity Leave

Employees are entitled to 7 days of paid paternity leave that must be taken after the child's birth. The employee will receive 100% of their average salary during this period, and the employer will be responsible for this pay.

Parental Leave

Parents are entitled to 12 weeks of parental leave, which either parent may take. This leave can be taken before the child reaches the age of 2 years. The leave can be taken all at once or in separate blocks of time and must be taken within the first year after the birth or adoption of the child.

Sick Leave

Employees are entitled to paid sick leave for up to either 18 or 36 days depending on the seniority of the employee.

Termination Requirements

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.

Notice Period

The minimum notice period is 15 days and will vary according to the reason for the termination:

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

In Panama, all employees are entitled to severance pay unless the termination is due to a disciplinary dismissal.
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

Both full-time and part-time employees are entitled to 30 calendar days of paid time off (PTO) a year. PTO accrues monthly at 2.72 days per month. Employees are eligible for 15 calendar days of annual leave after 5.5 months of work.

Public Holidays

Panama celebrates 8 national holidays. National public holidays include:
- 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)

Onboarding

Onboarding takes three business days. If the employee has no Social Security Number, the onboarding will be delayed at least seven business days.

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
Workplace
Regular work hours
Salary, date and payment method
Place and date of the execution of the contract
Signatures of both parties

Probation Period

Employees hired using Deel have a probation period of 90 days, this cannot be extended as it is the country maximum. As of January 2022, it's Deel company policy to include probation periods in all employment contracts moving forward.

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.

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Hiring in Panama, hassle-free

With Deel, your business can easily hire employees in Panama with our EOR solution. If you have an entity, our Global Payroll solution takes care of payroll and compliance for your direct employees. Our 250+ in-house experts handle everything from managing local laws, complex tax systems, or your payroll in Panama and 150+ countries.

Starting at 599 USD

Management fee

38%

Estimate Employer Cost

*of employee salary

Want to learn the cost of hiring an employee in Panama?

View our Employee Cost Calculator

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Hire and pay employees in Panama, hassle-free