Panamanian Balboa (PAB) & United States Dollar (USD)
Hire employees in Panama. No entity needed.
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.
Panama also treats contractors differently than full-time employees, so misclassifying a contractor could lead to fines. Deel lets you hire employees in Panama quickly, easily, and compliantly. We even automate tax document collection, payroll, benefits, and more.
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
- Unemployment Insurance
- Work From Home Allowance
- Workers Compensation Insurance
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
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%|
- 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
- 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.
The employee may extend leave unpaid at the employer's sole discretion.
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, they will have up to 60 days to sue the employer.
Compliant terminations include:
- Voluntarily by the employee
- By mutual agreement
- Must be in writing and should not waive any employment rights
- Termination with cause
- Unilaterally by the employer:
- For indefinite employment agreements must be for cause and in writing
- For the completion of the work
- By the expiration of the contract
- Due to the death of the employee or employer
Special cases and circumstances may apply including requiring the employer to get authorization from the relevant administrative labor authority.
- 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
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
- New Year’s Day
- Martyrs Day
- Tuesday of Carnival
- Holy Friday
- Labor Day
- National Holidays (4 days)
- Mother’s Day
Additionally, every five years, there is an additional holiday for the day the President of the Republic of Panama is elected.
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:
- Start date
- Length of the employment
- Job description
- Termination conditions
- Holiday entitlement and pay
- Salary and any other supplements
- Working hours
- Length of breaks
- Special working-hour arrangement is pursuant to the provisions concerning reduced working hours, flexible working hours, etc.
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.
Hiring 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.
Estimate Employer Cost
*of employee salary
We have a 4.9 out of 5 rating on Trustpilot
We're trusted by over 6,000 businesses all over the world. Read our reviews on Trustpilot.com.
Deel is the best!!
“Deel is an amazing platform! It's super intuitive and user friendly, plus it runs suuuuper smoothly!! It has great options for paying and withdrawing money, plus it helps you keep super organized with your spending. They also have great support and are super friendly with all the questions you might have :D I would definitely recommend it!!”
A contracting life-changer!
"This has by far the singular tool that made my contracting work amazing. It used to be that contract management and payouts was a nightmare — Deel makes everything so easy especially with its Transferwise integration. Everyone gets paid on time and kept happy. I also contacted their support a couple of times for some small questions and they’ve been nothing short of amazing. If you’re a contractor or someone who hires contractors then definitely give Deel a go."
Great service offering!!
"The Deel platform has been super effective for my team and I and has enabled us to bring on workers globally. The platform allows us to onboard individuals seamlessly and with no issues at all. Highly recommend."
"Great service, amazing customer care, terrific platform, both for the company and for the contractors/employees. Saving everyone's time and money"
Deel is a game-changer for distributed teams
"Deel has been instrumental in helping us both open and operate our EU operations. It's super simple to set up and implement and the support team has been world-class. I can't recommend them enough!"
Great app with great customer service
"Great app with great customer service, with great attention to details and legal requirements. Looking forward to keep using it!"