Hire in Panama
Republic of Panama, 4.4 million population, $17,400 GDP per capita. Everything you need to know about employment law, tax, compliance and hiring in Panama.
Capital
Panama City
Currency
Panamanian Balboa / US Dollar (PAB)
Languages
Spanish
Time zones
UTC-5 (EST)
Hiring overview
- Typical time to hire
- 2-3 weeks for contractor, 3-5 weeks for full-time
- Entity requirement
- Panamanian SA or SRL. Registration at Registro Publico.
- EOR available
- Yes, from $399/employee/month through a Corpshore entity
- Contractor of record
- Yes, from $39/worker/month
Employment law
- Standard workweek
- 48 hours (daytime) / 42 hours (mixed) / 36 hours (nighttime)
- Maximum weekly hours
- 48 hours
- Minimum annual leave
- 30 calendar days after 11 months
- Public holidays
- 10 per year
- Maternity leave
- 14 weeks (6 before + 8 after), fully paid
- Paternity leave
- 3 days
- Notice period
- 30 days
- Severance
- Seniority premium: 1 week per year. Indemnity for unjustified dismissal: 3.4 weeks per year.
- Probation
- Not formally recognised in the Labour Code
- Overtime rules
- 25% premium (daytime), 50% (mixed), 75% (nighttime). Sundays and holidays: 150% premium.
Tax overview
- Income tax range
- 0% to 25%
- Corporate tax
- 25%
- Social contributions
- Employer: ~13.5% (CSS). Employee: ~9.75%.
- VAT / GST
- 7% (ITBMS)
- Tax year
- Calendar year
- Treaty network
- ~20 tax treaties
Compliance landscape
- Worker classification
- Labour Code broadly defines employment. Contractor arrangements exist but face scrutiny.
- Data protection
- Law 81 of 2019 (Personal Data Protection). National Authority for Transparency and Access to Information oversees.
- Right to work
- Work permit required. Employer must ensure 90% Panamanian workforce (with exceptions).
- Non-compete
- Limited enforceability. Must be compensated and limited in scope.
- Collective bargaining
- Protected under the Labour Code. Unions active in construction, transport, and public sector.
Payment rails
Panama uses USD alongside the Balboa (pegged 1:1). Dollarised economy simplifies international payments. Strong banking sector (Panama is a major financial hub).
Key considerations for hiring
- USD-denominated economy eliminates currency risk for US-based companies
- Panama has Latin America's most developed banking sector (hub for regional finance)
- Copa Airlines hub makes Panama City a regional connectivity centre
- Special economic zones (Ciudad del Saber, Panama Pacifico) offer tax incentives
Business and cultural context: Panama
Business culture
Business-oriented and cosmopolitan, influenced by the Canal's international history. Relationships matter but deal-making is direct.
Key industries
Talent pool strengths
Historical context
The Panama Canal, opened in 1914 and expanded in 2016, handles 5% of global trade. This strategic position made Panama a natural hub for international banking, logistics, and legal services, giving it one of Latin America's highest per-capita incomes.
Ready to hire in Panama?
Use our EOR service from $399/month and we handle employment law, payroll, tax and compliance in Panama for you.