* Playroll continues to analyse immediate opportunities and fulfilled roles by recruitment partners, contractors and employers to identify in-demand jobs.

Capital City
Panama City

United States Dollar ($)


EST (GMT -5)

Employment Cost

0 - 21.34%

Annual Leave

30 days

In-demand Specialties*
Healthcare, Information Technology, Finance

The Ultimate Guide to Hiring Employees in Panama

Simplify hiring employees in by partnering with Playroll. Our Employer of Record (EOR) handles hiring, onboarding, payroll, taxes, immigration, benefits administration, and compliance. While you maintain control of day-to-day tasks and responsibilities.


Key Considerations Before Hiring In Panama

Employing in Panama requires employers to own a legal entity in the country and manage payroll, tax, benefits and compliance through their own in-country resources. Grow your team in Panama with our Employer of Record solution, ensuring streamlined, compliant business expansion with no entity.

Playroll allows you to hire employee's in Panama quickly, easily and we even automate tax document collection, benefits, payroll and more.

Good To Know

The minimum wage in Panama is around US$2 an hour.

The unemployment rate in Panama is just under 5%.


Fundamental Aspects of Employment in Panama

In accordance with Panama's Labour Law, employment contracts must be in Spanish or a mutually understandable language. Employers are obliged to provide a written contract specifying

  • The identification of both parties
  • Commencement date
  • Employee's salary and other benefits
  • Workplace

Probationary Period in Panama

Panama's work contracts or collective agreements lay out the probation period, which typically spans up to three months.

Working hours in Panama

The regular workday is eight hours, and a full workweek extends up to 48 hours in Panama. Those under 16 years old have a maximum work week of 36 hours.

Overtime in Panama

In Panama, overtime is restricted to three additional hours per day or nine hours per week. Compensation for overtime exceeding 48 hours per week ranges from 125% to 175%, based on the timing of the hours.

Navigating Key Aspects of Payroll in Panama

Panama has a robust and complex payroll and tax system, and as an employer, it pays to understand payroll process basics.

January 1st - December 31st

Fiscal Year in Panama

January 1st - December 31st is the 12-month accounting period that businesses in Panama use for financial and tax reporting purposes.

Payroll Cycle in Panama

The payroll cycle in Panama is usually Monthly, with employees being paid Once every month.
1.70 USD p/h

Minimum Wage in Panama

The minimum wage for employees in Panama is typically 1.70 USD per hour, amounting to ~326.56 USD per month for a typical 48 hour work week.

Minimum wages and salaries in Panama

Minimum wages in Panama vary based on economic activity, occupation, and establishment size, ranging from $326.56 to $971.35 per month.

Bonus Payments in Panama

In Panama, employees receive a mandatory 13th-month payment, equivalent to an extra month's salary, distributed in three equal parts on April 15th, August 15th, and December 15th.

Comprehensive Overview of Employment Taxes in Panama

Understanding the tax obligations for both employers and employees is crucial when operating in Panama's business landscape. This section explains how taxes and statutory fees affect payroll and individual earnings in Panama.

Employer Tax Contributions

Employer payroll contributions are generally estimated at an additional 0 - 21.34% on top of the employee salary in Panama.

Tax Rate Tax Type

Employee Payroll Tax Contributions

In Panama, the typical estimation for employee payroll contributions cost is around 11%.

Tax Rate Tax Type

Individual Payroll Tax Contributions

In Panama, individual taxes are calculated using a progressive rate that ranges from 0% to 25%.

Tax Rate Income Bracket

Pension in Panama

The Social Security program, overseen by the Social Security Fund (CSS), provides pensions for retirees and disabled individuals. Contributions from both employees and employers fund these benefits.

The tax-related information provided in this guide is intended for general guidance and informational purposes only. Reach out to our dedicated team for insights on remote hiring in Panama tailored to your needs.

Easily navigate payroll, taxes and contributions with Playroll.

Grow your distributed workforce today!

Understanding the Protocols for Termination of Employment in Panama

When it comes to terminating employment in Panama, understanding the legal obligations regarding severance pay and contributions is essential. Below is a detailed overview of the key considerations for both employers and employees.

Termination Process

In Panama, termination after the probation period requires just cause, with no at-will termination. Employees who believe their termination is unfair have 60 days to seek reinstatement. Termination methods include:

  • Resignation
  • Mutual agreement
  • Dismissal with valid cause
  • Contract expiration

Notice Period

In Panama, the minimum notice period is 15 days, subject to administrative labor authority approval in special circumstances. Salary payment may sometimes substitute for the notice period. The notice period typically varies depending on the reason for termination.

  • 15 days if the employee resigns
  • 30 days if the employer terminates the employee

Severance Pay

In Panama, employees receive severance pay unless it's a disciplinary dismissal. The amount depends on the termination reason, contract type, and duration of employment.

Annual Leave Entitlements and Company Policies in Panama

The annual leave entitlement in Panama is 30 days for a full time worker. These can include public holidays on top of that or within those days, which would otherwise be unpaid.

Public Holidays in Panama

Panama observes 12 national holidays:

Holiday Date

Paid Time Off in Panama

Maternity Leave in Panama

Paternity Leave in Panama

Sick Leave in Panama

Parental Leave In Panama

Panama's Benefits Built Into Playroll

Competitive benefits package in Panama

Playroll is committed to providing tailored, competitive benefits packages that are designed not only to attract but also retain top talent worldwide. Our global team of benefits experts build custom local packages to ensure your employees in Panama's needs are met. Typically our packages contain some or all of the following benefits.

Health Insurance
Pension or 401k
Life and Disability Insurance
Vision Insurance
Dental Insurance
Discounts & Perks

Playroll Supplementary Benefits For Employment In Panama

Make your benefits package in Panama a talent magnet with Playroll's local plans. We offer benefits that are compliant, comprehensive, and flexible — all at competitive rates. Speak with our local territory experts to explore the localized benefits we can offer you, while you scale your team.

Statutory benefits for employment in Panama

Playroll allows you to provide localized benefits for employees in Panama within minutes. All in one manageable online dashboard. If you'd like specific information about our benefits packages in Panama create an account or contact our global expansion team, today.

Playroll Benefit Services

Playroll's Expertise in Facilitating Work Visas for Panama

At Playroll we're all about empowering employees to work anywhere, making mobility possible for global teams. We sponsor visas and hire the employee for you, so you don’t have to worry about payroll, taxes, and more.

It's important to note, visa support can be complicated. There are many variables that affect whether sponsorship is possible, including one’s nationality, education, marital status, and the immigration policy for the country in question.

Unfortunately, this means we can’t support visas everywhere - with that being said, we handle the entire visa process in-house, and dig into your situation to give you an overview of what to expect if we're able to help with visa sponsorship in Panama.

Playroll Immigration Support

Integrated EOR Platform

Legal and compliance experts are readily available to provide guidance and case-by-case Q&A support.

Accelerated Immigration Timeline

By leveraging dedicated support from in-house legal and compliance experts for case by case questions and more.

Hire in 50+ Countries

Accelerated Immigration Timeline

Acquiring a visa without an entity has never been easier, leverage Playroll's global coverage to sponsor and hire employees.

Playroll Visa Services

Hiring International Employees is Complex.

Playroll makes it easy!