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Employer of Record Panama
Hire staff and expand your business in Panama with our fully-managed EOR Service
How we can help
Unrivalled Employer of Record Service in Panama designed to expand your business seamlessly
Agility EOR delivers services for business’s looking for an Employer of Record in Panama. We help clients hire new employees or transfer existing employees into a fully-managed EOR service.
We appreciate that each situation and business is different. That is why our personal approach to Employer of Record Services in Panama takes care of all HR, payroll, recruitment and compliance head aches, and allows you to do what you love best – driving your business forward.
Employer of Record in Panama
A Brief Guide to Panama
Panama, a vibrant blend of natural beauty, cultural diversity, and economic resilience, offers a treasure trove of opportunities for business expansion. Nestled between Costa Rica and Colombia, this Central American jewel is known for the iconic Panama Canal, booming commerce, and an inviting tropical climate.
Category | Information |
Location | Central America |
Capital City | Panama City |
Official Language | Spanish |
Area | 75,417 sq km |
Population | Approx. 4.3 million |
Currency | Balboa, U.S. Dollar |
Major Cities | Panama City, San Miguelito, Tocumen, David |
GDP | $115.2 billion |
Major Industries | Financial services, Logistics, Trade and commerce through Panama Canal, Construction, Tourism |
Business Culture
Business Culture in Panama
In Panama, business is often conducted with a sense of personal warmth and congeniality. Establishing solid relationships, punctuality, and respecting hierarchy plays a crucial role in the corporate landscape. Business attire tends to lean towards the formal side. Spanish is the primary language of business communication, though English is commonly understood and spoken in many business circles.
Meetings often start with light conversations and gradually transition into business discussions. Negotiations can be relatively relaxed but can sometimes require patience as Panamanians tend to be careful decision-makers. A firm handshake, direct eye contact, and a genuine smile go a long way in forming business bonds in Panama.
Payroll and Taxes
Payroll and Taxes in Panama
In Panama it is mandatory to make 13th month payments. The payment is a month’s salary, paid over three equal instalments in April, August and December.
Employee Taxation
In Panama, income tax rates are progressive, with higher income levels subject to higher tax rates.
Gross Annual Salary (USD) | Tax Rate (%) |
Up to $11,000 | 0 |
$11,001 – $50,000 | 15% |
$50,001 + | 25% |
Employer Taxation
Employers in Panama are also responsible for various employer costs, which may include:
Fund Type | Contribution (%) |
Social Security | 12.25% |
Educational Insurance | 1.5% |
Occupational Risk | 0.33% – 6.25% (depending on industry) |
Pension and Healthcare
Panama Pensions
Panama’s social security system is the main provider of pension schemes, managed by the Social Security Fund (Caja de Seguro Social). The scheme is funded by contributions from both employers and employees based on the employee’s salary. There are two types of pensions in Panama: the Disability, Old Age, and Death Program (IVM), which is a defined benefit program, and the Mixed Program, which is a blend of defined benefits and individual savings.
While the government continues to enhance the pension system, many expatriates and high-net-worth individuals prefer private pension plans for additional financial security.
Healthcare in Panama
Panama’s healthcare system is a mix of public and private providers. The Ministry of Health (MINSA) and the Social Security Fund (CSS) provide public healthcare services. These are funded by a combination of government funding, payroll contributions from employers and employees, and user fees. Public healthcare services are available to all residents, including expatriates who pay into the social security system.
On the other hand, the private healthcare sector is growing rapidly in Panama. Many Panamanians and expatriates opt for private health insurance, which offers a wider choice of providers and quicker access to treatments and specialists. Private hospitals and clinics, particularly in Panama City and other urban areas, offer high-quality medical services comparable to those in developed countries. However, in rural areas, access to healthcare services can be more challenging. Despite this, Panama’s healthcare system is known to be one of the best in Central America.
Employment Law
Employment Law in Panama
Relevant Legislation: The primary piece of legislation governing employment in Panama is the Labor Code (Codigo de Trabajo de la República de Panamá) established in 1972. It provides comprehensive regulations covering everything from contract conditions, working hours, and leave, to terminations and severance pay.
Employment Contracts: In Panama, employment contracts can be written or verbal and are usually for an indefinite period. However, fixed-term contracts and contracts for specific tasks are also common. The employment contracts must include terms such as compensation, work hours, and job description.
Working Hours: A standard work week in Panama is 48 hours, typically spread over six days. For commercial establishments, the workweek is usually 45 hours.
Leave: Employees are entitled to 30 calendar days of paid annual leave after one year of service. The law also provides for maternity leave (14 weeks), paternity leave (3 days), and sick leave.
Overtime: Overtime is considered as any work performed beyond the standard work hours and is compensated at a rate of 25% above the normal hourly rate. On Sundays and holidays, the overtime rate increases to 50%.
Termination: An employee may be terminated for specific reasons outlined in the Labor Code, including misconduct, negligence, or lack of ability. Employers must follow a proper procedure, which includes written notice and an opportunity for the employee to defend themselves.
Notice: Employers are generally required to provide notice when terminating an employee. The length of notice depends on the employee’s length of service, typically ranging from one week for service under one year, to a month for service of two years or more.
Severance Pay: On termination, employees are entitled to severance pay, calculated based on years of service. It is typically equivalent to a week’s pay for each year of service.
IMMIGRATION
Work Permits in Panama
Immigration in Panama is overseen by the National Immigration Service (Servicio Nacional de Migracion). Navigating the immigration process involves applying for the appropriate visa through a Panamanian consulate in your home country, followed by obtaining a residence permit or ‘carné’ once you have arrived in Panama.
The Panamanian government has established a variety of visa categories designed to attract foreign professionals, investors, and retirees. Some of the most common work-related visas include:
- Multinational Companies Headquarters Visa (Sede de Empresas Multinacionales, SEM): This visa is intended for foreign personnel occupying executive positions in multinational companies with a regional headquarters in Panama. This visa can be extended to the holder’s family and is renewable every five years.
- Professional Residence Permit: This is designed for foreign professionals who have a university degree and intend to practice their profession in Panama. This permit is not applicable for some professions like medicine and law, which are reserved exclusively for Panamanian citizens. Once granted, this permit is renewable every two years.
- Friendly Nations Visa (Visa de Países Amigos): This is a fast-track permanent residency visa for citizens of fifty “friendly” nations (including the USA, Canada, and EU countries) who are pursuing economic or professional activities.
- Panama Qualified Investor Visa: Introduced in 2021, this new residency program provides an expedited path to permanent residency for individuals who make a significant investment in Panama’s real estate or other sectors.
Each visa type has specific requirements, and the process usually involves submitting various documents, including a passport, health certificate, criminal record check, and proof of financial solvency, among others. It’s crucial to understand the visa requirements and to plan well in advance due to the time required for processing these documents.
Public Holidays
Panama Public Holidays
Holiday | Date |
New Year’s Day | January 1 |
Martyr’s Day | January 9 |
Carnival | Varies (Typically in February) |
Good Friday | Varies (Between March 20 and April 23) |
Labor Day | May 1 |
Separation Day | November 3 |
Flag Day | November 4 |
Colon Day | November 5 |
Independence Day | November 10 |
Republic Day | November 28 |
Christmas Day | December 25 |
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The Benefits
Panama Employer of Record Benefits
When you choose Agility EOR to expand in Panama, we guarantee an Employer of Record Service tailored to the needs of your business
Compliance
We are on top of regulatory changes in Panama so you can relax.
Cost reduction
Allow our economies of scale to work in your favour.
High Service Levels
You and your employees have a dedicated account manager.
Fixed Cost Pricing
We will agree our professional fees up front based on your needs - no nasty surprises!
Consolidated Invoicing & Payments
Make one monthly payment to cover all your tax, social and wages costs from one to one thousand employees.
Fast delivery
You can have 'boots on the ground' within days on our infrastructure.
Reduced Risk
All wage taxes are remitted in full to the Panamanian authorities by professionals ensuring liabilities are met, giving you peace of mind.
Supply Chain Transparency
We only pay employees through local full employed solutions meaning Panama payroll tax is paid on all funds.
Save Time and Money
Our expertise is at your disposal. The need for you to have internal HR, Payroll and admin staff is eliminated.