How to hire remote employees in

Panama

In the next few minutes, you’ll learn exactly how you can hire remote talent in Panama—without spending thousands of dollars on expensive solutions. Hiring abroad can be confusing, but it shouldn’t be that confusing: We’re here to help clear things up.

Country snapshot

CURRENCY
United States Dollar (USD)
EMPLOYER TAXES
up to 21.34%
PAYROLL FREQUENCY
Monthly
OFFICIAL LANGUAGE
Spanish

What to know before you hire in 

Panama

Panama’s a beautiful country with a rich history and, more relevant to you, some great remote talent. If you’re looking to hire in the country, you’ve got two choices: Hire your candidate as an employee, or bring them on as a contractor. Below are the details about each—as well as what we’d recommend.

If you want to successfully hire in 

Panama

, you have two options:

Hire talent as contractors

Laws about hiring contractors are significantly more simple in 

Panama

. Onboarding talent takes days, not weeks or months. Both you, the company, and your talent have more flexibility. And in many cases, since you’re remote, the talent you’re hiring is better classified as a contractor, anyway. Of course, it’s not possible in every case, but it’s what we built Panther for.

Hire talent as employees

This is the long route. You can either establish a physical presence with an entity and register as an employer, or you can use an Employer-of-Record (EOR) solution. Odds are, you’ll find using an EOR to be the easier route. Still, using an EOR in 

Panama

 is expensive—it can often be $500 per month per employee—and sometimes prone to lengthy onboarding times.

Why hire independent contractors in 

Panama

Hiring contractors is normally the easier, faster, more flexible choice—but don’t just take it from us. Below are the specific benefits and drawbacks to hiring contractors in 

Panama

.

It’s the fastest way to hire globally

Hiring employees takes months, at the minimum. When you hire with Panther’s locally-generated contracts, it’s a matter of days or weeks. This means you can hire the best talent, fast, without losing them to a hellish procession of paperwork.

It’s a lot cheaper

It costs just $0 to sign up for Panther, then $49 per month to hire your contractors with Panther. If you hired employees manually (or did contracting on your own), you’d likely be on the hook for thousands of dollars each month. Setting up an entity alone can cost tens of thousands of dollars.

It’s more flexible for you & your team

Hiring contractors in 

Panama

 means you’re generally not on the hook for things like health insurance and paid time off. This makes hiring flexible for you, and it gives your talent more options.

It’s less risky than hiring employees

Hiring employees is a bigger commitment, and generally puts you at a bigger risk for legal fees. When you hire contractors overseas, your biggest risk is misclassification—but even then, misclassification penalties are often minimal and just require you to pay off any compensation that the person would have been owed as an employee.

Some people want to be employees

The contractor life isn’t for everyone—some people want the security that being an employee often appears to provide. Though it’s rare, this does happen, and it’s one disadvantage of manage an all-contractor team.

You might not have as much control over your talent

Most countries’ contractor-employer relationship laws stipulate that the employer can’t set fixed working hours, among other things. These laws give contractors more freedom over how and when they do their work than an employee would have. In reality, however, most contractors are willing & able to work on the company’s schedule—it’s a matter of setting expectations beforehand.

How can I pay people in 

Panama

?

If you’re hiring contractors in 

Panama

, you can pay them with Panther in a single click. You won’t need to worry about complicated wire transfers, fees, or currency conversions. We’ll take care of it all. Just make a click and your contractor will get paid in their currency of choice. This is a valuable bonus for talent in countries where the local currency is particularly weak—most people appreciate the ability to receive their payment in stronger currencies.

Hiring and paying your team in 

Panama

Hire and pay with Panther

Pay everyone with a single click
Get great currency conversion rates
Pay $0 in platform fees
Run payroll in seconds
Let Panther automatically create & store invoices
Let Panther automatically write locally-compliant contracts
Let Panther automatically file local tax documents

Hire and pay without Panther

Pay all your contractors individually
Do all currency conversions yourself
Shoulder the burden of platform fees
Spend hours each month making payments
Manually track & store invoices
Manually write & sign contracts
Manually file relevant tax documents

Let Panther save you from hiring headaches.

Sign up today for $0

If you want to hire employees in 

Panama

If you’ve read up until this point, you’ll know that it’s easier, cheaper, and more flexible to hire contractors in Panama than employees. Still, there are valid reasons why you might want to hire employees instead. The content below is for you—we’ll cover employer taxes and obligations in Panama.

Taxes in 

Panama

Employer tax

Social security

Unemployment

Education Tax

Accident

Individual tax

Leave

Paid Time Off (PTO)

PTO is calculated by the:

  • After 1 year of employment, employees are entitled to 30 working days of paid annual leave. 

Public Holidays

There are 11 public holidays.

Sick Days

The duration of sick leave entitlement provided to workers is dependent on how long they have been employed by their employer:

  • Employees are entitled to 18 days of paid sick leave.

Maternity Leave

Women are entitled to 14 weeks of paid maternity leave and paid at 100% of the regular pay.

Maternity leave can start 6 weeks before the expected due date and 8 weeks after. However, if the actual due date is delayed, then the prenatal portion of the leave is extended so that the mother can enjoy 8 weeks of post-natal leave.

Maternity leave is calculated by the greater of the last salary or average of the last 180 workdays.

Paternity Leave

Fathers are entitled to 3 days of paid leave.

Parental Leave

There are no statutory laws regarding parental leave in Panama.

Other Leave

None.

Marriage Leave

None.

Bereavement Leave

None.

Termination

Termination Process

In Panama, the dismissal of an employee must have just cause as outlined in the labor code. Termination in writing must be provided outlining the cause and the date that the termination was given.

A dismissal that does not follow the laws outlined in the labor code is considered unjustified and the employee may be able to make a claim with a labor court. If the labor court does not resolve the claim within 60 days, the employer may continue with the dismissal.

However, there are certain classifications of employees that may be dismissed without just cause (domestic workers, fishing or agricultural workers, retail workers).

Notice Period

The notice period in Panama is:

Notice is not mandatory except for employees dismissed for just cause.

For employees who are dismissed without just cause, they are entitled to 30 days’ notice.

Severance Pay

There are no statutory laws regarding severance pay unless the reason for dismissal is redundancy. In this case, payment is determined based on the length of employment and is as follows:

  • Up to 6 months of employment– .5 months of pay
  • Up to 9 months of employment- .75 months of pay
  • Up to 1 year of employment- 1 month of pay
  • Up to 2 years of employment- 3 months of pay
  • Up to 4 years of employment- 4.5 months of pay
  • Up to 5 years of employment- 5.2 months of pay
  • Up to 10 years of employment- 9.75 months of pay

Probation Period

The maximum length of probation is 3 months.

Employee requirements in 

Panama

Working Hours

The standard workday is 8 hours, and a full time work week is up to 48 hours. 

Overtime

125% of the regular pay when overtime hours are between 6 am and 6 pm.

150% of the regular pay when overtime hours are between 6 pm and 6 am or work over a holiday or day of rest.

175% of the regular pay when the overtime hours carry over from working during night hours.   

It is important to note that an employee cannot work more than 3 hours of overtime per day or a total of 9 hours per week. If work is deemed dangerous or a hazard to one’s health, overtime is not permitted.

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