It can be verbal or written. (Article 62).
May be indefinite time, for a definite time or specific work. (Article 73)
Indefinite time: For an Indefinite time.
Definite time: May not exceed one year. Always written. (Article 74).
Nevertheless, it is legal for you to negotiate specific labor conditions with your employees, however, there are limits established by the Panamanian Constitution, the labor laws, as long as no legal rights are waived.
Written Contracts should with 3 duplicate copies: 1 copy for each party and 1 copy for the Ministry of Labor. (Article 66)
Jeff, as an employer, you have to understand that without a written labor agreement, all facts and circumstances claimed by the employee are presumed. (Article 69).
Restaurants, in Bocas del Toro, is B/.2.00 dollars per hour. (Decreto Ejecutivo No.182 de 30 de diciembre de 2013).
EXTEND A LABOR CONTRACT WITH A FIXED TERM.
If you do it, even with your employee’s consent because, it would be considered to be an indefinite-term Labor Contract. (Article 74, 75.).
SEVERANCE PAY, LIQUIDATION.
The law establishes that employers cannot demand employees to work overtime
The law permits up to 3 hours of overtime per day and a maximum of 9 hours per week.
The parties can select the weekly rest day, either as a fixed, pre-determined day of the week, or in a rotating fashion. However, the law also establishes that the weekly rest day should be on Sundays, except in activities as Restaurants
Other than the above cases, the weekly rest day must be on Sundays.
ENDS OF A LABOR RELATIONSHIP.
A: The law establishes that the employer can end an indefinite-term labor agreement if:
- The employee has served less than 2 years of continuous labor services.
- The employee is an apprentice. (These two are related your activity)
To paying employees with the indemnification as established in article 225 (indemnification for dismissal), the employer must notify the employee of the dismissal with a 30 day prior notice or pay the employee the corresponding amount for such pre-notice period. The pre-notice term will come into effect as of the date of the following payment period from the date of the notice. In addition, the employer must honor the proportional payment for vacation, year-end bonus and seniority bonus, if applied.
In the cases of the other indefinite-term labor relationships, the labor law prohibits dismissals for unjustified causes and, if it happens anyway, the employee will be entitled to reinstatement or to the indemnification for dismissal as established in article 225 of the Labor Code.
The employers must provide Social Security, starting as of the first day of the labor relationship.
S.S. TAX RATE.
Social Security Employee: 7.25%
Social Security Employer: 10.75%
Educational Security Employee: 1.25%
Educational Security Employer: 1.50%
Professional Risk Security Employer: 2.10% (This varies depending on the business activity)
Employee Income Tax: To be withheld by employer and paid to the government according to the salary tax table.
By the law 51 of December 27, 2005 which modifies the organic law of the Social Security in Panama. It makes progressive rates applied by the Social Security to both employees and employers as follows:
1. The amount to be paid by the employees will be:
Starting January 1, 2013 – 9.75% from their salaries
2. The amount to be paid by the employers:
Starting January 1, 2013 – 12.25% of the employee salary.
3. The amount that will be paid by independent workers will be:
Starting January 1, 2013 13.50% of their annual fees considered the base for the social security tax.
The contribution for the “XIII Month” will remain 7.25% employee and 10.75% employer.
The Panamanian law allows employees to receive a bonus by law called the “XIII Month” which is the salary split by 3 payments due on April, august and December; this is only subject to social security 7.25% employee and 10.75% employer on each of the 3 payments.
The law establishes that when hiring a pregnant employee, the employer is responsible for granting her maternity leave (14 weeks). Please note, however, that if the Social Security payments are not current, then the Social Security Agency does not pay for the maternity leave, and the employer must assume all costs thereof.
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Payment on holidays (Article 49 of the Labour Code). You will be paid with a surcharge of one hundred and fifty percent (150%) on the regular wage work.
If a holiday or a national mourning day (previously established in the law) falls on a Sunday, then the following Monday is considered as a mandatory weekly and paid rest day for all those employees that normally schedule their rest day on Sundays. If a holiday or national mourning day falls upon any other day than Sunday, and that day happens to be the employee’s rest day, then the employee is entitled to an additional compensatory rest day during any day of the corresponding week.
Thirty days for every eleven (11) consecutive months of work at the rate of one day for every eleven (11) working days. (Article 54, paragraph 1).
- The employer must cancel the holiday, before it starts. (Article 54, paragraph 5).
- In agreement, the parties may split into two equal fractions the holiday. (Article 56).