Panama is a transcontinental country spanning the central part of North America and the northern part of South America. The country is bordered by Costa Rica, Colombia, the Caribbean Sea, and the Pacific Ocean.

It houses the Panama Canal which is an artificial waterway that connects the Atlantic and Pacific Oceans, and divides North and South America. The canal cuts across the Isthmus of Panama so it can be a conduit for maritime trade — revenue from the canal tolls represents a large portion of Panama’s GDP.

The minimum wage in Panama depends on the job and industry, with average wages around PAB 1,600 per month. The standard workweek is up to 48 hours at 8 hours per day. Overtime work is regulated by the employment contracts and is usually paid between 125%-175% of the regular salary.

Parental Leave

Pregnant employees are entitled to 14 weeks of maternity leave beginning 6 weeks before the due date and 8 weeks after the birth. This leave is paid for by social security as long as the employee has contributed to social security for the last 9 months.

Fathers can take 3 days of fully paid paternity leave after the birth of their child, paid for by the employer. Employees can also take adoptive leave.

Sick Leave

Employees are entitled to 18 days of paid sick leave each year.

Paid Leave

There are 11 paid public holidays in Panama, and employees who have worked at their company for 1 year are entitled to 30 days of paid time off each year.

Process

The termination process depends on the employment contract and reason for termination. All terminations need to have notice provided in writing, and unjust terminations can be challenged in court.

Notice Period

The standard notice period in Panama is 30 days with a maximum of 3 months.

Severance Pay

Severance pay for terminations due to redundancy depends on the employee’s length of time at the company:

• 0-6 months = 0.5 months of pay
• 6-9 months = 0.75 months of pay
• 9 months - 1 year = 1 month of pay
• 1-2 years = 3 months of pay
• 2-4 years = 4.5 months of pay
• 4-5 years = 5.2 months of pay
• 5-10 years = 9.75 months of pay
• 10-20 years = 14.8 months of pay

It is mandatory in Panama to give a 13th-month salary bonus equal to 1 month of salary, usually paid in 3 installments in April, August, and December.