Panama is famous for its unique biodiversity and jaw-dropping scenery — from lush rainforests to beautiful beaches. But it’s more than just a paradise for nature lovers; it’s also a smart choice for businesses building global teams.
With a skilled talent pool of potential part-time and full-time remote workers, especially in customer success and technology, companies hiring in Panama have an edge when it comes to finding top talent.
Key takeaways:
- Panama’s commitment to digital transformation makes it an attractive option for global employment.
- The country benefits from stable economic policies and one of Latin America’s highest direct foreign investment levels.
- The Short-Stay Visa for Remote Workers allows digital nomads to live and work in the country for up to 18 months.
Advantages of Hiring in Panama
In 2014, Panama launched a program known as the Panamá Bilingüe Program to train teachers in English — raising overall English language proficiency throughout the country.
The Country Agenda forum highlights several initiatives to enhance educational quality in Panama, including curriculum reforms, teacher training, and technology integration.
In support of this vision, the Carnegie Mellon Robotics Academy (CMRA) has partnered with the International School of Panama (ISP) to bolster STEM education further.
Some quick stats about Panama include:
- Languages: Spanish (official), English (widely spoken)
- Currency: Panamanian Balboa (PAB)
- Capital City: Panama City
- Population: 4.5 million
- Cost of Living Rank: 45th
Infrastructure Grants and Multinational Corporations
The European Union has pledged EUR 1.28 billion to assist with Panama’s development, covering climate and digital transformation projects.
Industry giant Huawei is also establishing the first regional Cybersecurity and Transparency Center in Panama, enhancing the country’s role in digital security initiatives. This development will position Panama as a hub for multinational corporations in the tech sector.
Top remote job sectors in Panama include:
- Software Engineering
- Digital Marketing
- Customer Support
- Project Management
- Finance
Employment Laws: Hiring Compliantly in Panama
Employment Contracts
There are two primary types of contracts in Panama:
- Indefinite-term contracts (Contratos por Tiempo Indefinido): This is the standard option in Panama and the default option unless otherwise specified. There is no end date, and employees receive full benefits.
- Fixed-term contracts (Contratos a Término Fijo): These are ideal for temporary roles lasting up to one year and will convert to indefinite if extended beyond the initial term.
Working Hours & Pay
The standard workday is eight hours, with a maximum of 48 hours per week. However, most businesses operate on a 40-hour workweek. As of 2024, Panama’s minimum wage is PAB 340 monthly in Region 1 and PAB 315 in Region 2.
Additionally, a 13th-month payment is mandatory — providing employees with an extra month’s salary paid in three equal installments due on the 15th of April, August, and December.
Probation Periods
Probation periods in Panama are only allowed for employment contracts that require specific skills or abilities. This period can last up to three months and must be included in the employment contract. During this time, either party can terminate the employment without liability.
Employer Taxes
Employers must pay 12.5% of an employee’s gross salary towards Social Security, which covers employee benefits and is managed by the Caja de Seguro Social (CSS).
The Ministry of Education (MEDUCA) mandates that companies pay 1.5% for Educational Insurance Tax.
Termination Process & Severance Pay
If an employee is terminated without cause, employers must provide a 30-day written notice or pay the equivalent of 30 days’ salary to employees with less than two years of service. Employees with more than two years of service can only be terminated for just cause.
Severance pay is only mandatory if an employee is dismissed due to redundancy and is based on the employee’s length of service.
- 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
Paid Leave Laws in Panama
Vacation and Holiday
Employees in Panama are entitled to 30 days of paid time off each year. Employers must provide vacation pay to employees at least three days before their leave begins.
Panama observes several paid public holidays throughout the year, including:
- New Year’s Day
- Martyrs’ Day
- Carnival
- Good Friday
- Labor Day
Sick Leave
Employees in Panama receive up to 18 days of paid sick leave each year, which the employer pays. The Social Security Fund covers any additional sick days.
Maternity Leave
Pregnant employees receive 14 weeks of paid maternity leave, which starts six weeks before the expected delivery date and continues for eight weeks after.
The Panamanian Social Security system pays for maternity leave as long as the employee has paid into the system for at least nine months before the seventh month of pregnancy. Otherwise, the employer covers the employee’s salary during maternity leave.
Paternity Leave
Fathers receive three days of paternity leave, which is paid for by the employer.
Why Digital Nomads Love Panama
Panama’s Short-Stay Visa (also known as the Panama Digital Nomad Visa) allows digital nomads to live in Panama for nine months, with the option to renew it for another nine.
Panama is home to several co-working spaces, making it easy for freelancers to stay productive and connect with others.
The cost of living is also affordable compared to many Western countries, allowing nomads to enjoy a comfortable lifestyle.
Additionally, providers like PaNETma offer impressive internet speeds, with plans reaching up to 10,000 Mbps. With a booming infrastructure for remote work and a friendly expat community, Panama offers the perfect blend of work and exploration for remote workers.
How to Pay Remote Workers in Panama
Employers have several options to pay international teams, including bank wire transfers, PayPal, Wise, and Payoneer.
Before choosing a payment method, it’s essential to consider the following:
- Ensuring compliance with Panama’s payroll regulations
- Fluctuating currency rates that can cause overpayment or underpayment
- Risk of employee misclassification
- Payroll calculation errors
Partnering with an Employer of Record (EOR) can streamline the payroll process and reduce these risks. An EOR will manage all human resource responsibilities for your Panamanian employees, ensuring payroll compliance and timely payments.
Hire in Panama with RemoFirst
Hiring remote employees in Panama can be challenging due to complex regulations, compliance requirements, payroll management, cultural differences, and local labor laws.
An EOR like RemoFirst eliminates these challenges by acting as the legal employer, taking on payroll, compliance, and benefits administration responsibilities for your Panamanian employees.
This means you can hire employees quickly and efficiently in Panama and 180+ other countries without the need to become an expert on local employment law regulations.
To learn more about how RemoFirst can help with your global hiring needs, book a demo.
