Overview
Payroll Cycle
Employer Contributions
Employee Contributions
Minimum Wage
Hiring
Hiring Employees
Hiring Contractors
Hiring Expats
Background Checks
Employment Contracts
Onboarding
Employee Benefits
Social Security
Healthcare and Insurance
Leave Policy
Public Holidays
Work Permit and Work Visa
Probation Period
Notice Period
Termination and Severance
Personal Income Tax
Discover EOR in Panama, a valuable resource for foreign employers seeking comprehensive information and support in hiring and managing employees in the country. Explore essential details on employment regulations, payroll obligations, social security contributions, work permits, employee benefits, termination procedures, and the role of Panamanian labor authorities. Our comprehensive resources will assist you in understanding the intricacies of employment practices in Panama and ensure compliance with local legal requirements. Whether you are establishing a presence in the Panamanian market or expanding your workforce, our EOR services will provide the necessary support for a smooth and successful employment experience in Panama.
| Overview | |
| Continent | Americas |
| Country | Panama |
| Capital | Panama City |
| Time zone | UTC−05:00 |
| Total Time zones | 1 |
| Working hours per week | 48 |
| Working week | Monday–Saturday |
| Typical hours worked | 8 |
| Personal Tax filing deadline | 15th March |
| Financial Year | 1st January to 31st December |
| Date format | dd/mm/yyyy |
| Currency | United States Dollar (USD) |
| VAT | the standard rate is 7% |
Employer Payroll Contributions
| Employers | % of Gross Salary |
| Social Security | 12.25% |
| Unemployment | 1.92% |
| Education Tax | 1.5% |
| Accident Insurance | 0.98% to 5.67% |
| Total Employment Cost | up to 21.34% |
Employer Payroll Contributions in Panama
In Panama, employers have certain payroll contribution obligations to support various aspects of their employees' well-being and social security. These contributions, calculated as percentages of the employees' gross salary, encompass several key areas:
- Social Security: Employers contribute 12.25% of the employees' gross salary towards the social security system. This ensures that employees receive essential healthcare benefits and access to medical services.
- Unemployment: Employers are required to contribute 1.92% of the employees' gross salary to the unemployment fund. These contributions help provide financial assistance to employees who become unemployed and are actively seeking employment.
- Education Tax: A contribution of 1.5% of the employees' gross salary is allocated towards the education system. This helps support educational initiatives and improvements in schools and universities across the country.
- Accident Insurance: Employers must contribute a percentage ranging from 0.98% to 5.67% of the employees' gross salary towards accident insurance. This coverage provides compensation in case of work-related accidents or occupational diseases.
Taking into account these contributions, the total employment cost for employers in Panama can reach up to 21.34% of the employees' gross salary. It is crucial for employers to factor in these costs when budgeting and managing their workforce.
By fulfilling these payroll obligations, employers in Panama contribute to the overall well-being and security of their employees, ensuring access to social benefits, healthcare, unemployment support, and education opportunities.
Employee Payroll Contributions
| Employees | % of Gross Salary |
| Social Security | 9.75% |
| Education Tax | 1.25% |
| Total Employee Cost | 11% |
Employee Payroll Contributions in Panama
Employees in Panama also have payroll contribution obligations, which are deducted from their gross salary. These contributions play a significant role in supporting various social programs and services. Here are the key components of employee payroll contributions in Panama:
- Social Security: Employees are responsible for contributing 9.75% of their gross salary towards the social security system. This contribution helps ensure access to healthcare services, including medical treatments, hospitalizations, and preventive care.
- Education Tax: Employees contribute 1.25% of their gross salary towards the education system. This tax supports the development and improvement of educational institutions and programs across the country, benefiting students of all levels.
Considering these contributions, the total employee cost in terms of payroll deductions amounts to 11% of their gross salary. It's important for employees to be aware of these deductions as they directly impact their take-home pay and overall financial planning.
By fulfilling their payroll contributions, employees in Panama actively participate in the social welfare of the nation. Their contributions to social security and education help create a more robust system that benefits the entire population, ensuring access to quality healthcare and education services for all.
Minimum Wages in Panama
| Minimum Wage | |
| Minimum Wage | The minimum wage is dependent on region and industry. It ranges from 275 USD to 971.28 USD per month. |
Payroll Cycle in Panama
| Payroll | |
| Payroll Cycle | Weekly, Bi-Weekly, Monthly |
| 13th Salary | This bonus is paid in three separate installments, in April, August, and December. |
Personal Income Tax in Panama
| Income Tax | |
| Income Range | Tax Rate |
| Up to 11,000 USD | 0% |
| 11,000 - 50,000 USD | 15% |
| 50,000 USD and over | 25% |