EOR Service in Panama

Hire, Onboard and Pay Employees in Panama Quickly and Efficiently

Hiring in Panama at a glance

CURRENCY
Panamanian Balboa (PAB), United States Dollar (USD)
working hours
40 hours per week
public/bank holidays
8 days
capital
Panama City
language
Spanish
date format
DD/MM/YYYY
remote workers
1.2M
tax year
Jan 1st to Dec 31st
minimum hourly salary
No minimum wage
CURRENCY
Panamanian Balboa (PAB), United States Dollar (USD)
working hours
40 hours per week
public/bank holidays
8 days
capital
Panama City
language
Spanish
date format
DD/MM/YYYY
tax year
Jan 1st to Dec 31st
payroll frequency
Monthly
GDP
USD 76.52 billion

Employer of Record in Panama

In Panama, an Employer of Record (EOR) plays a crucial role in streamlining hiring processes and ensuring compliance with labor laws. With their access to a diverse pool of talent and market expertise, EORs efficiently identify qualified candidates. By collaborating with an EOR, businesses can focus on their core operations while leaving HR tasks, payroll, and statutory requirements in capable hands. This partnership also offers a cost-effective way to establish a local presence without the need to set up a legal entity, making it a favorable choice for short-term projects or market exploration. Partnering with an EOR in Panama empowers companies to acquire the right talent and navigate local employment regulations seamlessly.

Why use Panama EOR?

Using a Panama Employer of Record (EOR) or Professional Employer Organization (PEO) offers businesses expertise in handling complex labor laws. Employers partner with a Panama EOR for two reasons: 1) Hire local talent without establishing a local entity 2) Stay compliant with local labor laws.


For many employers, the monetary and opportunity costs of registering their business in a foreign country can be quite taxing. EORs allow employers to skip these hassles and hire quickly. Secondly, Panama’s labor laws are heavily influenced by its national labor law and collective bargaining agreements. CBAs, particularly, impact minimum wages, work hours, overtime pay, workplace safety regulations, etc.


With their profound understanding of the local business landscape and cultural nuances, a Panama EOR/PEO allows companies to adhere to all local regulations and position themselves for rapid growth. This collaboration provides valuable resources and support, empowering businesses to concentrate on core activities and efficiently achieve their expansion goals.

EOR Costs in Panama

The cost of Panama Employer of Record (EOR) or Professional Employer Organization (PEO) services may vary based on factors such as the number of employees, the extent of services needed, and the complexity of the project. Typically, Panama EOR/PEO services are provided at a monthly fee per employee or as a percentage of the employee's salary. Additional charges might apply for customized services or specialized solutions tailored to meet specific business requirements. Companies looking for EOR/PEO services in Panama should carefully assess these factors when considering the overall cost and advantages of such partnerships.

Key Metrics For Foreign Employers 

The table below depicts key indicators from the Global Talent Competitiveness Report for employers wishing to hire from Panama.

Factors Global Ranking Interpretation
Rule of law 73 Indicates effectiveness of law enforcement
Labour-employer cooperation 78 Indicates positive labor-employee relationships
Reading Maths, and Science 75 Indicates average scores in OECD's survey of 15-year old students
University Ranking 73 Indicates average QS rankings
Labour productivity per employee n/a Indicates total output by the total labor input used to produce that output
Ease of finding skilled employees 115 Indicates findability of skilled talent
Workforce with tertiary education 79 Indicates % of workforce with PG degrees
Digital Skills n/a Indicates prevalence of advanced digital skills in the population

Source: The Global Talent Competitiveness Index 2022

Through the Gloroots’ Recrew platform, you can discover amazing talent in Panama.

Why work in Panama?

What’s a Rich Text element?

The rich text element allows you to create and format headings, paragraphs, blockquotes, images, and video all in one place instead of having to add and format them individually. Just double-click and easily create content.

Static and dynamic content editing

A rich text element can be used with static or dynamic content. For static content, just drop it into any page and begin editing. For dynamic content, add a rich text field to any collection and then connect a rich text element to that field in the settings panel. Voila!

How to customize formatting for each rich text

Headings, paragraphs, blockquotes, figures, images, and figure captions can all be styled after a class is added to the rich text element using the "When inside of" nested selector system.

Risks of misclassification

In Panama, misclassifying employees can result in significant risks for businesses. Incorrectly categorizing workers as independent contractors or exempt from employment laws may lead to legal and financial consequences, including claims for unpaid wages and benefits.

To mitigate these risks, partnering with a PEO/EOR in Panama is a prudent step. The PEO/EOR ensures proper employee classification, compliance with labor laws, accurate payroll processing, and access to comprehensive benefits. This allows businesses to focus on their core operations while entrusting employment-related responsibilities to experienced professionals, thereby protecting them from potential legal liabilities. By maintaining compliance with Panama's labor regulations, companies can safeguard their interests and mitigate the risks associated with employee misclassification.

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Employing in Panama

What’s a Rich Text element?

The rich text element allows you to create and format headings, paragraphs, blockquotes, images, and video all in one place instead of having to add and format them individually. Just double-click and easily create content.

Static and dynamic content editing

A rich text element can be used with static or dynamic content. For static content, just drop it into any page and begin editing. For dynamic content, add a rich text field to any collection and then connect a rich text element to that field in the settings panel. Voila!

How to customize formatting for each rich text

Headings, paragraphs, blockquotes, figures, images, and figure captions can all be styled after a class is added to the rich text element using the "When inside of" nested selector system.

Tax

Income tax

Employee Income Tax

Income Range (US$) Tax Rate
0 - 11,000 0.00%
11,000 - 50,000 15.00%
50,000 + 25.00%

Social Security contribution

Employer Payroll Contributions

Contribution Type Rate
Social Security 12.25%
Unemployment 1.92%
Education Tax 1.50%
Accident 0.98-5.67%
Total Employment Cost up to 21.34%

Employee Payroll Contributions

Payroll Contribution Contribution Rate
Social security 9.75%
Education contribution 1.25%
Total Employee Cost 11.00%

Separation

Employment Termination and Severance

Termination Process

The termination process in Panama varies depending on the employment and collective agreements, contract type, and reasons for termination. All terminations must be provided in written form and adhere to the guidelines outlined in the Panama Labor Law. Unjustified dismissals may lead to legal proceedings in the labor court, and if the claim remains unresolved after 60 days, the employer may proceed with the termination.

Certain circumstances prohibit employee dismissal, such as during pregnancy or due to involvement in trade union activities, strikes, or complaints against the employer. However, specific employee classifications, such as domestic workers, fishing or agricultural workers, and retail workers, may be dismissed without just cause.

Severance Pay

Severance pay is not mandatory unless the dismissal is due to redundancy. The amount of severance pay for redundancy is determined by the employee's length of service:

Years of employment Severance pay
<6 months 0.5 of a month’s pay
<9 months 0.75 of a month’s pay
9 to 12 months 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

Notice Periods

Typically, notice periods in Panama do not exceed three months and are often set at 30 days or paid in lieu of notice for dismissals without just cause. No notice is necessary for dismissals with just cause or during the probationary period.

Probation Periods

In Panama, the probation period is determined in the employee's employment contract or collective agreement and generally lasts up to three months.

Start Hiring in Panama today

When hiring globally, ensuring compliance comes with its own set of battles. Employers must ensure all hiring and onboarding activities adhere to employment laws, payroll procedures, DE&I compliance, GDPR and similar data protection, etc. If you think it is hard to set up local entities and start hiring, keeping up with a dynamic compliance landscape is far harder. 

Gloroots helps you minimize all these efforts by providing a single window to manage all these tasks. Our in-house experts fully shield you from cross-border employment and payroll compliance risks. We do this by helping you with generating employment contracts, on-time payments, compliant benefits, while you focus only on screening talent. 

Our promise is a stress-free global employment experience for both you and your employee.

Contact our experts today to kickstart your global hiring campaign.

Grow your team in Panama

To expand your team in Panama, it is vital to navigate the complexities of local employment regulations and efficiently manage compliance, payroll, tax, and benefits.

With Gloroots' comprehensive global Employer of Record (EoR) service, you can entrust the intricacies of payroll, tax, benefits, and compliance to our experienced team. This allows you to concentrate on your core business operations, empowering your workforce and driving business growth. Our EoR service in Panama ensures strict adherence to all local laws and regulations, providing a seamless and efficient solution for successful team expansion in the country.

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Experience Seamless Hiring in Panama?

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