Forums For Adjudicating Employment Disputes
There are three main special labour jurisdictions in charge of the disputes between the employer and the employees:
- The Conciliation and Decision Boards: constituted with three representatives, which are the representative of the employer, representative of the employee, and the representative of the Ministry of Labour. The Conciliation and Decision Boards have jurisdiction to hear labour lawsuits for unjustified dismissal, domestic workers lawsuits, and lawsuits where benefits up to the sum of USD $1,500.00 are claimed.
- Labour Courts: that have jurisdiction to hear labour lawsuits that are not under the jurisdiction of the Conciliation and Decision Boards.
- Ministry of Labour and Labour Development: has jurisdiction to hear lawsuits to determine the minimum legal wage; lawsuits regarding the interpretation or validity of the clauses of a Collective Bargaining Agreement; and lawsuits regarding the breach of the procedure established by law to execute dismissals due to financial reasons.
There is also the superior Labour Court who has jurisdiction to hear appeals with respect to the decisions made by The Conciliation and Decision Boards and The Labour Courts.
The Main Sources Of Employment Law
The sources of Labour Law of the Republic of Panama are the Constitution, the Law (including the Labour Code, supplementary laws and other rules of law with equal or inferior hierarchy), the international treaties ratified by the Republic of Panama, the applicable collective bargaining agreement (if any), the internal labour regulations, as well as jurisprudence, custom and usage of the company.
National Law And Employees Working For Foreign Companies
Every employer (individual or legal entity) that is established or operate in the territory of the Republic of Panama, including foreign companies that operate in Panama and their local employees are bound to follow the Panamanian labour legislation.
National Law And Employees Of National Companies Working In Another Jurisdiction
Panamanian labour legislation is primarily territorial. If the employee, regardless of his/her residency, renders services for a Panamanian company established in other jurisdiction, Panamanian labour laws shall not be applied.
Every person has a right of access to his/her personal information contained in data banks, public or private registries, and to request its correction and protection, as well as its deletion in accordance with the provisions of the law.
This information may only be collected for specific purposes, subject to the consent of the person in question or by order of a competent authority and under the law.
Legal Requirements As To The Form Of Agreement
The labour contract shall be in writing and shall be signed upon commencement of an employment relationship. In the absence of a written Labour Contract, the facts or circumstances alleged by the employee that should be evidenced in said contract shall be presumed as true (except where there is proof to the contrary).
The following work areas are exempted from the previous requirements:
- Domestic Service
- Casual work of work of Short Duration
- Specific work of low value
- Work of low value in unpopulated areas.
When the rendering of service demands a particular competence or skill, the employer may include in the Labour Contract a trial period of up to three months, where any of the parties may terminate the labour relationship without any liability.
The Trial Period shall not be valid if it relates to a position that an employee has previously held in the same company.
Hours Of Work
The Labour Code divides the day into two long working periods: daytime period, that goes from 6:00 a.m. to 6:00 p.m. and night period, that goes from 6:00 p.m. to 6:00 a.m.
In turn, the Labour Code provides three types of working hours, namely
- Day shift: all the work hours are during the daytime period, with a maximum duration of eight hours per day and 48 hours per workweek,
- Night shift: a shift that includes more than three working hours during the night period; its maximum duration is seven hours per day and 42 hours per workweek.
- Mixed shift: a shift that includes working hours in both periods described above, but no more than three hours at night; its maximum duration is seven hours per day and thirty minutes and 45 hours per workweek.
Special Rules For Part-time Work
There are not special rules for Part-time Work under the Panamanian Labour Legislation.
The salary shall be paid in legal tender and may be agreed for tasks or pieces (piecework wage) or by time unit (monthly, bimonthly, weekly, daily, and hourly).
The employer is obliged to guarantee the employee a salary not inferior to the legal minimum wage.
Currently, the minimum wage in Panama City ranges from USD $2.73 and USD $ 4.67 per hour, depending on the activity of the company.
The rate of USD $4.67 per hour applies for international cabin crews (nationals).
The employee is entitled to have thirty days paid annual leave (vacation) for every eleven continuous months of work.
During a workday, the employee shall have a rest period of a least half an hour and not more than two hours.
In Panama, the following are national holidays and/or national days of observance: January 1st and 9th, Tuesday of Carnival, Holy Friday, May 1st, November 3rd, 5th, 10th and 28th, and December 8th and 25th. For all the legal effects they are considered paid days of rest.
There is no maximum age for work in Panama. Minors under 14 years of age are not allowed to work in Panama.
From the beginning of the labour relationship, the employee shall start to accrue a sick leave fund at the ratio of twelve hours for every twenty-six worked days or eighteen days per year.
Location Of Work/Mobility
The workplace constitutes an essential element in every labour relationship and therefore is the reason why it must be expressly set forth in the Labour Contract. Geographic mobility is only valid with the employee’s consent, and as long as it does not imply the deterioration of his/her work conditions.
They constitute benefits that the employer may offer or implement voluntarily in benefit of its employees. Nevertheless, they are not mandatory.
Parental Rights (Pregnancy/ Maternity/ Paternity/ Adoption)
Pregnant employees are protected against the direct action of dismissal of their employers during the pregnancy, during maternity leave, and for one year starting from the date in which the employee returns to work after childbirth. During these periods, pregnant employees can only be dismissed with justified cause and by means of a prior judicial authorization.
Male employees are entitled to receive a paternity leave of three (3) days starting from childbirth.
Paternity leave will only be granted when the wife or cohabitant under conditions of stability and monogamy delivers a child.
The paternity leave days will be paid by the company.
The Labour Contract must compulsorily contain the following information: name, nationality, age, sex, marital status and personal identification number of the employee; name of the persons who live with and depend on the employee; job description or services agreed; place where the service shall be rendered; Labour Contract duration; the salary, form, payday and place; work schedule; place and date of execution and the signature of both parties.
The employer and employee may subscribe all agreements that neither infringe the rules of the Labour Code, nor affect or deteriorate the labour rights and conditions of the employee.
Types Of Agreement
The Labour Contract may be entered into for a definite period, for a specific job or an indefinite period. Likewise, in the Labour Contract, the parties may establish different work hours, provided that the hour limits stipulated in the Labour Code are not exceeded.
The employee is obliged to refrain from disclosing to third parties the technical, administrative, and commercial secrets of the employer, unless prior authorization is given. If the employee does not comply with this obligation, he may be dismissed with justified cause, without the right to receive compensation.
Ownership of Inventions/Other Intellectual Property (IP) Rights
The Labour Code establishes three classes of inventions during the labour relationship, namely; company inventions in which the process, , the equipment, the technology, the elements of computer programming, the facilities, methods, and procedures belong to the employer; such inventions shall be property of the employer.
The inventions of services are those executed by the employees hired specifically for researching, studying and obtaining them; such inventions are property of the employer, but the inventor shall be entitled to have his name recognized as the author of the invention.
Free inventions are those where the force of ingeniousness of the employees dominates; such inventions shall belong to their makers.
In the Panamanian Labour Legislation, once the company extends a job offer letter, it constitutes a formal job promise.
If the company desists from hiring and a work termination occurs prior to the start date of the employment relationship, the company must compensate the employee for the damage suffered. The compensation shall not be less than one (1) month’s salary, except for contracts concluded for a shorter period.
The Labour Code allows the hiring of foreign employees in a proportion that does not exceed 10% of the company personnel and 15% if dealing with technical foreign employees or specialists.
Additionally, the government has implemented new migratory policies that will allow the company to hire foreign workers depending on nationality and his professions.
Hiring Specified Categories Of Individuals
There are some work restrictions for women and minors in unhealthy activities. Minors are also not allowed to work in night-time activities and places where alcoholic beverages are sold.
Outsourcing And/Or Sub-Contracting/Temporary Agency Work
The Labour Code allows the operation of companies engaged in providing their own employees to render services to other companies for temporary periods that do not exceed two months. In these cases, whoever receives the services of these employees shall be jointly responsible with the employer company, for the salaries and other labour benefits of these employees.