Horizons Logo


Panama PEO & Employer of Record

Expand your business into Panama, even without an entity

Panama has a stable and mostly service-based economy, which is among the strongest in the region. With many opportunities for growth, foreign investment is common.

However, if your organization is planning on expanding into Panama, it is important to understand that the legal and procedural framework can be complicated. Additionally, language barriers, cultural differences, and more can potentially cause significant delays.

Horizons offers a range of services for any organization looking to expand in Panama. With Horizons’ Panama professional employer organization (PEO) and payroll services, you can outsource all of the complex administration and compliance work so you can focus on expanding your business in Panama.

As the only global PEO with an in-house recruitment team, we can also take care of the sourcing, hiring, and onboarding of your Panamanian workforce, along with any associated HR and legal compliance work. Our tailored services can save you thousands in associated expansion costs.

How can Horizons outsourcing can help you expand into Panama?

Expand in Panama rapidly and effectively, even without a Panamanian subsidiary.

Rapid Market Entry

Horizons will enable you to source, hire, and onboard professionals across Panama in as little as 48 hours.

Cost-Effective Expansion

Our PEO solution can help you benefit from cost savings of up to 82%, without the need to establish a Panamanian entity.

Payroll Outsourcing

Simplified Panama salary & payroll processing, including social security payments, tax, and any other required contributions.

Employee Onboarding

Utilize the relevant provision for all types of Panamanian labor contracts, whether a fixed-term or open-ended contract.

Onsite Legal & HR Team

Full support for Panama-specific contract renewals, terminations, annual leave management, HR, and strategic guidance.

Ensure Full Compliance

We ensure that employment contracts are fully compliant and adhere to Panamanian labor laws and best practices.

🇵🇦 Hiring in Panama - Employment Law Overview

📝 Panama employment contracts

Contracts of employment can be either verbal or written in Panama, but we always recommend producing formal written contracts every time you hire. These contracts should contain all necessary details of the employment arrangement, such as working hours, entitlements, benefits, salary, and so on. They should also be written in Spanish and reference either US dollars or Panamanian balboa (although US dollars are generally preferable).

⏰ Working hours in Panama

The standard working week for employees in Panama is 44 hours spread across five days. Any time worked beyond this should be compensated at 125% of normal pay, or 175% for evening shifts.

📅 National holidays in Panama

There are several annual public holidays in Panama, and employees generally receive the following as paid leave from work:

  • New Year’s Day
  • Martyr´s Day
  • Carnival
  • Good Friday
  • Shout in Villa de los Santos
  • Independence from Spain
  • Colon Day
  • Christmas Day
  • Labor Day
  • Independence Day

🏖 Vacation in Panama

Employees in Panama are generally entitled to 30 days of paid vacation leave annually.

😷 Sick leave in Panama

Employees in Panama can usually take up to 18 days of paid sick leave each year.

👶 Maternity and paternity leave in Panama

Female employees in Panama are entitled to 14 weeks of paid maternity leave, with up to six weeks before the birth and eight after. Fathers in Panama can take up to three days of paid paternity leave for the birth of a child.

💰 Employee severance and terminations in Panama

Employees in Panama are generally entitled to 30 days of notice prior to termination of their employment contract. Severance payments, if applicable, usually equal around three to four weeks of pay for every year of service with an employer. Probation periods are limited to three months.

🏦 Tax laws and withholdings in Panama

Employers and most employees in Panama must both contribute to social insurance for the employees. Contributions equal 6.75% of salary for employees and 2.75% for employers. The government also contributes 1.04%.

Panama’s territorial income tax laws are very favorable for many, particularly foreign workers. Panamanian sourced income is taxed progressively at rates of between 0% and 25%.

Corporate tax in Panama is also territorial in nature, and Panama-sourced income is taxed at a rate of 25%.

🏥 Health insurance in Panama

Panama has a public healthcare system, although many employers do provide private insurance as part of their benefits packages.

💳 Panama compensations & benefits

Compensation laws in Panama

Minimum wages in Panama vary significantly based on the type of work, such as agricultural, manufacturing, construction, and so on. For this reason, it is important to understand which rates apply to your workers whenever hiring in Panama.

Benefit management in Panama

It can be difficult to understand and set up employee benefits in Panama, and it can require a lot of time, effort, and investment on the part of employers. However, it is crucial that you adhere to compensation and benefits laws as you can be subject to large fines and legal issues if you fail to.

Horizons can help you bypass this element of your Panama expansion by offering benefit system outsourcing that can save you time and money. Our experts will advise you on the best course of action and take care of your benefit setup and management, helping you focus on the rest of your expansion.

Request a Proposal

Why choose Horizons' services for your expansion into Panama?

Horizons’ Panama PEO, employer of record, and payroll services enable your business to rapidly begin trading in Panama, in compliance with all employment and benefits laws. This allows your business to commence operations in Panama in as little as 48 hours, and could save you up to 82% in expansion costs, whether or not you have a legal entity in the country.

We will take care of all your expenses, payroll setup and management, benefits, and legal compliance in Panama, as well as any HR work. And as the only global PEO with an in-house recruitment team, we can also source and onboard your local workforce, providing our Panamanian subsidiary to act as employer of record for your hires so you don’t even need to establish a Panamanian entity.

Get in touch with our Panama experts today to find out more about our Panama expansion support services.