Labour Code [LC], 30 December 1971 as last amended by Act No. 68 of October 2010 (Código del Trabajo) - available in Spanish
Date:26 Oct 2010;
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Size of enterprises excluded (≤): none
Workers' categories excluded: civil/public servants, members of cooperatives
Art. 2 LC: Civil servants are governed by civil service rules, except in those cases where any provision of the LC is expressly stated to be applicable to them.
Art. 3 LC: Agricultural and agro-industrial cooperatives are governed by the special regulations.
Note that Act No. 34 of 1979 regulates the working conditions of Balboa and Cristóbal dockworkers and its relationship with the employer. (Act abrogated in October 2012)
FTC regulated: Yes
Valid reasons for FTC use: objective and material reasons
Art. 75 LC: The duration of a contract for a specified period is valid only:
* where the nature of the work performed so permits;
* if it is made for the purpose of temporarily replacing a worker who is on leave, on vacation or absent because of any temporary impediment; or
* in the other cases provided for in the LC.
Maximum number of successive FTCs: no limitation
No statutory limitation on renewals provided that the total duration does not exceed 1 year.
Contracts concluded for a job requiring special technical skills can however be renewed twice within a 3-year-period in the cases where vocational training is provided by the employer: art. 74 LC.
Maximum cumulative duration of successive FTCs: 12month(s)
Contracts may be made for an unspecified period, for a specified period of not more than one year, except in the case of services requiring special technical skills, in which case the duration may be stipulated for a maximum of three years: art. 74 LC.
% of workforce under FTC: 77
Statistics for 2007: includes contracts concluded for specified period (definido) 44.9 % and for a specified piece of work (obra determinada)
Source: Ministry of Labour (http://www.mitradel.gob.pa/estadisticas/Contratos.pdf)
Maximum probationary (trial) period (in months): 3 month(s)
Art. 78 LC: a probation period can be stipulated when the work requires certain aptitudes or special skills. The maximum duration of the probation period is three months, provided that it is expressly contained in the written contract of employment.
Notification to the worker to be dismissed: written
Art. 214 LC.
Notice period:
No statutory notice periods to be observed.
However, there is an exception for some specific categories of workers to which the "just cause" rule does not apply. Those workers can be dismissed without just cause provided that the employer gives 30 days' prior notice or pay the corresponding amount in addition to a payment amounting to compensation for unfair dismissal.
This rule applies to those workers with less than two years' uninterrupted service; domestic employees; permanent employees of small agricultural, fishing or manufacturing undertakings; seafarers serving on board vessels operating on international routes; apprentices; workers in retail sales establishments and in undertakings with five or fewer workers, except in the case of insurance establishments or real estate (art. 212 LC).
tenure ≥ 6 months:
tenure ≥ 9 months:
tenure ≥ 2 years:
tenure ≥ 4 years:
tenure ≥ 5 years:
tenure ≥ 10 years:
tenure ≥ 20 years:
Pay in lieu of notice: No
Except for those workers listed in art. 212 LC to which the "just cause" requirement does not apply.
Notification to the public administration: No
Except for dismissals (individual and collective) on economic grounds: art. 215-216 LC Procedural requirements applicable to such dismissals are dealt with under the theme "Procedural requirements for collective dismissals for economic reasons".
Notification to workers' representatives: No
Approval by public administration or judicial bodies: No
Except for dismissals (individual and collective) on economic grounds: art. 216 LC Procedural requirements applicable to such dismissals are dealt with under the theme "Procedural requirements for collective dismissals for economic reasons".
For dismissals based on any other authorized ground, the employer has the option of applying to the labour courts for prior authorization to dismiss. Such judicial authorization is however not compulsory.
Approval by workers' representatives: No
As a general rule, the employer is not required to observe statutory notice period under the Panamanian labour legislation.
Depending on the reasons for dismissal, before proceeding to dismissal, the employer has either the obligation to obtain authorization from the labour administration (in case of an economic dismissal) or the option of applying to the labour courts for prior authorization to dismiss when dismissal is based on any other authorized ground.
tenure ≥ 6 months: 0 month(s)
tenure ≥ 9 months: 0 month(s)
tenure ≥ 1 year: 0 month(s)
tenure ≥ 4 years: 0 month(s)
tenure ≥ 5 years: 0 month(s)
tenure ≥ 10 years: 0 month(s)
tenure ≥ 20 years: 0 month(s)
Redundancy payment:
tenure ≥ 6 months: 0.5 month(s)
tenure ≥ 9 months: 0.75 month(s)
tenure ≥ 1 year: 1 month(s)
tenure ≥ 2 years: 3 month(s)
tenure ≥ 4 years: 4.5 month(s)
tenure ≥ 5 years: 5.2 month(s)
tenure ≥ 10 years: 9.75 month(s)
tenure ≥ 20 years: 14.8 month(s)
1) Dismissal with cause (not economic): no severance pay.
2) Economic dismissal: redundancy payment = compensation for unfair dismissal.
3) Dismissal of workers not subject to the just cause requirement (workers with less than two years of uninterrupted service; domestic employees; permanent employees of small agricultural, fishing or manufacturing undertakings; seafarers serving on board vessels operating on international routes; apprentices; workers in retail sales establishments and in undertakings with five or fewer workers, except in the case of insurance establishments or real estate): compensation for unfair dismissal