FTC regulated: Yes

Valid reasons for FTC use: objective and material reasons

Remarks

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

Remarks

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: 12months

Remarks

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

Remarks

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 months

Remarks

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.

Obligation to provide reasons to the employee: Yes

Remarks

Art. 214 LC: The notice of dismissal shall be in writing and shall specify the date and the specific reasons for the dismissal or termination of the employment relationship. Any additional reasons subsequently alleged and differing from those set out in the said notice are invalid.

Valid grounds (justified dismissal): economic reasons, worker's conduct, worker's capacity

Remarks

The LC recognizes numerous disciplinary, non-disciplinary (including capacity-based) and economic reasons that are considered valid grounds for the termination of employment at the initiative of the employer that are listed in art. 213 LC.

Prohibited grounds: pregnancy, filing a complaint against the employer, race, sex, religion, political opinion, social origin, trade union membership and activities, disability, participation in a lawful strike, birth

Remarks

No general prohibition of discrimination in the LC.
However, the Act No 11 of 22 April 2005 prohibits discrimination in employment based on race, birth, disability, sex, social condition, political ideas. See also art. 19 of the Constitution.
In the LC, dismissals based on trade union activities, participation to a strike, filing a complaint against the employer are considered "unfair practices against trade unionism and the worker's rights" (práctica desleales en contra del sindicalismo y de los derechos del trabajador) in art. 388 2), 3), 7).

Workers enjoying special protection: workers' representatives, pregnant women and/or women on maternity leave

Remarks

- On trade union protection (fuero sindical), see art. 381 -387 LC. The special protection applies to the following workers: the members of trade unions, where the unions are being established; the members of the executive committees of workers', trade unions' federations, confederations or central congresses, up to a maximum of 11 members, substitute members of the executive committee.
Art. 384 of the LC establishes a series of rules applicable to the duration of trade union immunity:
* for the members of trade unions in the course of formation: for three months following the date on which such association's registration is authorized;
* for titular and substitute members of executive committees (the latter if they enjoy trade union immunity) and trade union representatives: for one year running from the date on which they cease to hold office;
The protection of trade union immunity commences on the date on which the worker's name appears on the list of candidates for election, on condition that such list is communicated to the employer or to the Inspectorate of Labour, and provided that such protection does not cover a period of more than one month before the actual date of the elections. Elected candidates continue to enjoy trade union immunity even before they take office, and unsuccessful candidates are to continue to enjoy such protection for the entire month following the date of the election returns. If the communication referred to above is not made, immunity should be afforded to members of the executive committee and trade union representatives as from the date of their election.

- Maternity protection: see art. 106 LC.
An expectant mother may be dismissed only for valid reasons and with prior authorization of the judicial authorities. An expectant mother who receives notice of dismissal or of unilateral termination of her employment which has not been authorized by the competent labour court must submit to the employer or to any labour authority a medical certificate of her pregnancy within the 20 days of receipt of such notice of dismissal. On completion of this formality the employee is entitled to immediate reinstatement in her employment plus payment in full of her remuneration as from the date of the dismissal. If she allows the said 20-day period to expire without taking any action, she may submit the certificate and claim reinstatement at any time during the following three months, but in this case she is entitled only to back payment of her remuneration as from the date on which she submits the certificate. If the employer refuses to reinstate her, she may sue in the ordinary way for a reinstatement order.

Notification to the worker to be dismissed: written

Remarks

Art. 214 LC.

Notice period:

Remarks

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:

  • All: 0 months.

tenure ≥ 9 months:

  • All: 0 months.

tenure ≥ 2 years:

  • All: 0 months.

tenure ≥ 4 years:

  • All: 0 months.

tenure ≥ 5 years:

  • All: 0 months.

tenure ≥ 10 years:

  • All: 0 months.

tenure ≥ 20 years:

  • All: 0 months.

Pay in lieu of notice: No

Remarks

Except for those workers listed in art. 212 LC to which the "just cause" requirement does not apply.

Notification to the public administration: No

Remarks

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

Remarks

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

Notes / Remarks

Notes

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 months

tenure ≥ 9 months: 0 months

tenure ≥ 1 year: 0 months

tenure ≥ 4 years: 0 months

tenure ≥ 5 years: 0 months

tenure ≥ 10 years: 0 months

tenure ≥ 20 years: 0 months

Redundancy payment:

tenure ≥ 6 months: 0.5 months

tenure ≥ 9 months: 0.8 months

tenure ≥ 1 year: 1 months

tenure ≥ 2 years: 3 months

tenure ≥ 4 years: 4.5 months

tenure ≥ 5 years: 5.2 months

tenure ≥ 10 years: 9.8 months

tenure ≥ 20 years: 14.8 months

Notes

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

Compensation for unfair dismissal - free determination by court: No

Remarks

Art. 225 LC

Compensation for unfair dismissal - Legal limits (ceiling in months or calculation method): In case of unfair dismissal or failure of notification if mandatory, the worker is entitled to receive from his or her employer compensation based on the following scale (sec. 225, LC) For periods of service prior to 2 April 1972:
* for less than one year's service, the equivalent of one week's wages for every three months of employment, and with a minimum amount of such compensation equivalent to one week's wages;
* for a period of service of between one and two years, the equivalent of one week's wages for every two months of employment;
* for more than two and not more than five years' service, three months' wages;
* for more than five and not more than ten years' service, four months' wages;
* for more than ten and not more than 15 years' service, five months' wages;
* for more than 15 and not more than 20 years' service, six months' wages; and
* for more than 20 years' service, seven months' wages.
This scale may not be applied on a graduated basis, i.e. the highest applicable level determines the amount to be paid.
For periods of service after 2 April 1972, the following scale is to be applied:
* for less than one year's service, the equivalent of one week's wages for every three months of employment (the minimum amount of such compensation to be the equivalent of one week's wages);
* for a period of service between one and two years, the equivalent of one week's wages for each two months of employment;
* for a period of service between two and ten years, the equivalent of wages for three additional weeks for each year of service; and
* for more than ten additional years of service, the equivalent of one additional week for each year of service.
This scale is applied on a graduated basis, the total length of service completed being distributed among the corresponding steps set out in the previous sub-items. In the case of service rendered in periods before and after 2 April 1972, the above-mentioned scales are to be applied separately.
In the case of employment commencing after the LC entered into force, compensation should be equivalent to three to four weeks of wages for each year worked in the ten first years; and each year after ten years should be compensated with the equivalent of one week's wages for each year. Such compensation should not be combined with any other scale. For the two instances cited in this sub-item, where a full year has not been completed, the corresponding proportion is due.

Reinstatement available: Yes

Remarks

Art. 218 LC: a worker under a contract of unspecifed duration can ask for reinstatement or compensation for unfair dismissal before the Labour Court or the Conciliation Board.
According to art. 219 LC, if reinstatement is ordered by the Court, the employer nonetheless terminate the employment relationship by paying the statutory compensation for unfair dismissal plus a surcharge, calculated as follows:
50%, in addition to the corresponding compensation, for those workers employed in the undertaking at the time the LC entered into force; and
25%, in addition to the corresponding compensation, for those workers who begin working after the LC entered into force, provided that the employer has not established a severance fund.
In addition, wages in arrears are to be paid in the form prescribed by the respective judgment, in accordance with sec. 218 of the LC.

Preliminary mandatory conciliation: No

Remarks

No provision found in the legislation reviewed.

Competent court(s) / tribunal(s): labour court

Remarks

Art. 218 LC: The Labour Tribunals and/or The Conciliation and Decision Boards (junta de conciliación y decisión,) have jurisdiction over claims of unfair dismissal. The "juntas de conciliación y decisión" which are tripartite bodies and are integrated into the "Jurisdiccion Laboral".

Existing arbitration: Yes

Remarks

Art. 218 LC: The Labour Tribunals and/or The Conciliation and Decision Boards (junta de conciliación y decisión,) have jurisdiction over claims of unfair dismissal. The "juntas de conciliación y decisión" which are tripartite bodies and are integrated into the "Jurisdiccion Laboral".

Burden of Proof: both

Remarks

Article 735 Labour Code.