I Salary withholdings and deductions:

1. Income Tax: Determine by a schedule in the Panamanian Fiscal Code.
2. Social Security: A 7.25% is made off the monthly gross salary, and the employer covers 1.50% of the assessment.
3. Education tax: A 1.25% is withheld based on the monthly gross salary, and the employer covers 1.50% of the tax rate.

Additionally, the employer must cover worker compensation, which depends on the duties performed by the worker. The Panamanian Social Security assigns the percentage to be paid, whereas 0.98% is the minimum percentage established for office workers.

II Employee Rights

1. Annual Vacations (Leave): The Panamanian Labor Code establishes an annual remunerated leave, that is, thirty days for each eleven continuous months of work, at a rate of one day for each day worked for the employer.
2. Thirteen Month: It is a special compensation equivalent to one day of work for each eleven worked days or fraction thereof, continuo or otherwise. This compensation is paid in three allotments, in the months of April, August, December and it is withholdings subject to income tax.
3. Seniority Compensation: Upon termination of all labor contracts, whichever the reason for termination, the permanent employee has a right to receive seniority compensation equivalent one week salary for every year worked, from the beginning of the employment. If the year of service is not completed, the employee is entitled to the portion thereof.

III Application for Employment

There are no specific employment forms to be filled by interested applicants. Each employer usually prepares its own forms. These forms allow the corporation to select personnel prior employing them.
It is important to note; however, that our labor laws require that a written contract contain the following:

1. Name, nationality, and gender, age. Civil status, home address and personal identity card number of the parties. When the employer is a corporation, the contract must contain the name of the corporation, address, name of legal representative and Public Registry information.
2. Employee’s dependents and household members.
3. Specify services or work contracted and the variations thereof contracted for performance.
4. Place or places in which services will be rendered.
5. Duration of the contract; if its is a specific period of time; or a clause stating of the contract is for a fixed period of time or for an specific duty.
6. Regular duration and division of the working day.
7. The salary, form, day and payment place.
8. Place and execution date; and
9. Signature of the parties.

IV Classification of labors contracts

The Panamanian Labor Code defines three different labor contracts:

1. Definitive Period of Time Contract: The duration of this type of contract can not exceed one (1) year.
2. Defined Work Labor Contract: The duration of this type of contract will be determined by the duty to be performed.
3. Indefinite or Permanent Labor Contract: The duration of this type of contract is undetermined by the parties upon signing.