Hire in Panama

Panama PEO &

Employer of Record

Hire & manage teams remotely in Panama without a local entity. We handle HR compliance, payroll & taxes so you can focus on your business.

Business Language


Salary Currency

United States Dollar (USD)

Payroll tax


Payroll Cycle


Time zone

UTC -5

Capital city

Panama City

Hire Employees in Panama

NNRoad provides employer of record (EOR)professional employment organization (PEO) services to ensure that your business in Panama complies with local labor laws and regulations. We process monthly payroll and act as the Employer of Record, taking on all local employer liabilities.

The NNRoad Advantage ☺

Pay as you go

No set-up or overhead costs to global expansion.

Global account manager

One point of contact for all of our 50+ serviced countries and regions.


Ensured compliant contracts and operations.

Fast Onboarding

Start working with your remote employees/contractors within a week.

Foreigner Visas

NNRoad assists with overseas foreign hires visa needs.


Access your payroll reports and employee pay stubs on our portal.

Employer of Record in Panama

Employer of Record (EOR) services are for companies who do not have a legal entity in Panama, but who want to hire localy. Employment and full liability are outsourced to NNRoad.


Candidate Selection

You interviews & select the candidates you want to hire in Panama.


Employee Onboarding

We sign a local labor contract with your employees based in Panama.


Compliance & Payroll

We manage monthly payroll, mandatory benefits & all HR compliance in Panama.


Payroll Reporting

See all payroll reports on our platform & focus on your business in Panama.

Recruiting process outsourcing – including but not limited to resume screening, shortlisting candidates, coordination for interviews, and assistance for salary negotiation.

Hiring and termination of employees/local labor contracts (contract administration – engagement, extension termination and conversion to permanent hire).

On-boarding and off-boarding employees following labor law practice.

Complete payroll solution and benefit administration

Employee management – employee record retaining, time keeping, bonus and allowance management, expense and claims, and leave employee database management accordingly to the local law.

Mandatory insurance compliance (i.e. pension, labor and health insurance) according to the local labor laws.

Payment management (Invoicing customers/clients and vendor payments).

Work VISA application assistance, if needed.

Local individual income tax reporting.

Payroll & PEO in Panama

Professional Employment Organization (PEO) services are for companies who have a legal entity in Panama, and want to outsource their payroll. Employment liabilities are shared between your organization and NNRoad.


Compliance & Payroll

We manage monthly payroll, mandatory benefits & all HR compliance in Panama.


Payroll Reporting

See all payroll reports on our platform & focus on your business in Panama.

Registering the necessary company and personnel information for payroll calculation in the payroll software and system

Monthly Payroll Processing

Year-End Adjustment and Annual Declaration

Panama peo

Taxes & Payroll in Panama

Employee Income Taxes:

Individual income tax rates in Panama are based on progressive tax brackets.

Panama’s tax system is founded on the premise of income being territorial. Citizens and residents are taxed on income earned from Panamanian sources. Non-residents are only taxed on income earned in Panama, and the payer must withhold the tax on any sort of income paid to a non-resident.

Tax Brackets

0%: Up to 11,000 USD
15%: 11,000 – 50,000 USD
25%: Over 50,000 USD

Sample Calculation


Employer Costs in Panama

Employer Contribution

  • Social security: 12.25%
  • Unemployment: 1.92%
  • Education tax : 1.50%
  • Accident: 0.98-5.67%

Employee Contribution

  • Social security: 9.75%
  • Education tax: 1.25%

Benefits & Insurance in Panama

Social Security Fund

The Panamanian Social Security Fund is in charge of administering and governing the Republic of Panama’s social security system. Pensions, as well as programs such as survival, disability, and old age, are coordinated by the social security fund. The social security fund also provides benefits, such as maternity and illness benefits.

Panama peo and eor

Working Hours in Panama

Working Hours Per Week

The standard workday in Panama is eight hours, and the workweek is up to 48 hours. Night shifts (from 6 p.m. to 6 a.m.) are restricted to seven hours per day and 42 hours per week. A mixed-shift workweek is seven and a half hours long and can last up to 45 hours.


Overtime is paid based on the following rules:

  • 25% of ordinary wages, when the overtime work is performed between 6 am and 6 pm.
  • 50% of ordinary wages when the overtime work is performed between 6 am and 6 pm and mixed shifts which start in the daytime and continue for longer than usual working time.
  • 75% of ordinary wages when an overtime work shift is an extension of a night shift or of a mixed shift that starts between 6 pm and 6 am.

Termination Laws in Panama

Contracts can be dissolved through mutual consent, resignation, or unilaterally for good or bad reason. In Panama, only limited and serious conditions, as defined by the labor legislation, can result in a just cause dismissal.

The employer must give the employee written notice of the termination, including the reason for it and the date it was given. A dismissal that does not follow the labor code’s rules is considered unreasonable, and the employee may be able to file a claim in a labor court.


Severance pay is required if an employee has served the company for less than 2 years continuously and if dismissed without cause. In this case, the severance pay is equal to 3.4 weeks of salary for each year worked.

Employment Contract in Panama

Employment Contract

Employment contracts in Panama can be in writing or verbal form. Contracts are usually for an indefinite term, and fixed-term contracts can only be used for temporary replacement of an employee or for specific tasks that are not permanent in the nature of the company.

Written employment contracts must include:

  • Name of employer and employee
  • Probation period
  • Job description
  • Place of work
  • Working hoursSalary and form of payment
  • Duration of the contract if it is for a definite term, or a specific project
  • Other terms agreed by the parties

Probation Period

The probation period can be for maximum three months and must be included in the employment contract.

peo panama

Types of Leaves in Panama

Annual Leave

Employees that have worked for at least 11 months without interruption are entitled to 30 days of paid vacation leave. The pay due to the employee will be settled and paid three days prior to the start of the employee’s yearly vacation.

Sick Leave

Employees in Panama are entitled to 18 days of paid sick leave. For non-work-related illness or injury, the employer pays sick pay at 100% salary rate for the first 18 days. From the 21st day onward, the Social Security fund (at rates according to the law) covers sick pay.

Maternity and Paternity Leave

A female employee is entitled to maternity leave for a period of six weeks prior to delivery and eight weeks following childbirth. The overall length of maternity leave must not be less than 14 weeks. The Social Security Fund is responsible for maternity leave payments. Pregnant women who have paid a minimum of 9 monthly installments in the 12 months before to the 7th month of pregnancy, that is, up to the 6th month inclusive, are eligible for the Maternity Allowance.

Fathers are entitled to three days of leave paid by the company. The leave shall be taken immediately after the childbirth.

Public Holidays in Panama

Public Holidays

  • New Year’s Day – January 1
  • Martyr’s Day – January 9
  • Carnival – February 28
  • Mardi Gras – March 1
  • Ash Wednesday – March 2
  • Holy Friday – April 15
  • Labor Day – May 2
  • Separation Day – November 3
  • Flag Day – November 4
  • Colon Day – November 5
  • Los Santos Uprising Day – November 6
  • Independence Day – November 28
  • Panama Mother’s Day – December 8
  • Christmas Day – December 25-26