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

US Dollar (USD)

Capital city

Panama City

Time zone

UTC -5

EOR in Panama

Hire Employees in Panama

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

Fast Hiring

Start working with your remote employees in a week.

Foreigner Visas

NNRoad assists with overseas foreign hires visa needs.


Access your payroll reports 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.

1. Candidate Selection

Select the candidates you want to hire in Panama.

2. Employee Onboarding

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

3. Compliance & Payroll

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

EOR service includes:

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

All mandatory employer (and employee) contributions filed and paid for your EOR employees.

Payroll recording, reporting and administration.

Distribution of salaries to employees through direct deposit into their bank accounts.

Calculation, reporting, filing and processing of EOR employee’s individual income tax due.

Collecting and processing your employee’s invoices for business related expenses.

Guiding and organizing your expat employee’s work visa application too guarantee their successful onboarding.

Standalone 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.
Panama peo

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:

Sample Calculation

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

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%

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.

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.

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

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.

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

  • 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
Panama peo and eor


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