Employer of Record & PEO in Panama

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

Native Language



$60.12 billion

Payroll Frequency


Capital city

Panama City

GDP per capita





Balboa (PAB), United States Dollar (USD)


UTC -5

English Speaking



4.43 Million

Employment Cost


Cost of Living


How NNRoad Employment & PEO Services Work?

NNRoad provides professional employment organization (PEO) & employer of record (EOR) services for companies looking to hire and manage teams in Panama. Registering a legal entity in Panama as a means for employment is an outdated practice that takes both time (months) and money (thousands of USD). NNRoad’s employer of record and PEO services enables companies to hire and manage employees in Panama in full accordance with local labor laws in under a week.

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 in Panama. Employment and full liability are outsourced to NNRoad.

➊ You interviews & select the candidates you want to hire in Panama.
➋ NNRoad arranges a local labor contract with your new employee.
➌ NNRoad arranges a service contract between your organization & NNRoad.
➍ NNRoad organizes, manages & processes  payroll in Panama in full compliance with local employment laws.
➎ You maintain a normal working relationship and manage your team in Panama while NNRoad manages payroll & HR liabilities.

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.

➊ You interviews & select the candidates you want to hire in Panama.
➋ NNRoad organizes, manages and processes payroll for your local employees in full compliance with local employment laws.
➌ You maintain a normal working relationship and manage your team in Panama while NNRoad manages payroll & HR compliance.

Advantages of NNRoad's Panama Employment Services

  1. With EOR/PEO solutions you can manage client meetings, sales, quality control, marketing, R&D and customer support without a local company in Panama.
  2. Pay as you go
  3. ​​Dedicated account manager – One point of contact for multiple locations
  4. Employment & termination processing
  5. Complete payroll solution and statutory benefit according to local laws
  6. With EOR/PEO solutions you can hire staff while waiting for the registration of your company in Panama.
  7. NNRoad only works with professional locally licensed partners
  8. GDPR compliant
  9. NNRoad manages employee record timekeeping, bonus and allowance, expenses claims and personal leaves according to local law.
  10. NNRoad provides foreigner VISA application services, if needed

Employment Compliance in Panama

Taxes & Payroll in Panama

Employee Income Taxes:

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

Employer Costs in Panama

Employer Contributions:

Social security 




Education tax 




Employee Contributions:

Social security 


Education tax 


Working Hours and Overtime in Panama

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. 

Mandatory Contributions 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. 

Termination Laws and Severance Pay 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 

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. 

Public Holidays in Panama

Public Holidays in Malaysia

  • 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

Paid Leave in Panama

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. 

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. 

Types of Leaves in Panama

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. 

Immigration Laws in Panama

Like any other country, Panama has a specific set of regulations in place for foreign nationals who plan to travel within its borders. Foreigners who intend to stay in Panama for up to 90 days can obtain a tourist visa, but this visa does not allow the holder to work.

To live and work in Panama, foreign employees will need to get an immigration visa and establish residence before applying for a work permit.


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