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How to hire remote employees in
Panama’s a beautiful country with a rich history and, more relevant to you, some great remote talent. If you’re looking to hire in the country, you’ve got two choices: Hire your candidate as an employee, or bring them on as a contractor. Below are the details about each—as well as what we’d recommend.
If you want to successfully hire in
Panama
, you have two options:
Laws about hiring contractors are significantly more simple in
Panama
. Onboarding talent takes days, not weeks or months. Both you, the company, and your talent have more flexibility. And in many cases, since you’re remote, the talent you’re hiring is better classified as a contractor, anyway. Of course, it’s not possible in every case, but it’s what we built Thera for.
This is the long route. You can either establish a physical presence with an entity and register as an employer, or you can use an Employer-of-Record (EOR) solution. Odds are, you’ll find using an EOR to be the easier route. Still, using an EOR in
Panama
is expensive—it can often be $500 per month per employee—and sometimes prone to lengthy onboarding times.
Hiring contractors is normally the easier, faster, more flexible choice—but don’t just take it from us. Below are the specific benefits and drawbacks to hiring contractors in
Panama
.
Hiring employees takes months, at the minimum. When you hire with Thera's locally-generated contracts, it’s a matter of days or weeks. This means you can hire the best talent, fast, without losing them to a hellish procession of paperwork.
It costs just $0 to sign up for Thera, then $25 per month to hire your contractors with Thera. If you hired employees manually (or did contracting on your own), you’d likely be on the hook for thousands of dollars each month. Setting up an entity alone can cost tens of thousands of dollars.
Hiring contractors in
Panama
means you’re generally not on the hook for things like health insurance and paid time off. This makes hiring flexible for you, and it gives your talent more options.
Hiring employees is a bigger commitment, and can open you up to increased liabilities and regulations. When you hire contractors overseas, your biggest risk is misclassification—but laws surrounding contractor classification are often significantly more straightforward.
The contractor life isn’t for everyone—some people want the security that being an employee often appears to provide. Though it’s rare, this does happen, and it’s one disadvantage of manage an all-contractor team.
Most countries’ contractor-employer relationship laws stipulate that the employer can’t set fixed working hours, among other things. These laws give contractors more freedom over how and when they do their work than an employee would have. In reality, however, most contractors are willing & able to work on the company’s schedule—it’s a matter of setting expectations beforehand.
If you’re hiring contractors in
Panama
, you can pay them with Thera in a single click. You won’t need to worry about complicated wire transfers, fees, or currency conversions. We’ll take care of it all. Just make a click and your contractor will get paid in their currency of choice. This is a valuable bonus for talent in countries where the local currency is particularly weak—most people appreciate the ability to receive their payment in stronger currencies.
If you’ve read up until this point, you’ll know that it’s easier, cheaper, and more flexible to hire contractors in Panama than employees. Still, there are valid reasons why you might want to hire employees instead. The content below is for you—we’ll cover employer taxes and obligations in Panama.
PTO is calculated by the:
There are 11 public holidays.
The duration of sick leave entitlement provided to workers is dependent on how long they have been employed by their employer:
Women are entitled to 14 weeks of paid maternity leave and paid at 100% of the regular pay.
Maternity leave can start 6 weeks before the expected due date and 8 weeks after. However, if the actual due date is delayed, then the prenatal portion of the leave is extended so that the mother can enjoy 8 weeks of post-natal leave.
Maternity leave is calculated by the greater of the last salary or average of the last 180 workdays.
Fathers are entitled to 3 days of paid leave.
There are no statutory laws regarding parental leave in Panama.
None.
None.
None.
In Panama, the dismissal of an employee must have just cause as outlined in the labor code. Termination in writing must be provided outlining the cause and the date that the termination was given.
A dismissal that does not follow the laws outlined in the labor code is considered unjustified and the employee may be able to make a claim with a labor court. If the labor court does not resolve the claim within 60 days, the employer may continue with the dismissal.
However, there are certain classifications of employees that may be dismissed without just cause (domestic workers, fishing or agricultural workers, retail workers).
The notice period in Panama is:
Notice is not mandatory except for employees dismissed for just cause.
For employees who are dismissed without just cause, they are entitled to 30 days’ notice.
There are no statutory laws regarding severance pay unless the reason for dismissal is redundancy. In this case, payment is determined based on the length of employment and is as follows:
The maximum length of probation is 3 months.
The standard workday is 8 hours, and a full time work week is up to 48 hours.
125% of the regular pay when overtime hours are between 6 am and 6 pm.
150% of the regular pay when overtime hours are between 6 pm and 6 am or work over a holiday or day of rest.
175% of the regular pay when the overtime hours carry over from working during night hours.
It is important to note that an employee cannot work more than 3 hours of overtime per day or a total of 9 hours per week. If work is deemed dangerous or a hazard to one’s health, overtime is not permitted.
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