Work contracts

Your rights and responsibilities

Work contracts

The content of the work contract can be freely agreed, as long as it is not contrary to the law. It can also include elements from a collective agreement.

Work contract

The labour agreements should always be written in triplicate: one for the employee, one for the employer and the other one for the Ministry of Labour.

According to the Panamanian Labour Code, three types of work contract can be signed:

  • a probationary contract for three months,
  • a fixed-term contract for a maximum of one year,
  • an indefinite-term contract.


Wages in Panama are much lower than in Europe or the United States, unless you are paid as an expat. According to your level of education, the wages vary. To give you an idea, an average Panamanian earns around $400 per month, and between $800 and $1,200 if he has a college degree.

Legal weekly duration

The Labour Code permits four work shifts:

  1. Day work of 8 hours maximum per day and 48 hours per week
  2. Night work of 7 hours maximum per day and 42 hours per week
  3. Mixed work (night and day) of 7.5 hours maximum per day and 45 hours per week, (but if it is more than 3 nights per week it is considered night work)
  4. Rotating cycle when the company need staff during the different shifts.

Usually, working on Saturday afternoons and Sundays is not allowed. However, the law makes several exceptions: hotels, restaurants, bars, drug stores, grocery stores, tourism businesses, entertainment businesses, export processing zones, etc.

Overtime work

The law states that employers cannot ask their employees to work overtime, except in specific cases like agricultural workers, export companies, some works performed in the Special Economic Area Panama Pacific, etc.

Otherwise, the law allows up to 3 hours per day and a maximum of 9 hours per week of overtime, with the agreement of the employee.

Unions and strikes

In Panama unions are allowed. As in many countries, they can negotiate on behalf of employees collectively. But in Panama, unionism is not very prevalent and tends to be centred in the construction and private manufacturing sectors. In Panama, unionised workers in private sectors represent only 11% of the workforce.

Strikes are authorized under defined circumstances set by law and after a majority vote. However, a conciliation step is always required before a strike.

Further reading

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