What is the carry-over policy for annual leave in Panama?

In Panama, the carry-over policy for annual leave is as follows:

• As per Panamanian labor laws, vacation rest days can be accumulated for up to 2 accrued periods, which is a maximum of 60 calendar days.
• If more than 2 periods are accumulated, the employee is not permitted to use the excess vacation days. Instead, the employer must pay the corresponding wages, and the employer is subject to sanctions.
• Accumulation of vacation days is unlimited for economic purposes.

How is paid time off (PTO) calculated in Panama?

In Panama, supported employees accrue paid time off (PTO) at a rate of 2.73 days per month worked. After completing 11 months of continuous employment, the supported employee is entitled to a total of 30 calendar days of paid annual leave.

These 30 days of vacation accrue at the end of the 11 months. Employers are required to pay for annual leave 3 days before the vacation begins, based on the employee's average salary, which includes regular bonuses and commissions. It is important to note that time off cannot be compensated in lieu of taking the actual leave.

What is the process to request annual leave in Panama?

To request annual leave in Panama, a supported employee must:

• Indicate the desired vacation period at least 2 months in advance.
• Obtain and submit their manager's approval along with the leave request.

Is time off usage required in set increments in Panama?

In Panama, vacations can be divided into two equal parts at most. However, this division is only allowed when specified in a collective agreement and with the prior agreement of the employee.

Is unlimited PTO an option in Panama, and how can it be accommodated?

In Panama, offering unlimited Paid Time Off (PTO) to supported employees is feasible and presents no negative implications. However, it is important to:

• Clarify that unlimited PTO is a benefit covering any statutory PTO, ensuring that additional dual benefits are not unintentionally created.
• Manage the PTO as part of a flexible/company policy instead of incorporating it into the employment agreement. This approach prevents the PTO benefit from becoming an unchangeable employment condition.

Is it necessary to track leave accrual on employee payslips in Panama?

Yes, it is necessary to track leave accrual on employee payslips in Panama.