How is salary calculated and what components does it consist of in Panama?

In Panama, salary calculation is based on the hourly rate negotiated between the customer and the employee, ensuring that the rate meets minimum wage requirements. The salary consists of the following components:

• Base salary
• Overtime pay, which is 125% of the regular hourly rate on regular days and 150% on holidays or mandatory rest days
• Bonuses, which are considered part of the salary if they are recurring
• Commissions, also regarded as part of the salary
• 13th Month Salary, calculated as 1/12 of the annual salary and paid in three installments

Is there a legal obligation to pay salaries in the same month in Panama?

Yes, there is a legal obligation to pay salaries in the same month in Panama.

How many salary payments are made per year in Panama?

In Panama, the number of salary payments an employee receives each year includes both regular salary payments and the 13th Month Salary. Employees typically receive:

• 12 regular salary payments, which are made either monthly or biweekly.
• An additional 13th Month Salary, known as "Décimo Tercer Mes." This is a mandatory extra payment equivalent to one month's salary, distributed in three equal installments on April 15, August 15, and December 15.

Therefore, employees effectively receive 13 salary payments annually in Panama.

What tax and social security obligations do employees have in Panama?

In Panama, employees have specific tax and social security obligations. These include:

• Social Security contributions at a rate of 9.75%.
• Educational Insurance at a rate of 1.25%.

Employers in Panama also contribute to social security (starting April 1, 2025), educational insurance, and tax withholding, if applicable.

What are the details of the statutory bonuses and 13th/14th-month salary in Panama, including the local name and payment schedule?

In Panama, supported employees are entitled to a statutory annual bonus known as the 13th-month bonus. This bonus is equivalent to one month's salary and is paid in three equal installments. The payment schedule for these installments is as follows:

• April 15
• August 15
• December 15

What is the minimum wage information in Panama?

Effective January 16, 2025, the minimum wage in Panama ranges from 1.55 to 4.67 balboas per hour, depending on the region and occupation. The Ministry of Labor and Job Development divides the country into two regions for the purpose of enforcing minimum wage laws. These wages are reviewed and potentially adjusted at least once every two years by executive decree, based on recommendations from a national minimum wage commission. Additionally, wages can be negotiated above the minimum level through collective bargaining agreements.