After setting Panama Company certain labor law is to be followed that are as follows:
The Labor Code of 1971 deals with Labor Relations describing the rights and duties of employers and employees. "Subordination" is the key concept of the law. Any relationship where one person is subordinate to another falls within the law. It makes no difference whether the relationship is or is not described as “employment”. The labor law provides social justice to employees against the exploitation and unethical practices of the employer and everyone who is working is abiding by law.
There are certain basic employee rights which must be followed:
1. Written Employment Contract
2. Minimum Wage
3. Maximum Hours
4. Paid Vacation Time
5. Firing Employees
Employee Contracts
You must have your employees sign a written employment contract called an Inscripcion Contratos con trabajadores.
You must file two copies of the contract with the Ministerio de Trabajo y Desarrollo Laboral.
Employers can easily terminate the employee during the first two years. After that, employees have greater protection under the law. The law lists "just causes" for dismissal. Under this, employer has to mention the cause of dismissal. Unlawful dismissals can result in minimal compensation payments. Both parties can contract for "fixed terms".
Minimum wage levels vary according to the employee's seniority.
Vacations: There are 11 public holidays per year. In addition, employees are entitled to a 30 day vacation every year.
13th Month: The law also requires a 30 day paid bonus every year which is known as "the 13th month". This bonus is estimated at one-salary day for every 11 days of work. The 13 month bonus is paid in 3 equal installments: April 15th, August 15th, and December 15th every year.
Unions
Unions are allowed in Panama. Unions can collectively negotiate on behalf of the employees. Strikes are lawful under defined circumstances after a majority vote of the member employees. Conciliation is mandatory before a strike can occur. However, only around 11% of the private sector employees are unionized.
As you know, labor laws are there to protect the interests of disadvantaged employees, but some unions try to make use of it to get political advantage. So beware of such unions.
The Labor Code of 1971 deals with Labor Relations describing the rights and duties of employers and employees. "Subordination" is the key concept of the law. Any relationship where one person is subordinate to another falls within the law. It makes no difference whether the relationship is or is not described as “employment”. The labor law provides social justice to employees against the exploitation and unethical practices of the employer and everyone who is working is abiding by law.
There are certain basic employee rights which must be followed:
1. Written Employment Contract
2. Minimum Wage
3. Maximum Hours
4. Paid Vacation Time
5. Firing Employees
Employee Contracts
You must have your employees sign a written employment contract called an Inscripcion Contratos con trabajadores.
You must file two copies of the contract with the Ministerio de Trabajo y Desarrollo Laboral.
Employers can easily terminate the employee during the first two years. After that, employees have greater protection under the law. The law lists "just causes" for dismissal. Under this, employer has to mention the cause of dismissal. Unlawful dismissals can result in minimal compensation payments. Both parties can contract for "fixed terms".
Minimum wage levels vary according to the employee's seniority.
Vacations: There are 11 public holidays per year. In addition, employees are entitled to a 30 day vacation every year.
13th Month: The law also requires a 30 day paid bonus every year which is known as "the 13th month". This bonus is estimated at one-salary day for every 11 days of work. The 13 month bonus is paid in 3 equal installments: April 15th, August 15th, and December 15th every year.
Unions
Unions are allowed in Panama. Unions can collectively negotiate on behalf of the employees. Strikes are lawful under defined circumstances after a majority vote of the member employees. Conciliation is mandatory before a strike can occur. However, only around 11% of the private sector employees are unionized.
As you know, labor laws are there to protect the interests of disadvantaged employees, but some unions try to make use of it to get political advantage. So beware of such unions.
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