Employer of Record in Panama
Skuad’s Employer of Record Panama (EOR) solutions make business expansion to Panama easy and hassle-free. Our unique HR platform allows companies to hire exceptionally talented employees in Panama, without having to set up a separate legal entity. It streamlines the process of hiring and onboarding a remote team by handling payroll management, taxation, and other legal compliances. To learn more about Skuad, Book a demo today.
Panama at a Glance
Population: 4.374 million (2020)
Currency: Panamanian Balboa (PAB)
Capital city: Panama City
Languages spoken: Spanish
Gross Domestic Product (GDP): 52.94% (2020)
Employment in Panama
Under Article 78 LC, employment contracts in Panama can be written or verbal, though the written form is recommended. Three different employment contract copies are essential: one each for the employee, employer, and the Ministry of Labor. The contract should preferably be in Spanish and inclusive of terms of payment, benefits, and termination. Whether an offer letter or employment contract in Panama, salary and other payments should be mentioned in US dollars (USD).
Panamanian employment contracts should include the following details in writing.
- Name of employer and employee
- Job description
- Probation period
- Duration of the contract (period of the project)
- Salary and form of payment
- Working hours
- Place of work
- Other mutually agreed-upon terms
Fixed-term contracts should be in writing and can be used only in the context of temporary replacement of the employee or for a specific job. Though they cannot exceed 12 months, a period of three years with two renewals is allowed for special services and technical skills. Generally, there is a three-month probation period, which shall be mentioned in the written contract.
To ensure your expansion endeavors are in compliance with the Panama employment laws, Contact Skuad today.
Contractors vs. Full-time Employees
Whether your company needs to hire a contractor or a full-time employee depends on several factors such as the size of the business, job requirements, and the duration of the project. When it comes to the payroll of a contractor, you need not withhold payroll taxes from the preset payment. When you hire a full-time employee, you need to withhold payroll taxes from their monthly salary.
Benefits of Hiring Contractors
- Savings on the cost per employee
- Hire global talent for a limited time
- Payment on mutually agreed terms
- Need not provide other benefits
- Saving on training expenses
- Diverse work experiences
- Lesser exposure to lawsuits
Benefits of Hiring a Full-time Employee
- Can guide and monitor their work
- Lesser chance of quitting
- Higher productivity
- Relationship building
Whether you need full-time employees, freelancers, or employees on a contractual basis, Skuad’s EOR services can guide you from start to finish. Book a demo with Skuad experts to avail yourself of tailor-made HR solutions.
Hiring in Panama
Depending on your business requirements, you can hire a contractor or full-time employee in Panama. Payroll, benefits, and compensations are different for a contractor and a full-time employee.
Job search platforms such as Konzerta, LinkedIn, OPCIONEMPLEO, Indeed, Gigajob, and Buscojobs are used by employers to advertise job opportunities in Panama. The benefit of hiring through these job search platforms is that you get varied choices of talent. Also, you can sift through the applicants’ profiles before taking the application further. The drawback is that it is difficult to verify the credibility of the information provided.
Skuad’s Panama EOR service excels in recruiting for international businesses. Our expertise in the field helps you to undertake and manage the most tedious of hiring processes efficiently.
Probation & Termination
Probation Period in Panama
The probation period in Panama does not exceed three months. An employee is entitled to the company’s benefits after this period. An employer can terminate their employees during the probation period without prior notice and compensation.
Termination of Service
You can contact Skuad to learn more about how our Panama EOR solutions can aid your hiring process regarding adhering to the probation and termination legislature.
EOR Solution in Panama
Business expansion is a long-drawn process that calls for extensive planning, especially when expanding to a foreign country. It is complicated and can take up to several months to complete but by choosing the EOR route for hiring employees in Panama, you can fast-track the expansion process. Employer of Record Panama (EOR) solutions by Skuad can make expansion to Panama much simpler and a lot quicker for business. Our global outreach and a tech-enriched HR platform ensure compliance with local labor laws by managing employment responsibilities such as monthly payroll, work permits, employment contracts as well as taxation for your employees in Panama.
Outsourcing Employment through an Employer of Record
It is ideal to think ahead if you want to hire directly or by partnering with an EOR service while expanding your business to other countries. An EOR company can supervise and conduct HR-related processes for you, saving you time, labor, and other resources to focus on the business side of things. Skuad’s EOR solutions for Panama can manage recruitment, work permits, employment contracts and payroll, and taxation. Book a demo with Skuad experts to learn more.
Types of Visas in Panama
The table below lists and explains the different types of visas available in Panama.
Knowledge of the different types of Panamanian visas available is crucial if you have plans to expand in the country. Skuad’s industry experts can guide and manage visa-related and procedural tasks for you. Talk to us today to book a demo.
Skuad’s Panama EOR services can assist you in all your HR responsibilities while starting a subsidiary in the country. Skuad’s tech-enriched HR platform can expedite and simplify your expansion activities. Contact Skuad to learn more today.
Payroll & Taxes in Panama
Setting Up Payroll in Panama
You must have thorough knowledge about employee laws, payroll requirements, and legislation on taxes before setting up a payroll in Panama. Taxes are imposed on both residents and non-residents who earn an income in Panama. Employers are expected to pay their employees on the 15th or 30th day of each month.
Paychecks are given on the last business day and before closing for the day. They are usually issued through a local bank and the amounts for social security, education tax, and income tax withholding are deducted.
Taxes in Panama
It can be difficult to navigate formalities surrounding payroll and taxation in Panama. Talk to Skuad experts to get a tailor-made EOR solution for your company’s Panama expansion plans.
Incorporation: How to Set Up a Subsidiary in Panama
Setting up a subsidiary in Panama requires navigating through the subsidiary laws. The HR-related processes can be time-consuming, labor-intensive, and difficult to manage without knowledge of the local language and laws. Three different subsidiary options are available in Panama: branch office, limited liability company (LLC), or representative office. Take advice from EOR experts such as Skuad after deciding on the activities you are planning in Panama and choose what is best.
Laws for the three subsidiaries are different. An LLC is the most preferred subsidiary in Panama. It requires three directors and one shareholder at a minimum share capital for incorporation of USD 1. The Panama subsidiary needs a company secretary and a director who is fit for the role. Accounting records and related documents must be maintained and stored in Panama for five years. An LLC can protect its parent company and function on its own.
LLC Subsidiary Process in Panama
- Fill an online form with your details
- Mention the name of your choice for your subsidiary and check for its availability
- Mention the name of the director who you want to appoint
- Indicate how you wish to issue share certificates
- Mention your payment method
What You Need for the Incorporation Process in Panama
Companies are required to work for several weeks or months before starting a subsidiary in Panama. The longer you take, the higher the chances of returns getting delayed. It is better to consult a legal adviser or an expert account who is thorough with Panama’s subsidiary laws.
Skuad provides EOR services and has been doing so for years. You can entrust the process of creating a subsidiary in Panama with us and concentrate on your business expansion. Get in touch with a Skuad expert today to learn more.
Professional Employer Organization (PEO)
A professional employer organization (PEO) is a firm that co-works with its client or employer and provides employees on lease. Further, the PEO handles the responsibilities that come under HR like hiring, payroll, employee benefits and compensations, and employment taxes. Though a PEO proves to be effective when it comes to handling HR responsibilities in volume, it also has drawbacks, as follows.
- Employers lose control over existing company policies and have to comply if the PEO wants to change them.
- Employers might have to pay higher service charges to the PEO in case it shifts the employer to a higher-risk category unexpectedly.
- A potential risk is that the employer or the company still holds the legal liabilities. Once a complaint is registered in terms of employment, the employer would still be held responsible.
The services of a global EOR company are similar to PEO services, but legalized. If you do not require all the HR functions, opting for an EOR service is a better alternative. Note that if your business chooses to partner with a PEO, you will require legal presence all over the country.
Organizations planning to expand into new territories are better suited with a global EOR which becomes the legal employer on behalf of the organization. Instead of associating with a PEO, a co-employment partner, organizations have more to gain by utilizing the services of a EOR solution. The EOR solution safeguards organizations from unexpected policy changes, loss of control, and potential risks as the EOR bears every legal liability for the organization. In addition to these, the EOR handles payroll, tax, and employment law compliances. To know more about Skuad's EOR solution, Contact Skuad today.