PANAMA Law and Practice Contributed by: Rafael Rivera, Javier José Vallarino, Juan Vallarino, Karen Y. Tejeira and Carolina Lino, BDO Legal Panama
Humanitarian Limits For humanitarian reasons, there are limits to the num- ber of overtime hours an employee may work: a maxi - mum of three hours per day and nine hours per week. If these limits are exceeded, the employer must pay an additional 75% surcharge There are also restrictions on overtime for minors under the age of 16, pregnant employees and for jobs that are inherently hazardous or unhealthy. 4.4 Termination of Employment Contracts Termination of individual employment contracts is strictly regulated under the Labour Code and must fall within specific legal grounds, including death of the employee or employer, expiration of a fixed term, completion of a specific project, mutual consent, legal impediment, justified dismissal, or unjustified dismissal. Justified Dismissal Justified dismissal is permitted for disciplinary, non- attributable or economic reasons. Employers must fol - low due process, which includes a written notice to the employee clearly describing the circumstances of the manner, time, and place of the alleged fault com - mitted by the employee. Unjustified Dismissal Unjustified dismissal is allowed under the Panama - nian Labour Law; however, in addition to the acquired labour rights and severance, the following must be paid: • for permanent employees with less than two years of service, one month of salary in lieu of notice; and • for permanent employees with more than two years of service, three months of accrued wages, and 25% in compensation if the company is not up to date with contributions to the unemployment fund. Mutual Consent Mutual consent must be in writing and cannot involve the waiver of acquired rights. Coercion is not accept - able, and the employee has the right to refuse the employer’s offer.
• Daytime work shifts: a maximum of eight hours per day and 48 hours weekly. • Nighttime work shifts: a maximum of seven hours per day and 42 hours weekly. • Mixed work shifts: a maximum of seven and a half hours per day and 45 hours weekly. Nighttime and mixed work shifts are paid for as a day - time work shift. Overtime Regulation Overtime refers to any hours worked beyond the employee’s regular schedule. Overtime is regulated as follows. • Voluntariness: overtime must be voluntary. While the employer may request additional hours, the employee must agree to provide the service beyond their regular schedule. The employee is not obligated to accept unless specific exceptions apply ‒ such as emergencies, imminent risks to human life, or threats to the existence of the com - pany or project. Collective bargaining agreements may also impose mandatory overtime in certain cases. • Employer authorisation: overtime must be express - ly/or tacitly authorised or requested by the employ - er. If an employee continues working beyond their regular hours without such authorisation, the employer could impose disciplinary measures on the employee. • Meal breaks must be respected: employees are not required to work during their designated meal or rest breaks. If an employee is on a lunch break, the employer cannot demand that this time be used for overtime work. • Recordkeeping and compensation: overtime hours must be recorded and compensated according to the time of day they are worked. Examples include: (a) day shift overtime: a 25% surcharge on the regular hourly wage up to 6.00pm; (b) night or extended mixed shift overtime: a 50% surcharge; (c) extension of the night shift or mixed shift that begins during the night period: 75%; and (d) holiday or mandatory rest day overtime: a 150% surcharge applies.
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