PANAMA Law and Practice Contributed by: Rafael Rivera, Malvis Mina, Nicole Pérez and Carolina Lino, BDO Panama
• 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 company or project. Collective bargaining agreements may also impose mandatory overtime in cer - tain cases. • Employer authorisation: overtime must be expressly authorised or requested by the employer. If an employee continues work - ing beyond their regular hours without such authorisation, the employer is not legally obligated to compensate those hours unless a collective agreement or internal company regulation provides otherwise. • Meal breaks must be respected: employees are not required to work during their designat - ed 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; (b) night or extended mixed shift overtime: a 50% surcharge; and (c) holiday or mandatory rest day overtime: a 150% surcharge applies. Humanitarian Limits For humanitarian reasons, there are limits to the number of overtime hours an employee may work: a maximum of three hours per day and nine hours per week. If these limits are exceed - ed, the employer must pay an additional 65%
surcharge and may also face legal sanctions for non-compliance. There are also restrictions on overtime for minors under the age of 16, and for jobs that are inher - ently hazardous or unhealthy. 4.4 Termination of Employment Contracts Panama’s labour law does not recognise at-will employment. Termination of individual employ - ment 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, comple - tion 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. Employ - ers must follow due process, which includes a prior written notice to the employee indicating the date and the cause of the dismissal. Unjustified Dismissal Unjustified dismissal is allowed but requires pay - ment of severance compensation as follows. • For less than a year of service, compensation is equivalent to one week’s salary for every three months worked. Compensation must not be, in any case, less than one week’s sal - ary. • For a labour relationship of one to two years, the compensation would be equivalent to one week’s salary for every two months worked. • For a labour relationship of two years to ten years, the compensation would be equivalent to three weeks’ salary for each year worked.
620 CHAMBERS.COM
Powered by FlippingBook