PANAMA Law and Practice Contributed by: Rafael Rivera, Malvis Mina, Nicole Pérez and Carolina Lino, BDO Panama
4.5 Employee Representations In Panamanian labour law, employees are not required to be represented by any individual or entity. However, if a labour union exists and the employee is affiliated with it, the union is authorised to represent the employee before the employer and/or the administrative labour authority. If an employer intends to make decisions that collectively affect the workforce and a union is present, such matters must be submitted to the union for review. Furthermore, if the employer wishes to modify any terms previously estab - lished in a collective bargaining agreement, such changes must be negotiated with the union(s) representing the employees. The union also has the right to negotiate a new collective bargaining agreement with the employer. The union, or a unified group of work - ers seeking to negotiate employment conditions or a collective agreement, must submit a written request addressed to both the employer and the administrative labour authority. If no agreement is reached, the labour authority may intervene to facilitate conciliation. Should conciliation fail, the workers have the legal right to initiate a strike. If both parties reach an agreement, a collective bargaining agreement will be executed. 5. Tax Law 5.1 Taxes Applicable to Employees/ Employers Based on their employment relationship, both the employee and the employer, are subject to income tax, social security’s contributions and educational tax.
• For a labour relationship over ten years, the compensation will be one week’s salary for each year worked. Mutual Consent Mutual consent must be in writing and cannot involve the waiver of acquired rights. Coercion is not acceptable, and the employee has the right to refuse the employer’s offer. Resignation Resignation could be voluntary or justified. In case of voluntary resignation, the employee must issue a letter of resignation duly stamped by the Ministry of Labour and give 15 days’ notice to the employer. Severance and Seniority Premium Severance for unjustified dismissal is calculated at 3.4 weeks of salary per year of service (up to ten years), and one week per year thereafter. All employees are entitled to a seniority premium of one week’s salary per year of service, regard - less of the reason for termination. Collective Dismissal Collective dismissal is permitted for economic reasons such as bankruptcy, reduced produc - tion, or depletion of resources, but requires prior authorisation from the Ministry of Labour. If no decision is issued within 60 days, the dismissal is deemed justified by law. The Ministry may intervene to protect workers and ensure busi - ness continuity. If company assets are insufficient to cover labour obligations, the Ministry is responsible for deter - mining and overseeing the liquidation of assets to satisfy employee claims.
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