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Helpful Guidelines When Hiring Domestic Help in Panama

Published: 2006-06-15 Send Print

The definition of a domestic worker is one who lends in a habitual and continuous way, cleaning services and assistance with the household and/or with a person or members of a family.

There are some very important parts to the Panamanian Labor Code that you should be aware of when hiring domestic help. Among these parts are additional expenses and payments that must be made on behalf of your employee. In total you should budget for these additional payments and expenses to be about 40-42% above the agreed salary.

As an employer you are responsible for the following payments to your employee:

1. Salary 

You must pay at least the minimum salary, which for domestic employees is as follows.

  • 119.00 USD per month for the Districts of Panama, Colon and San Miguelito.
  • 106.00 USD per month for all other districts within the Republic of Panama

2. Decimotercer Mes (13th Month)

  • The decimotercer mes or 13th month is basically an extra month’s pay each year. Since the pay periods or quincenas take place on the 15th and 30th days of each month, rather than every 15 days, there is a discrepancy each year of about 29 days, basically an extra month.
  • The 13th month is paid in three parts: April 15th, August 15th and December 15th

3. Vacation

  • An employee is entitled to 30 days of paid vacation for every 11 months of continuous work. This breaks down to basically 1 days worth of vacation for every 11 days worked.
  • If the employee quits or is terminated before they complete 11 months of continuous labor they must be compensated for their accumulated vacation time.

4. Seguro Social (Social Security)

  • Social Security includes several parts… in total it is about 21% of the salary and is broken down as follows:

Contracts:

Employment contracts should be in written form, though are also considered valid if verbal. They should be agreed upon and signed at the beginning of the work relationship and 3 copies should be administered, one for the employee, one for the employer and one for the regional Ministry of Work and Social Wellbeing.

The contracts should include, but not be limited the following items:

  • Name, age, sex, civil status, nationality, residential address and personal identification numbers of employer and employee.
  • Specific description of the work or services to be performed.
  • Place or places where the work or services are to be performed.
  • Duration of the contract whether it is for a set period of time, indefinite or until a specified job is finished.
  • The amount of the salary, form in which it will be paid, as well as the day and place payment is to take place.
  • Signature from both parties.

Termination of a Domestic Employee

In order for an Employer to terminate the work relationship with a domestic worker without justified cause, an indemnification must be paid according to time served. The breakdown is as follows:

The above information is meant only as a general guideline. When hiring domestic help or dealing with issues regarding domestic help, it is always recommended to consult with an attorney or certified public accountant.

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