PANAMANIAN LABOR LAW

By Vicente González

Definition

Labor law (also called labor law or employment law) is the body of laws, administrative rulings, and precedents which address the legal rights of, and restrictions on working people and their organizations.

As such, it mediates many aspects of the relationship between trade unions, employers and employees.

Objectives

This course aims that students know and deal with Panamanian labor law, regulations and by-laws.

They will learn the rights and duties of both part of the labor relation, and the main concepts related to this matter.

History of Labor Law

The history of Labor Law has to do with the history of law which is the history of our race, and the embodiment of its experience.

Since humans gathered to form society they needed rules to smooth their relationships.

There has not existed and there never will exist any organization of human society, tribe or nation that has not been more or less controlled by some recognized form of law.

Antecedents

In the great civilizations of antiquity there were great aggregations of labor which was not solely, though frequently it was predominantly, slave labor.

Some of the features of manufacture and mining on a great scale arose, producing the same sort of evils and industrial maladies known and regulated in our own times.

Antecedents

One of the most important sources of the law as we know it nowadays is the Roman Empire.

The Romans devised the most perfect legal system which the world has ever known. They conquered most part of the ancient world by the power of their arms, and we inherited their great jurisprudence.

Antecedents

Before the Industrial Revolution and the introduction of mechanized manufacture, regulation of workplace relations was based on status, rather than contract or mediation through a system of trade unions.

Serfdom was the prevailing status of the mass of people, except where artisans in towns could gain a measure of self regulation through guilds.

Panamanian Labor LawLabor Code

The main piece of labor legislation in Panama is the Labor Code of 1971, which deals with labor relations and the rights and duties of employer and employee.

The key concept of the Code is that of 'subordination', so that any relationship in which one party is subordinated to the other will fall within the terms of the Code, whether or not it is described as 'employment'.

Panamanian Labor Code

Strikes are lawful under defined circumstances and after a majority vote. Conciliation is mandatory before a strike. However, only around 11% of private sector workers are unionized.

Employers can terminate employment during the first two years, but after that employees have the protection of the Code. Fixed-term contracts are possible. The Code lists 'just causes' for dismissal, and unlawful dismissal results in compensation payments, which are not very high.

Panamanian Labor Law

There are minimum wage levels which vary according to the seniority of the employee. There are 11 public holidays per year, and the statutory paid vacation is 30 days.

The employment market is quite closely regulated in Panama: the law sets maximum percentages for the employment of foreigners in a business according to its sector. Usually the figure is 10%. However, foreign companies are allowed to fill senior positions with expatriates, up to a maximum of 15% of the staff. It may be possible to agree a higher percentage with the Ministry Of Labour, which is responsible for issuing work permits.

Contracts

There is a contract between employer and employee, whether written down or not, and it can include elements from a collective agreement. Unions are allowed, and can negotiate on behalf of employees collectively.

There are three main types of contract that can be signed:

The Definitive Period of Time Contract is determined by the job to be performed and is for a maximum of one year.

The Indefinite or Permanent Labor Contract.

Special circumstances can call for a probationary three-month contract.

Benefits for Panamanian workers

For every 11 months of continuous employment employees are entitled to an annual paid vacation of 30 days.

The "Thirteenth Month" rule: In Panama workers get paid 13 months for every twelve or one day's salary for every 11 days worked. The bonus is payable in three installments in April, August and December.

Termination of employment compensation is equivalent to a week's salary for every year worked.

An unjustified-cause termination payment: a lump-sum payment, the value of which is based on labor code indemnification tables. After the amount is paid, the employee must be rehired if he or she wishes.

Paid maternity leave of 14 weeks ( paid by Social Security, not by the employer) Working hours and rate of pay:

For day shift hours the maximum working week is 48 hours, 42 for night shift and 45 for a combination.

Minimum wage standards average between $0.82 and $1.33 per hour depending on area and occupation.