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If you are keen to tap into the talent and potential on offer in the Panamanian market without making the commitment of setting up a local entity, you should consider hiring staff via an EOR in Panama – otherwise known as an employer of record.
Because an EOR in Panama will employ people for you via their local entity, take care of the onboarding and payroll of those staff, and even be able to support in the recruitment process should you not already have candidates selected.
Once hired via an EOR in Panama, employees will report directly to you. Meaning you will effectively have local staff in place in only the time it takes to find them, as well as the peace of mind of knowing that all relevant regulations are being taken care of by a provider who understands them well.
Note that, an employer of record can also be referred to as a professional employer organization (PEO), and while many providers will distinguish between EOR and PEO services, they are effectively the same type of outsourced recruitment and staff administration, which may also be referred to as employee leasing.
An EOR in Panama may also be referred to as a PEO payroll company, given that management of salaries and benefits is a critical element of any services agreement an employer of record provides.
SEE ALSO: Panama Tax Overview
Panama sits at the meeting point of North and South America, while the famed Panama Canal provides access between the Pacific and Atlantic Oceans. That highly strategic location and the country’s critical role in international trade has led to it being referred to as the “Hub of the Americas.”
Tocumen International Airport is less than a 30-minute drive outside capital Panama City and also offers easy access to key destinations through Europe and the Americas, including direct flights putting it around three hours from Miami and Fort Lauderdale, four hours from Atlanta and Houston, and five hours from New York and Toronto.
Panama is well-known for its high levels of prosperity, as well as decades-long political and economic stability, while its world-renowned offshore banking industry makes it an important player in the international financial system and highly popular destination for foreign investors keen to securely manage their money.
Panama’s dollarized economy also offers considerable benefits to investors keen to shield themselves from the fluctuations that some developing world currencies can be prone to – with the Panamanian balboa effectively pegged to the US dollar at a rate of one to one and US currency the only form of paper money in circulation.
This Central American country goes to great lengths to promote business and investment, offering favorable tax arrangements to investors and foreign residents, while its high standard of living includes good quality health care.
It is also an increasingly well-recognized hub for innovation, with Panama’s “Ciudad del Saber” (City of Knowledge) providing state of the art facilities for research- and tech-focused companies, while the country turns out high quality talent to fill related roles.
If you are looking to hire via a professional employer organization in Panama – whether you are need a local executive to provide national or regional representation, or you are seeking a team of skilled workers to support your operations in some way, SERVIAP Global can help you.
If you need a PEO in Panama, contact us today. Or read on to find out more about your employee outsourcing options in this prosperous Central American market.
What is an employer of record in Panama?
An employer of record in Panama partners with a client to assist them in finding, hiring, and administering local staff, while leaving every aspect of managing and overseeing the work of those staff to the client.
Your EOR in Panama will take control of payroll, timekeeping, compliance, benefits, unemployment claims, workers’ compensation and many other complicated administrative matters associated with keeping staff.
While clients will obviously have to pay a fee to an EOR in Panama — usually on a monthly per-employee basis — that outlay will generally be considerably less than the costs involved in setting up and managing a local entity, and subsequently liquidating it.
An EOR arrangement is also much more convenient and allows the client to secure local staff in significantly less time, as well as providing the flexibility to prolong or curtail engagement in the market at relatively short notice.
Moreover, risks to the client are limited by the fact that their professional employer organization in Panama will take responsibility for a wide array of regulatory matters – with guaranteed compliance usually included in any services agreement signed.
Beyond that, by working with an EOR in Panama, a client can tap into their understanding of the market, as well as their established recruitment network if needed. Meaning ideal staff can be found and hired in the shortest time possible and valuable advice can be offered in terms of choosing partners and suppliers of other services within the market.
Employment regulations an EOR in Panama will take care of
Your EOR in Panama will guarantee that you are in full compliance with all applicable aspects of employment law, including:
Maximum hours: In Panama the working week should last no longer than 48 hours for daytime workers – whose hours fall between 6a.m. and 6p.m, and 42 hours for nightshift workers whose hours fall outside that period. Mixed shift workers, whose shifts straddle day and night hours, may work for a maximum of 45 hours per week.
Minimum wage: In the event you are hiring employees for construction, manufacturing, or agricultural work, you may need to take the minimum wage into consideration. Panama’s minimum wage fluctuates based on region and sector, and in 2022 ranged at between 1.22 and 2.36 Panamanian balboas per hour.
Contract details: In Panama, three types of contracts are generally used, all of which must be provided in writing. They are defined contracts, for a limited or specified period; undefined contracts, for an ongoing job role, which generally include a three-month probation period; and construction contracts, for jobs specifically related to the construction sector.
Statutory bonuses: As in many Latin American countries, Panamanian employment law includes a 13th salary, which sees employees paid an additional salary each year, which in Panama is generally paid in three equal installments during the year – on April 15, August 15, and December 15.
Paid leave: All workers are entitled to at least one full day of rest each week, while after 11 months of continuous service they are also entitled to 30 working days of paid vacation, which must be split into not more than two periods. Workers are also entitled to up to 18 days of paid sick leave per year, as long as a note from a registered doctor is provided.
What are the alternatives to employee leasing?
The alternative to hiring staff via an EOR in Panama is to employ them directly through a local entity – of which there are a variety to choose from.
Those include a branch office, a corporation (sociedad anonima – SA), or a limited liability company (sociedad de responsabilidad limitada – SRL), each of which has its own individual requirements, benefits, and downsides.
However, choosing to hire directly via your own entity does not mean that an EOR in Panama will not be of use to you, because many employee leasing providers will also offer standalone recruitment services that can still be accessed if you are planning to directly hire employees yourself.
Working with a provider of employer of record services to recruit direct hires means you are still able to benefit from their deeper understanding of the market and established recruitment network, as well as receive valuable advice when it comes to honing your candidate profiles.
It also means that, should you choose to subsequently move into another new market that your EOR in Panama is also engaged in, you will be able to harness that relationship for more recruitment services, or to hire via an employee leasing arrangement.
When you work with an employer of record with a global presence, they can be your steppingstone into multiple markets and continents. Meaning that, when you choose an EOR in Panama, it pays to have your future goals and growth prospects in mind.
SERVIAP Global can be your EOR in Panama
At SERVIAP Global, we act as an EOR in Panama, as well as dozens of other countries across six continents.
We also have trusted partners in many more markets, so wherever you are seeking to hire, we are ready to provide you with global hiring (PEO & EOR) services, or assist you with direct hiring via our global talent acquisition services.
Contact us today to find out more about what we offer as a professional employer organization in Panama.
You can also find out more about us or read about our leadership team.