Last updated on July 19, 2024.

Paid Time Off (PTO) in Panama

Vacation (Annual Leave) Quota

30 days

Employees in Panama are entitled to 30 calendar days of paid vacation leave. They become entitled to it after 11 months of continuous work. Also, employees are eligible for 15 calendar days of vacation after 5.5 months of employment.

Vacation leave can be split into two equal parts if there is a collective bargaining agreement or an agreement between an employee and an employer. The employer and employee may also agree to accumulate up to two annual leave periods.

Vacation Pay

Employees must be given their vacation pay 3 days before their vacation starts.

Cashing Out is Not Allowed

Employers are required to provide the actual time off for vacation leave and may not substitute the leave with a payment. In other words, employees must take their vacation days and can’t be paid extra to work instead of taking their vacation.

Payment for Unused Vacation Leave

An employer must pay employees for any unused days of annual leave they are entitled to at the time of termination of employment.

Sick Leave in Panama

The first 3 days are paid by the employer, then social security takes over.

Employees in Panama are entitled to 18 days or 36 days (depending on their length of employment) of paid sick leave per year. This paid leave has a maximum duration of up to 1 year for certain types of illnesses or injuries.

Payout

The employer is responsible for paying for the first three days of sick leave.

The Panamanian Social Security Fund (Caja de Seguro Social, or CSS) pays the sick leave allowance starting from the 4th day of absence at a rate of 70% of the standard salary. This payment can go up to 26 weeks (a half of a year) for the same injury or illness. However, it can be extended to one full year with an appropriate medical certificate.

To be eligible for paid sick leave benefits, employees must have contributed for at least six months in the nine months before the injury or illness.

Maternity and Paternity Leave

Maternity Leave in Panama

14 weeks

The maternity leave required by law in Panama must be at least 14 weeks long. Maternity leave begins with six months of obligatory leave before giving birth. If delivery is delayed, an employee is entitled to leave for the following 8 weeks. In the unfortunate cases of stillbirth, miscarriage, abnormal labor, or pregnancy-related illnesses, maternity leave may be extended based on the health condition of a woman. An extended leave also applies to multiple births.

To be eligible for maternity leave, a pregnant employee must have worked for at least 60 consecutive days at the company. An employee is required to apply for maternity leave payment at least a month before the leave starts and provide an official medical certificate from a gynecologist.

Any female employee on maternity leave is not allowed to work on days of rest or overtime.

An employer may not change the employment contract or impose any penalties during an employee’s maternity leave. Employees are also protected from dismissal without a valid reason during the first year after returning from leave.

Payout

Maternity leave is paid by the Panamanian Social Security Fund. During leave, an employee receives 100% of their regular salary.

To be eligible for maternity pay, an employee must have contributed to Panamanian Social Security for at least nine months. In the event that an employee hasn’t made the required contributions, the maternity leave benefits must be paid by the employer. This way, maternity pay is calculated as the greater of either the last salary or the average pay of the previous 180 working days.

Adoption Leave in Panama

28 days

A mother who has adopted a child is entitled to 28 days of maternity leave.

Paternity Leave in Panama

3 days

An employee who became a father in Panama is entitled to 3 days of paid paternity leave in Panama.

Payout

Paternity leave in Panama is paid by the employer at a rate of 100% of the regular salary.

Parental Leave in Panama

12 weeks

Working parents in Panama are entitled to 12 weeks of parental leave. This leave can be taken by either parent and must be used before the child turns 2 years old. It may be taken in separate blocks or in one go.

Bereavement Leave in Panama

Bereavement leave is not specified by Panama leave laws.

Jury Duty Leave in Panama

Jury duty leave is not specified by Panama leave laws.

Military Leave in Panama

Military leave is not specified by law.

Voting Leave in Panama

Voting leave is not specified by law.

Public Holidays in Panama for 2024

Workers are entitled to double pay if they are required to work on any official public holiday. If a national holiday falls on a Sunday, it will be observed on the following Monday.

Sources

1. Local Laws & Regulations, https://www.atlashxm.com/en/countries/panama

2. Payroll and Benefits Guide Panama, https://www.papayaglobal.com/countrypedia/country/panama/

3. Definitive Guide to Hiring in Panama, https://www.globalexpansion.com/countrypedia/panama

Check out our Leave Laws page to learn more about laws in various countries.