Panamá | The Ministry of Labor issued an Executive Decree consolidating in a single the all procedures and requirements of foreign work permits in Panama.

Through Executive Decree No. 4 of March 2, 2023, the Ministry of Labor (in Spanish, “MITRADEL) issued a single consolidated text with the regulation of Articles 17, 18, and 19 of the Labor Code, related to the procedures and requirements of foreign work permits in Panama.

Key points.

·       This Decree came into effect when published in the Official Gazette. However, through Memorandum No. 011 of March 10, 2023, the Ministry of Labor informed that work permit applications filed until 31 March 2023, will be processed under the conditions and requirements established in the legislation repealed by this Decree.

• This Decree eliminates the work permit for permanent residents established by Decree 21 of 28 May 2019. However, it establishes that permanent residents may apply for any work permit category regardless of their immigration status.
• Work permit extension applications will be governed by the current legislation when the first application is submitted.
• The Decree repeals all the regulations related to work permits in Panama.

·       The Decree modify the work permit classifications related to:

1.     Local work force

2.     Percentages authorized by the Labor Code

3.     Special laws

4.     Humanitarian protection

5.     Special conditions

6.     Temporary employees

·       Common requirements are established for all work permits.

Most relevant amendments made by the Decree:

A. Work permit categories for local work force

1. Foreigners who have lived in the country for 10 years or more:

o   The 10-year period will be calculated from the first resolution issued by the National Immigration Office that grants provisional residence permits to foreigners in Panama. 

o   For foreigners who have arrived the country while being minors, the 10-year period will be calculated continuously from the date of arrival to the country, indicated in their immigration status certificate.

1. Foreigners married to a Panamanian citizen:

o   This permit is classified as follows: (i) current marriage; (ii) parental guardianship in case of divorce; or (iii) parental guardianship in case of widowhood.

o   This Decree establishes specific requirements for parental guardianship (in case of divorce or widowhood).

1. Foreigners with special residence permit.
2. Foreigners who are parents of a dependent Panamanian citizen (Panamanian child).
3. Foreign residents under the Treaty of Friendship, Commerce and Navigation between Panama and Italy.
4. Foreigners who depend on diplomatic, consular, administrative, and international entity personnel accredited in Panama.

o   Dependents acquires the right to apply for work permits that are valid during the stay of diplomatic, consular, or international personnel in the country.

B. Work permit categories for percentages authorized by the Labor Code

The foreign labor workforce and salary percentages established by Article 17 of the Labor Code are maintained. Therefore, a company may have ordinary employees within 10% and technical and trusted employees within 15% of the total workforce, excluding both percentages from each other.

1. Foreigners hired as ordinary employees within the total workforce.
2. Foreigners hired as specialized or technical employees within 15% of the total workforce.

o   As a new requirement, companies who apply for work permits for specialized or technical employees within 15% of the workforce must train such employees. To do so, these companies may: (i) Create a learning center; (ii) Implement training programs with universities or educational centers; or (iii) Present evidence of their field training programs.

1. Foreigners hired as trusted employees within 15% of the total workforce.
2. Foreigners hired by micro or small employers (MIPE in Spanish):

o   This permit replaces the Marrakesh Agreement. Companies may have up to nine (9) employees, including foreign workers.

1. Foreigners hired as trusted employees whose operations are exclusively performed abroad.

o   To extend the work permit, applicants must provide a bank or account statement showing that their salary comes from a foreign source.

C. Work permit categories established for Special Laws

1. Foreigners hired as executives of the Colon Free Zone.

o   These employees are excluded from the percentages mentioned in Article 17 of the Labor Code.

1. Foreigners hired by authorized employers under the City of Knowledge Foundation regime.

o   These employees are excluded from the percentages mentioned in Article 17 of the Labor Code.

1. Foreigners hired by employers in the Panama Pacific Area.
2. Foreigners hired by employers under the Free Zone regime.
3. Foreigners hired by employers under the Multinational Headquarters Company (SEM) regime.
4. Foreigners hired by employers under the Multinational Company that renders Manufacturing Services (EMMA).

Below are the main amendments regarding SEM and EMMA categories:  

• A work permit for trusted (permanent) MNC and MNCM middle and senior managers was created.
• Dependents of MNC and MNCM employees may only apply for work permits within the percentages authorized by the Labor Code.

1. Foreigners hired as trusted employees by employers within the film and audiovisual industry.
2. Foreigners hired as pilots or specialized employees of commercial airlines.

D. Work permit categories for foreigners under the protection of the Panamanian government

1. Refugees (i) admitted by procedure and (ii) recognized as refugees.
2. Asylees.
3. Stateless persons.
4. Human trafficking victims.
5. Foreigners with temporary humanitarian status. 

E. Work permit categories for Special Conditions

1. Specific countries (“Friendly Nations”).
2. General immigration regularization.
3. Foreign professionals.
4. Family reunification for dependents.
5. Students.

The main amendments for Special Conditions category are:

• These work permits will be subject to hiring limits per Articles 17 and 19 of the Labor Code and Title II, Chapter VI of this Executive Decree.
• Applicants of special condition work permits must comply with self-employment or employment conditions as individuals or corporations.
• Foreigners with the student residence permit may apply for work permits.

F. Work permits for Temporary Workers.

Below are the work permits for temporary workers:

1. Temporary technicians
2. Athletes
3. Artists
4. Night entertainment or entertainment workers

The main amendments for Temporary Workers category are:

• Temporary workers are not included in the percentages established by Article 17 of the Labor Code.
• Before workers arrive to the country, employers may publish (through an attorney of the Ministry of Labor) the promise of hiring foreigners who provide (i) letter of responsibility, (ii) employment contract complying with relevant legalizations and endorsement, and (iii) evidence of the date of arrival to the country.  The other requirements must be submitted within no longer than three (3) business days from the date of arrival to the country. 
• Foreigners who come to the country to work in management activities and do not generate local income for a maximum of fifteen (15) calendar days must inform the Ministry of Labor (through an attorney) about this condition.

• Companies who hire foreign vendors who come to the country to provide product or service guarantee or related services and do not generate local income must inform the Ministry of Labor (through an attorney) about this condition.

GENERAL AND COMMON WORK PERMIT PROVISIONS:

A. Work permit resolution term

The term to resolve work permit applications changed from thirty (30) business days to forty (40) business days.

B. Motion of Reconsideration

Motions of Reconsideration can be submitted within two (2) to five (5) business days from the date when the resolution is notified. Likewise, evidence of Motions of Reconsideration can be submitted within fifteen (15) business days.

C. Social Security Administration payroll certification

Companies with more than twenty (20) employees must provide a Social Security Administration payroll certification issued by an authorized public accountant.

D. Extensions and validity of work permits

The term for submitting work permit extension applications changed from thirty (30) business days to at least sixty (60) calendar days before the date of expiration of the work permit.

Work permits must indicate the validity terms per category, extensions, and number of potential extensions.

Government fees to be paid for each work permit will be set by resolution of the Ministry.

E. Work permit cancellation

Below are the reasons of cancellation of work permits: (i) False submitted documents; (ii) immigration permit loss, revocation, cancellation, cessation, withdrawal; (iii) transfer of foreign employees of a company to another company without the authorization of MITRADEL, etc.

F. Administrative infractions and sanctions

Employers who have hired foreigners who are extending their work permits will not be sanctioned, provided that they demonstrate that the extension application is still in process, and that the extension was requested before the expiration of the work permit.

G. Application for increase of specialist or technician percentages

Based on Article 17 of the Labor Code, the percentages of foreign specialists or technicians can increase provided that (i) it is required by the labor market, economic activity, job position, and company size; and (ii) it does not undermine work contracts and/or opportunities of national employees.

In this case, the Ministry of Labor will issue a resolution to authorize or refuse the increase of specialist or technician percentages. If authorized, they must include the validity term, the increased percentage, and the owners of such permit.

For additional information please contact: