Labor Provisions Attending Mobilization Restrictions

The Panamanian Government, through the Ministry of Health, lifts the total quarantine on January 14, 2021 and establishes mobilization restriction measures resulting in the pronouncement of the Ministry of Labor adopting labor measures to operate given the sanitary restrictions.

These measures repeal the decree that governed at the beginning of the year 2021 in all its parts therefore this is the norm in force to date regarding special measures for sanitary restriction.

The provisions:

  1. Reaffirmed that the pandemic of the COVID-19 constitutes an act considered by the authority as fortuitous or force majeure therefore provisions related to suspension of the effects of the employment contract are fully justified by law. 
  2. Every company unable to function, due to legal restrictions and that cannot keep its staff in the telework mode, and companies able to operate but needs to have part of its staff suspended, must register the suspension of its collaborators, making use of the means digital made available by the Ministry of Labor.
  3. Labor benefits (seniority premium, vacations, thirteenth month and compensation, when appropriate) of workers who have been suspended or whose hours have been reduced, will be calculated on the basis of average wages received during the six months prior to March 2020 or the last monthly salary received on this date, whichever is more favorable to the worker.
  4. All termination by mutual consent shall comply with the procedure of delivering a written termination proposal, granting the worker a minimum of two working days to revise the proposed terms and subsequently sign the agreement at the discretion of the parts. The omission of the worker’s response will be considered as a rejection of said proposal.

Not complying with this provision may cause the nullity of the action and possible future labor judicial actions against the employer before the sectional labor courts. 

  • Infringement of these provisions carries fines of US$500.00 to US$1,500.00 dollars.

I recommend:

  • Submitting the suspension request on the date established in this decree;
  • Complying with the mutual termination procedure;
  • Signing, as soon as possible, the agreements to reduce working hours, that are necessary for the maintenance of the economic activity of your organization for the year 2021; 

Note that Decree No. 229 of December 15, 2020, will come into force as of March 1, 2021, and therefore, it is necessary to be ready for its compliance in the terms exposed in it.


Lourdes Bishop


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