VACATIONS REGULATIONS IN PANAMA

In Panama, the Labor Law establishes that every employee has the right to an annual paid vacation.

In this sense, article 54 specifies that for every eleven (11) months of continuous worked days, the employee must receive thirty (30) days of Vacation.

For part-time employees, the total amount of ordinary and extraordinary remunerations for eleven worked days will be divided for regular rendered hours, and this result will be multiplied by the number of vacation days that the employee has accumulated.

The date to enjoy this labor benefit will be previously coordinated between the parties, considering the employer's operations needs and the employee's situation.

Vacation Pay

Vacations shall be one month's wages when the agreed remuneration is paid monthly and four and one-third weeks' wages when salary is paid every week.

Wages for vacation payment includes:

- Regular salary;

- Bonuses;

- Commissions;

- Other variable amounts.

The employer shall calculate the salary to be paid in this concept based on the average wage earned during the last eleven months or the most recent base salary, as may be more favorable to the employee.

Kindly note that days of rest, holidays and justified absences shall be counted in calculating the amount of time worked to determine entitlement to vacations.

The time to be enjoyed will be granted, taking into consideration rest days and holidays, as vacations are thirty calendar days, not working days.

Time for payment of Vacation

The amount to be paid in this concept shall be determined and spent at least three days before the date on which the employee's Vacation begins.

It is essential to mention that the law does not permit the employer to compensate the employee with a cash payment for the vacation time that an employee is entitled to avoid suspension of the employee's duties to the employer, even if the employee accepts this offer. The law establishes that

vacation time must be taken in a timely fashion since the law seeks to ensure the employee's rest and recovery of physical and mental energy.

Nevertheless, vacations may be accumulated for two periods by agreement between the parties. Whenever this accumulation exceeds the periods permitted, the law prohibits the employee from demanding the Vacation applicable to these periods, without prejudice to the employee's right to require that the vacation pay applicable to these periods be recognized and paid.

Vacations during the Sanitary situation.

The Panamanian government has established a special regulation for vacations whenever the employer's operations are closed due to Pandemic measures.

When there is a restriction in employers' operations due to sanitary measures, the employer is entitled to order the vacations as a mandatory measure to prevent and mitigate the virus. This type of Vacation may be accumulated or even leaves that have not been accrued.

Violations to the Vacation's provisions shall subject an employer to the imposition of a fine through the administrative authorities or can be sue before the labor courts.