Find A PEO / EOR Payroll Company In Panama

• Published date: 05 February 2024
• Subject Matter: Employment and HR, Contract of Employment, Employee Rights/ Labour Relations
• Law Firm: Biz Latin Hub Group
• Author: Legal Team Panama

Finding the right professional employer organization (PEO) payroll company in Panama will allow you to hire qualified local staff without having to formally establish a business in the Central American country. For foreign companies with a limited-scale or short-term operation, it is often the most suitable option available, while for others planning a larger-scale involvement, using a PEO payroll company in Panama offers the opportunity to get familiar with the market before investing further.

Panama minimum hourly wage for some activities. PEO Payroll Company in Panama.

A PEO company can also be known as an employer of record (EOR), while PEO payroll services can also be referred to as payroll outsourcing.

With a gross domestic product (GDP) of 7605 billion (all figures in USD) in 2022 and a population of approximately 4.5 million, Panama is considered a high-income country that saw it score a high 92.0 in the World Bank's Doing Business 2020 report. The nation recorded more than $2 billion of foreign direct investment (FDI) inflows in 2022, stimulated by a territorial tax system in which only income earned within the country is taxed.

The Central American country's business-friendly approach sees it employ the lowest value-added tax (VAT) and income tax rates in Central America, while its politically stable government and secure banking sector have made it a highly popular destination for foreign investors and expats. Some of the country's main export commodities include refined petroleum, coal tar oil, passenger and cargo ships, and gold.

Panama has an advantageous geographic location, linking Central America to South America, while also connecting the Caribbean Sea and the Atlantic Ocean via the iconic Panama Canal, through which roughly 14,000 ships transit each year, generating an estimated 8% of the nation's GDP.

If you are considering company formation in Panama or are otherwise looking to enter the market, read on to understand the advantages of hiring local staff through a PEO payroll company in Panama.

What is a PEO / EOR payroll company in Panama?

A PEO payroll company will support your business expansion by providing high-quality HR services that will give you time to focus on other vital aspects of your business. A PEO payroll company in Panama will be responsible for recruiting, hiring, firing, managing employee payroll, and paying all holiday and social benefits.

Operating as the official employer in the eyes of the local government, a PEO payroll company in Panama will be in charge of remunerating local personnel in the event of resignation, dismissal, maternity leave, retirement, and any other payments established by local labor regulations.

In addition, with extensive knowledge of local labor, tax, and corporate legislation, a PEO payroll company in Panama will also guarantee your business remains in good standing with authorities and will assist you with time-consuming administrative processes, such as drafting contracts and other documents and paperwork.

Legal Framework Governing Employers of Records (EORs) in Panama

Panama has a well-developed legal framework governing EORs. Under Panamanian law, an EOR is known as a "contratista de personal," which translates to "personnel contractor." Personnel contractors are regulated by the Panamanian Labor Code and must be registered with the Ministry of Labor and Social Security.

One of the key advantages of using an EOR in Panama is that it allows companies to quickly and easily establish a presence in the country without the need...