Panama revokes rule that would have impacted quota calculations

IMPACT – MEDIUM

What is the change? Panama’s Ministry of Labor has said it will revoke a rule announced last week that would have resulted in workers in the Foreign Professionals and Friendly National categories counting as “foreign workers” for company quota purposes.

What does the change mean? Workers in the two categories will not be counted toward the 10-percent quota when the foreign-hiring limits on a company are calculated. The ministry did leave in place requirements that workers must have a local employment contract and be on local Social Security payroll.

• Implementation time frame: Immediate.
• Visas/permits affected: Work permit requests in the Foreign Professional or Friendly National categories.
• Who is affected: Companies hiring foreign workers in the above categories.
• Business impact: Companies will not have to count workers in the categories above as foreign workers for the purposes of complying with limits on the hiring of foreign labor.

Background: Panamanian companies are restricted in employing foreign workers to certain percentages of their workforce. As BAL reported, Panamanian authorities announced last week that workers in the Foreign Professionals and Friendly National categories, who traditionally do not count toward the quota, would count as foreign workers. Authorities have now said, however, that the rule will be revoked. Workers in these two categories will not count against the 10-percent quota.

BAL Analysis: The revocation of the rule is welcome news because, had authorities gone forward with the rule, it would have changed many companies’ foreign-worker numbers and hindered their ability to hire foreign nationals. While the employment contract and Social Security requirements for the Foreign Professionals and Friendly National categories have not changed, workers in these categories will not be counted as foreign workers for quota purposes.

This alert has been provided by the BAL Global Practice group and our network provider located in Panama. For additional information, please contact your BAL attorney.

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