IMPACT – MEDIUM

What is the change? Panama has increased fines for companies that hire workers without approved work permits.

What does the change mean? In addition to increased fines, companies that are repeat offenders risk cancelation of their operating license, loss of labor privileges and publication of their name on the Labor Ministry’s website.

  • Implementation time frame: Immediate.
  • Visas/permits affected: Work permits.
  • Who is affected: Companies hiring foreign nationals without the proper work authorization.
  • Business impact: Businesses face increased fines and loss of labor privileges for immigration violations.
  • Next steps: Panamanian companies should review their policies to ensure compliance.

Background: Amendments to the Labor Code were published Sept. 12 in the Official Gazette and took effect Sept. 15. The amendments increase fines and penalties for employing a worker without an approved work permit as follows:

  • First offense – $500 per unauthorized worker.
  • Second offense – $1,000 per unauthorized worker.
  • Third offense – $10,000 regardless of the number of unauthorized workers and the Ministry of Commerce will be asked to cancel the company’s operating permit.
  • Fourth offense – Request for permanent cancellation of the company’s operating permit, immediate dismissal of unauthorized workers and loss of labor benefits, and publication of the company’s name on the Labor Ministry’s website.

Fines will be imposed within eight days.

BAL Analysis: Companies should be aware of the increased risks of employing workers without proper work authorization. Companies using visas under the Specific Countries program, Professionals program and Italy-Panama Convention should pay particular attention to the increased risks and are reminded that foreign nationals must obtain approval of residence before filing of the work permit, which can entail a wait of four to five months.

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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