Panama: Revised Decree Implements Work Permit Reforms with Key Changes

The Ministry of Labor in Panama has published a revised Executive Decree which is an updated version of the work permit reforms published in March 2023 but which were not yet implemented. This new version will go into effect on May 15, 2023. One of the key changes reverses the Work Permit requirement for foreign nationals who hold visas under special laws (such as Multinational Company – SEM visa holders, and certain Companies Providing Manufacturing Related Services – EMMA - visa holders); these visa holders will not require an additional work permit to work in Panama, in line with the current system. The new decree also creates an additional (seventh) work permit category, called the work permit under special economic and investment laws, which includes foreign nationals with Specific Country visas by investment and certain other investors; the March decree did not contemplate a work permit category for these foreign nationals. The new decree clarifies that foreign nationals who hold Specific Country or Humanitarian/Protection work permits are exempt from the foreign national population percentage for quota calculation purposes. Furthermore, the decree also clarifies that dependents of SEM and Emma visa holders are eligible to apply for work authorization under any existing work permit category; the March decree had limited their eligibility to work permits issued under a quota requirement. Additionally, the decree also clarifies that, upon a third offense breaching labor laws, employers are liable for fines of up to USD 15,000 and temporary suspension of the company’s operating permit – the same as under the current system; the March decree had decreased the fine to USD 1,500 and removed reference to permit suspension. Lastly, while the March decree eliminates the category specifically for Permanent Residents to obtain work permits (originally implemented in 2019), the new decree clarifies that foreign nationals who already hold this type of work permit will be able to keep renewing it indefinitely. The decree implements many other, less impactful changes. Employers and foreign nationals should work with their immigration and labor professionals for case-specific advice.