Panama: Significant Work Permit Reforms Implemented
March 14, 2023
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At a Glance
- The Ministry of Labor has published a decree which restructures Panama’s work permit categories and implements numerous other changes to work permit regulations.
- Under the decree, there are overall stricter quota requirements for employers in Panama but relaxed quota requirements for short-term technicians; stricter work permit rules for SEM and EMMA visa holders; stricter documentary requirements for certain employers; and new work permit options for self-employed foreign nationals and students, among numerous other changes.
- Though the decree is effective immediately, the Ministry has granted a grace period until March 31, 2023 so that foreign nationals who already hold a valid work permit in Panama or submit their work permit application on or before that date are unaffected by the changes.
The situation
The Ministry of Labor has published a decree which restructures Panama’s work permit categories and implements numerous other changes to work permit regulations.
A closer look
Notable reforms include:
| CHANGE | DETAILS | IMPACT |
| The decree restructures the work permit system, replacing 18 work permit categories with six categories (each with the corresponding sub-categories). |
The new categories are:
|
Foreign nationals seeking to apply for a work permit in Panama as of April 1, 2023 must be eligible under one of the new six categories. Foreign nationals with a work permit issued under the old system will not be subject to the new eligibility criteria upon renewal of their work permit or change of status to permanent residence. A grace period applies until March 31, 2023 under which foreign nationals who submit their work permit application on or before that date are unaffected by the changes. Notably, the category specifically for Permanent Residents to obtain work permits (originally implemented in 2019) has been eliminated. Instead, Permanent Residents will have to qualify and apply for a work permit under one of the six new categories. |
| Work Permit requirement for SEM and EMMA visa holders |
According to the decree, SEM and EMMA visa holders now require both a visa and a corresponding work permit to legally work in Panama. Under the current system, SEM and EMMA visa holders can work in Panama without an additional work permit (whereas foreign nationals under most visa categories require both a visa and a work permit). |
Though it is uncertain why the Ministry of Labor included work permit restrictions for SEM companies in the decree, Fragomen believes the Ministry will clarify (and possibly reverse) its position soon. Until then, affected foreign nationals will need to obtain a work permit, which can add up to 90 additional days to the entry process. Employers and foreign nationals should consult their immigration professional for case-specific advice. |
| Increased work permit processing times | Under the new decree, the Ministry of Labor has increased its standard processing time for a work permit application to 40 business days up from 30 business days. |
Employers and foreign nationals should account for longer processing times when planning assignments to Panama. Due to current backlogs delays in processing, in practice the Ministry takes around 90 days to adjudicate work permit applications. |
| Stricter documentary requirements for employers with more than 20 employees |
Employers with more than 20 employees are now required to submit a notarized payroll certification issued by a certified public accountant in support of a work permit application. Previously, a notarized copy of the company’s payroll sufficed. The payroll certification is prepared by the company (or an authorized third party) and certified by a public accountant and calculates the number of nationals and foreign employees in each immigration category. |
This change may add administrative hurdles, costs, and may delay the document-gathering time. |
| Stricter work permit renewal timeframe | Foreign nationals must submit work permit renewal applications at least 60 calendar days before the expiration of their current permit, up from 30 business days in advance of the expiration. | Employers and foreign nationals should initiate the work permit renewal process sooner and should gather supporting documents well in advance of the expiration of the current work permit to remain under their current immigration status. |
| Stricter quota requirements for certain Special Condition applicants; but relaxed quota requirements for short-term foreign technicians and experts |
Special Condition work permit applicants are no longer exempt from quota requirements (which means they must be hired within the allowed 10% or 15% quota, as applicable). Foreign technicians and experts seeking to work in Panama for up to 90 days (renewable for up to 12 months) are no longer subject to quota requirements. Previously, foreign technicians could not comprise more than 15% of the company’s specialized workforce. |
More foreign nationals (including those holding visas under specific bilateral agreements such as a Specific Country Visa, Foreign Professional visa, dependents under family reunion visas, and students) may face administrative hurdles to the work authorization process since they may be subject to a quota.
In order to comply with quotas, employers must include the company’s payroll documents (which can vary depending on the size of the workforce) showing the list of employees, job titles and enrollment in social security to the Ministry of Labor. This change also means that companies in Panama will benefit from access to a larger talent pool of technicians and experts beyond the local labor market in Panama due to the elimination of quota requirements for these professions. |
| Work permit option for self-employed foreign nationals | The new Special Conditions category allows foreign nationals who are self-employed to apply for a work permit to work in Panama. Previously, self-employed foreign nationals could not obtain work permits in Panama. | Self-employed foreign nationals now have an immigration pathway in Panama. |
| Work permit option for students | Student visa holders now have the option to apply for a work permit under the Special Conditions category. Previously, student visa holders were not allowed to work in Panama. | Foreign students will benefit from being able to work in Panama during their studies, making Panama a more attractive destination for students. |
| Notification requirements for certain short-term visits or work | Foreign nationals must now have an attorney file a notification with the Ministry of Labor if they are entering Panama to perform activities at a managerial level for up to 15 days or if they are fulfilling a contract with a supplier and their activities are not remunerated in Panama. | The implication of this change is not yet clear. It is expected that the Ministry will clarify details of the change and any implications soon. |
The decree implements many other, less impactful changes. Employers and foreign nationals should work with their immigration and labor professionals for case-specific advice.
Background
According to the Ministry of Labor, the reforms aim to modernize the work permit system which had not been updated since 1999, to adapt it to Panama’s current market needs.
Though some of the reforms protect international companies that benefit from special regimes in the country to attract foreign direct investment, the reforms also include restrictions to protect local workers more broadly.
Looking ahead
Though the new decree is effective immediately, the Ministry of Labor is also expected to publish an accompanying Procedures Manual soon in which details and policy changes would be published.
During the next few months while the Ministry of Labor implements the changes, foreign nationals and employers should expect delays with work permit application processing, increased scrutiny of applications, and discretionary application of the law.
Fragomen will monitor and report on any developments, including clarifications on SEM and EMMA work permit rules.
This alert is for informational purposes only. If you have any questions, please contact the global immigration professional with whom you work at Fragomen or send an email to [email protected].
