Employment Contracts and Labor Practices in Panama
What is a Settlement?
A settlement is a document that formalizes the termination of an employment relationship and benefits. It signifies full acceptance of the terms by both parties.
It must be approved by a notary public.
Depending on the situation of dismissal or resignation, the settlement may include the payment of certain allowances, which must be specified in this release form.
Define Compensation: When is it Paid and When is it Not?
Compensation is a term used mainly in the legal field and refers to a transaction between a creditor and a debtor or a victim and a victimizer. In simple terms, it is a form of “recompense” that someone may receive for damages or debts owed by another person or entity.
- Legal Holiday or Vacation: Payment for unused paid days is required in any dismissal case.
- Years of Service: Severance pay is only required in cases of dismissal due to business necessity, with one month’s salary for each year of service.
- Substantive Notice: Severance pay for lack of notice is only required if the employee is not notified 30 days in advance and if the dismissal is due to business necessity.
Define Personal Induction
It is a process by which the company familiarizes an individual with their work, co-workers, and the objectives of the organization. It involves understanding their functions and reducing the adaptation time.
What Rules Apply in the Induction Process?
- Welcome by the supervisor
- Details of the functions or responsibilities of the position
- Introduction to a company tutor who will guide the new employee
- Introduction to co-workers and their functions
- Explanation of the working relationship with colleagues
- A tour of the facilities
- Information about company benefits provided by the HR department
What Methods Can Be Applied When Integrating a New Employee? Describe Each One.
- Assign a Mentor: The mentor guides the new employee, describes their functions, and provides documentation.
- Information Day: No more than two sessions of 2 hours each, covering topics such as organizational structure, organizational chart, reporting lines, and procedures manual.
- Training: Technical or technological training for companies in technology-driven industries.
- Soft Skills Training: Training focused on interpersonal and human relations skills.
Define Each of the Elements and Parties Involved in a Contract
Employer: A natural or legal person who utilizes the services of one or more individuals under an employment contract.
Employee: Any natural person who provides personal, intellectual, or material services under the dependence or subordination of an employer and under an employment contract.
Self-Employed: An individual who, in the exercise of their activity, does not depend on any employer or have workers under their authority.
An employer is considered self-employed for pension purposes.
Company: Any organization of personnel, tangible or intangible assets, ordered under a direction for the achievement of economic, social, cultural, or charitable goals, endowed with a particular legal individuality.
Define Each Type of Contract and When a Contract is Not Necessary
1. Fixed-Term Contract: Establishes a start date and contract duration. It can be renewed but cannot exceed two years. Many companies hire for three months under a fixed-term format and renew the agreement for another three months. This is legal, but after that time, the employee must continue with a permanent contract or be terminated.
2. Indefinite-Term Contract: Does not have a defined end date, providing the employee with greater stability. The contract can be terminated by resignation, dismissal, or the death of the employee. Despite being maintained over time, such contracts should be updated annually.
3. Contract for a Specific Task: Used for specific projects, where the employee’s employment ends upon completion of the task. For this reason, the contract cannot be renewed. The individual can sign a new contract with the same company for a different task.
Some Clarifications:
- A. Work for Fees: Governed by civil law, not labor law. The employer does not deduct social security contributions. These are the responsibility of the service provider. Rules regarding minimum wage, rest, maternity protection, collective bargaining, etc., do not apply. To work under this scheme, you must have invoices.
- B. Part-Time Work: Part-time contracts exist and should not exceed 30 hours per week. The full workday is 45 hours per week.
Contracts are not required when:
- Work needs are sporadic.
- Professional practice of a graduate of any educational institution.
- People who work in their homes or without immediate supervision.