Panama: New rule to affect counting of foreign-hire ratios

What is the change? The Ministry of Labor recently announced a new requirement that work permit requests in the Foreign Professional or Friendly National categories include an employment contract and local payroll.

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What does the change mean? The change means that foreign workers in the two categories will now be counted within the 10-percent quota when calculating the foreign-hiring limits on a company.

  • Implementation time frame: Immediate.
  • Visas/permits affected: Work permit requests in the Foreign Professional or Friendly Nationals categories.
  • Who is affected: Companies hiring foreign workers in the above categories.
  • Business impact: The new rule affects how “foreign workers” are defined and counted for purposes of limits on hiring of foreign labor.
  • Next steps: Companies that rely on foreign workers should reassess their foreign workforce numbers in light of the new requirement to ensure that they are within the allowable limits.

Background: Panamanian companies are restricted in employing foreign workers to certain percentages of their workforce. Foreign Professionals and Friendly Nationals may not make up more than 10 percent of a company’s workforce.

BAL Analysis: The rule may suddenly change companies’ foreign-worker numbers and may negatively impact their ability to hire foreign nationals. Employers are encouraged to contact their BAL professional to assess whether they are in compliance with the foreign-hire limits and whether to explore alternate visa routes.

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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