#Panama 🇵🇦 #BDS_Informs: Labor Considerations on Labor Day
In connection with Labor Day, it is important for employers and Human Resources teams to have a...
The Ministry of Labor and Social Welfare issued Guidelines No. 01/2026, establishing the operational criteria and procedures for implementing the Special Quincena Veinticinco Act, including the rules for determining the amount of this benefit, eligibility requirements, and the manner in which it must be paid.
The Quincena Veinticinco is a supplemental payment equivalent to 50% of an employee’s nominal monthly salary and must be paid between January 15 and January 25 of each year. In the private sector, employees who, as of January 14, have completed one year or more of services with the same employer will be entitled to the full payment. Employees who have not met this requirement will receive the pro-rata amount of this benefit based on their length of service.
To qualify for the benefit, employees must have an active employment relationship and earn a nominal monthly salary of US$1,500 or less.
For purposes of determining the applicable salary, the benefit will be calculated based on the employee’s basic or nominal salary at the time of payment, excluding commissions and other variable compensation.
The Guidelines also establish that this benefit is exempt from attachments and free from deductions for social security contributions, AFP pension contributions, income tax, or other similar items. They also include specific provisions governing situations such as termination of employment, leaves of absence, suspensions, and the provision of professional services.
For the private sector, payment will become mandatory beginning in January 2027. During 2026, payment of the benefit will be voluntary and will entitle employers to a tax credit under the applicable legislation.
In light of these provisions, we recommend that employers review their internal and payroll processes, identify employees who meet the eligibility requirements, and prepare in advance for the mandatory implementation of this benefit beginning in 2027.
The Guidelines were published in the Official Gazette, Volume No. 452, on September 14, 2026.
Please do not hesitate to contact us should you have any additional questions or require assistance regarding this matter.
