A decree was published in Panama authorizing the modification or temporary reduction of the working day, which due to the economic crisis generated by covid-19 may be reduced by up to 50%.

The new regulation establishes that the agreement to modify working hours must include methods to achieve the gradual recovery of working hours to the levels existing before the crisis and that they must not affect the hourly rate agreed in the current employment contract, reported the Ministry of Labor and Labor Development.

An official statement says that “… it was established that the maximum reduction in the working day will be 50% of the working hours per month and that the effects of temporary modifications, which will be signed during this year 2020, will not extend beyond December 31st of this year.”

The rule states that the discounts and deductions will be adjusted in accordance with the salary resulting from the modification of the agreed working hours, according to the percentages established in article 161 of the Labor Code. This Executive Decree has been in effect since its promulgation in the Official Journal this Monday, July 13, 2020, the document states.

Regarding the hiring of new employees, Article 5 of the Decree explains that “… During the validity of the agreement for the temporary modification of the working hours of the effects of the employment contract, companies may hire workers, provided that such hiring refers to new positions, for which there is no staff before the agreement for the temporary reduction of the working hours.”

See Executive Decree No. 101 dated July 13, 2020.
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