On July 2, 2020, Executive Decree No. 100 of July 1, 2020 entered into force in Panama, extending the temporary suspension of the effects of employment contracts and dictating other provisions.
Companies whose restart of operations has not been authorized
The temporary suspension of the effects of the employment contracts of companies whose restart of operations has not been authorized according to the measures of gradual return to economic activity, is automatically extended for a 30 calendar days period. Coming into force upon expiration of the initial authorization of the suspension or the expiration of the immediately previous extension period.
Companies whose restart of operations has been authorized
The temporary suspension of the effects of employment contracts of companies whose restart of operations has been authorized is not automatically extended. Companies in this condition that maintain workers with suspended employment contracts must request the Ministry of Employment and Labor Development to extend said employment contract suspensions, according to article 2 of Executive Decree No. 95 of April 21, 2020.
Article 2 of Executive Decree No. 95
Article 2 of Executive Decree No. 95 establishes that the employer must submit electronically to the Ministry of Employment and Labor Development, in a term not less than five (5) business days prior to the date of termination of the original suspension period, a formal request in which the need for such new extension is explained, detailing the affectation to the company and the new suspension term.
In the cases of Executive Decree No. 100 it must be understood that the term of not less that five (5) business days referred to above, applies to the termination period of the original suspension or its last extension.
The Platform “Panama Digital”
Executive Decree No. 100 establishes that, from July 13, 2020, requests for extensions by companies will be processed on the platform provided in www.panamadigital.gob.pa.
However, as of July 14, 2020, said platform had not been enabled as above, so it is recommended that until then companies send their applications using the emails previously provided for this purpose by the Ministry of Employment and Labor Development.
Maximum of four (4) months of suspension
Executive Decree No. 100 establishes in its 5th and penultimate article that the sum of the authorized extensions shall not exceed four (4) months; limitation established in our Labor Code.
However, in recent days the Ministry of Employment and Labor Development submitted a bill to the National Assembly to allow for the suspension of companies’ employment contracts until December 31, 2020.
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