Payroll in Panama

Panama minimum wage and salaries in 2026

Short answer: The minimum wage in Panama in 2026 is $1.95 an hour (about $406 a month). A typical full-time salary is around $1,500 a month. Professionals paid as contractors through Ontop earn a median of $2,650 a month (47 active contracts, September 2026).

Minimum wage details: Decreto Ejecutivo 13 of 2025-12-31 (Gaceta 2026-01-06), in force 2026-01-16, valid 2026-2027; hourly rates by region (1 urban: Panama, Colon, San Miguelito, David, etc.; 2 rest), activity and firm size, 100+ rates. 1.95 = manufacturing small firm Region 2 (lowest non-agri figure seen); Region 1 small manufacturing 2.32; retail small 2.37 (R1) / 1.99 (R2), large 3.02 / 2.48; construction 3.51/3.30; hotels 2.96/2.43; agriculture small R1 1.64 (lowest overall). Domestic workers monthly $350 (R1) / $320 (R2). Highest ~5.01 (international cabin crew). Table partly from La Prensa / secondary sources. USD figures use exchange rates from 1 October 2026. Updated October 2026.

Next step: compare contractor rates in Panama with other countries or estimate the full cost of an employee.

Hiring in Panama: employee or contractor?

Panama uses the US dollar, so there is no currency risk to manage. What you do have to manage is a labor code that front-loads obligations onto the employer: contributions to the Caja de Seguro Social (CSS), a thirteenth-month bonus paid in three installments, a full month of vacation, and severance that grows with every year of service.

Ontop's numbers also show who companies hire here. The median contractor paid through Ontop earns well above Panama's average monthly salary of about $1,500. These are mostly professional, remote-ready roles, not entry-level ones.

What an employee costs you in Panama

On a $1,500 monthly salary, the employer's 13.25% CSS contribution plus 1.5% educational insurance adds about $221, for roughly $1,721 a month. That is before the obligations that run on the calendar:

• Décimo tercer mes: one extra month of salary a year, paid on April 15, August 15 and December 15.
• Vacaciones: 30 calendar days a year.
• Incapacidad: up to 18 days of sick leave a year paid by the employer.
• Prima de antigüedad e indemnización: 1 week per year of service, plus 3.4 weeks per year if a dismissal is unjustified.

The contractor route with Ontop

Panama recognizes independent work under servicios profesionales: the professional invoices for services and handles their own taxes with the DGI. Companies paying contractors in Panama through Ontop pay a median of $2,650 a month (the middle half earn between $1,747 and $4,186), across 47 active contracts in September 2026. That is Ontop's own book, not a market survey. To model a specific role, use the contractor cost by country calculator.

Ontop works as contractor of record. You sign a compliant contract (yours or an Ontop template), get support on classification, and pay from one platform without a Panamanian entity or a SIPE payroll filing. The contractor gets paid into the Ontop Global Account in USD. Pricing starts at $49 per contractor per month.

When an employee is still the right call

A contract labeled servicios profesionales does not protect you if the relationship is employment in practice. Set working hours, exclusivity, daily direction and an open-ended role all point to an employee under MITRADEL's rules. In that case, hire one and budget for the full cost above. Ontop does not offer employer of record and never becomes the legal employer. For deliverable-based work, see how the EOR alternative for contractors works.