Panama Labor Laws SUCK!

[Dottie Atwater]

A long-term employee left and I ended up having to pay him $8,000. Never mind that I paid him very generously and gave him many thousands of dollars extra over the years, plus many  other benefits.

Now I recently hired one who worked six weeks for me. He got drunk twice. He was living in my casita. The second time I had to go wake him up was the morning after pay day the previous day.  He lost/drank all his money except for $10. Then he wanted to borrow money from me, saying he couldn't work without having food. I refused, and he left. After working for me for only six weeks, I had to pay him $100 for liquidacion and a portion for his "vacation." 

I am certainly not alone in getting the shaft like this. Nothing to be done about it...just venting.

Dottie

[Pantah]

Good to pass this along. When there is a strong financial system to "work the system" this is what happens! Also if one has a tenant of child bearing age, and she gets pregnant, she and the child can't be evicted until the child is two.

[TwoSailors]

"I am certainly not alone in getting the shaft like this. Nothing to be done about it...just venting."

 

Some friends of ours avoid this by having 6-month contracts. They simply do not renew the contracts if the employee is not working out. Plus it gives the employee incentive to do good work so the contract can be renewed and they have work that otherwise they may not.

 

Just a suggestion. You will need to consult with your attorney. CYA! 

Edited December 12, 2017 by TwoSailors

[Bonnie]

Unfortunately, this leaves the employee without social security benefits, both now (health, etc.) and beyond his work days (monthly payments). I wouldn't want to CMA this way.

[Dottie Atwater]

1 hour ago, Pantah said:

Good to pass this along. When there is a strong financial system to "work the system" this is what happens! Also if one has a tenant of child bearing age, and she gets pregnant, she and the child can't be evicted until the child is two.

Good grief!

[Dottie Atwater]

53 minutes ago, TwoSailors said:

Some friends of ours avoid this by having 6-month contracts. They simply do not renew the contracts if the employee is not working out. Plus it gives the employee incentive to do good work so the contract can be renewed and they have work that otherwise they may not.

If the employer doesn't renew the contract, he/she is still liable for liquidation and a portion of "vacation" for the six months worked. Plus, it is my understanding that each time a termination/renewal is done, the employee has to be taken off social security and then put back on....which is costly and a big pain in the butt.

[Keith Woolford]

1 hour ago, Pantah said:

if one has a tenant of child bearing age, and she gets pregnant, she and the child can't be evicted until the child is two.

Can you direct us to this regulation, please?

[Pantah]

8 minutes ago, Keith Woolford said:

Can you direct us to this regulation, please?

No, but you can contact the source of this info, my attorney Vicki Romero who has since relocated with her husband Dr. Pretelt to Panama City. This issue came up when I evicted a tenant, and she offered this info (which wasn't needed).

[Bonnie]

5 hours ago, TwoSailors said:

"I am certainly not alone in getting the shaft like this. Nothing to be done about it...just venting."

 

Some friends of ours avoid this by having 6-month contracts. They simply do not renew the contracts if the employee is not working out. Plus it gives the employee incentive to do good work so the contract can be renewed and they have work that otherwise they may not.

 

Just a suggestion. You will need to consult with your attorney. CYA! 

To add to my previous post about it being unfair to the employee, this is almost certainly a violation of the law. Contracts may be utilized for single jobs or projects, but using them to avoid having to pay s.s. to a regular employee defeats the purpose of the law requiring the payment of s.s. If and when the employee leaves the job, he can file suit under the labor law. The employer found to have violated the law, would have to pay the s.s. owed and severance pay as well as a penalty. I know lawyers who have given bad advice about this and left their clients, friends of mine, with a big financial liability.

[TwoSailors]

22 hours ago, Bonnie said:

To add to my previous post about it being unfair to the employee, this is almost certainly a violation of the law. Contracts may be utilized for single jobs or projects, but using them to avoid having to pay s.s. to a regular employee defeats the purpose of the law requiring the payment of s.s. If and when the employee leaves the job, he can file suit under the labor law. The employer found to have violated the law, would have to pay the s.s. owed and severance pay as well as a penalty. I know lawyers who have given bad advice about this and left their clients, friends of mine, with a big financial liability.

 

22 hours ago, Bonnie said:

Some friends of ours avoid this by having 6-month contracts. They simply do not renew the contracts if the employee is not working out. Plus it gives the employee incentive to do good work so the contract can be renewed and they have work that otherwise they may no

 

They do indeed pay their employee's social security and vacation compensation. They do all this under the advice of their attorney to comply with the laws. I never stated otherwise.

[Bonnie]

2 hours ago, TwoSailors said:

 

 

They do indeed pay their employee's social security and vacation compensation. They do all this under the advice of their attorney to comply with the laws. I never stated otherwise.

There is a residential community in town that is known for hiring workers for only six months to avoid a number of costly labor laws, including the payment of social security and severance pay. They do not rehire the same people, however, presumably on their lawyer's advice. I know others who operate solely by contract with regular, continuing employees to avoid the social security and severance pay laws. I'm puzzled by how many different interpretations there are, by lawyers, of the six-month and contract issues. I also think there is widespread misunderstanding of how a contract arrangement can be used. Common sense dictates that if a contract can substitute for the "regular" laws even though the worker is a continuing employee, there would be no need for the regular labor laws.

But interpretations are all over the place. I have known two people, however, who understood from their attorneys that they were in compliance with the law but found out in an employee dispute that the labor authorities disagreed. It cost them a lot of money. Just sayin'.

Edited December 13, 2017 by Bonnie

[Dottie Atwater]

Believe me, workers know the word "liquidacion" and the other monies they are "owed."  I don't think there's any way around paying SS these days, contract or no contract, plus a portion for decimo and vacation if they terminate, whether they quit or you fire them. (Apparently you owe them more if you fire them.) They guy who I "owed" $100 worked for me starting October 16th, but his contract started November 1st. He worked one month under the contract.  I asked my legal adviser how he could prove he started on October 16th, and she said the labor board will always take the employees word with any issue.

Also, in the past, it was customary to have a three-month probationary period in a contract. I had that in my contract with the last guy and it is meaningless these days.

I think the residential community you mention can't possibly avoid any of the labor laws, by whatever means.

I wish to heck I could do without an employee, but it is impossible.

 

 

 

Edited December 13, 2017 by Dottie Atwater
addition

[Bonnie]

You may be right, Dottie, but my understanding is that the first six months is a probationary period during which the employer has no obligations (other than to pay the employee the agreed-upon amount for the time worked) and may let the employee go within that period of time without consequence. After that, the full force of the labor law comes into play.

[Dottie Atwater]

Well, what I posted came from two separate accountants who specialize in employee contracts and the labor law.

[Ricco]

Dottie,

I use contracts and at the end of each I pay all liquidacion.

Your figure of $8000 sounds very steep.

May I ask how many years the person was under your employ?

And did you ever pay liquidacion before or is this figure is for all the accumulated years of service?

Thanks.

[Dottie Atwater]

No, I did not pay liquidation before. This was for about 9 years of employment. Silly me, I did not have a contract, and I did not pay decimo or vacation (or called it that), although I gave the employee MUCH more money than paying those things would have been. I was WAY too generous and I treated him more like a friend than an employee. Gave him free rent in my casita, even provided the gas and electricity, gave him use of my car for personal things, paid for doctors for him and his family,  gave him many items of clothing, and many other benefits. Now I know better, both about contracts and to keep an employee strictly an employee, not as friend. I assume responsibility for the outcome. I now realize that most Panamanians have no concept of gratitude and merely think of us as a "deep pockets" money machine.  I won't make that mistake again. (That's not to say I will be a "Simon Legree or unpleasant to an employee because of this.)