The minimum wage is postulated as a norm of constitutional rank, which through Article 66 of the Political Constitution of the Republic of Panama is recognized with the purpose of covering basic necessities of life, improving the level of development depending on the economic activity or region, for each profession or trade. All of the above will be developed by law and will be for the benefit of the workers.
In this sense, Article 173 of the Labor Code describes the minimum wage as: "the amount, lesser in money, to be paid by the employer to the worker, fixed per unit of time for the region, activity or profession in question". As such, the Labor Code also provides that the minimum wage shall be fixed periodically at least every two years, in accordance with the recommendation of the National Minimum Wage Commission and by decree of the Executive Branch. The above then, does not suggest that every two years a new minimum wage is fixed in a mandatory or unavoidable manner, however, in at least the last fifteen (15) years it has been revised and increased.
Unlike other jurisdictions, when some businessmen, investors or managers of multilateral organizations ask what is the fixed salary in Panama, the answer cannot be exact and/or unique; and the fact is that in Panama, there are several minimum salaries according to the provisions of article 173 of the Labor Code. Therefore, in order to determine the minimum wage, the last legal instrument that has made a revision and consequent fixation of a new minimum wage must be consulted directly. For such purposes, the new Decree that fixed "the new minimum wages" is Executive Decree No. 1 of January 10, 2024.
Executive Decree No. 1 of January 10, 2024, which establishes the new minimum wage rates throughout the national territory, classifies the new minimum wage rates by economic activity, profession or trade, company size and regions distinguished as region 1 and region 2. Basically, the regions refer to the political-administrative division of the country, with respect to the Districts or Municipalities. For example, a worker rendering services for a company with less than 11 workers dedicated to retail commerce and located in the District of Aguadulce does not have the same salary as another worker of the same economic group rendering services in the District of Soná.
Therefore, it is relevant to take into account that the modification of the minimum salary for those to whom it applies brings as a consequence that the clause of the labor contract where the salary is fixed, by mandate of law, is automatically modified. Thus, there should be no fear on the part of the worker to demand such change or addendum since the law directly resolves such situation.
We urge the labor parties to take into account the legal provisions regarding the minimum wage, and thus ensure compliance with the relevant regulations applicable in these cases.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.