Panama Employment Law Update: Summary of the most relevant changes of the Executive Decree No. 6 of April 13th, 2023

Executive Decree No. 4 of March 2nd, 2023 (hereinafter “Decree 4”), controversial due to the changes it implemented in several of its articles regarding the hiring of foreign workers, has been recently repealed and subrogated by Executive Decree No. 6 of April 13th, 2023, (hereinafter “Decree 6”) published through Official Gazette No. 29760-C, which regulates articles 17, 18 and 19 of the Labor Code of the Republic of Panama.

We would like to begin our analysis of Decree 6, indicating that the Ministry of Labor has replaced throughout the text, the concept of foreign person by that of migrant worker and in this order of ideas, we would like to begin by highlighting that the change implemented by Decree 4 is maintained, which established the possibility that all migrant workers who have permanent residence may apply for one of the work permits listed in this Decree, without distinction of the immigration category that has led them to acquire permanent residence.

In attention to the Permanent Resident Work Permit that had been created by Executive Decree No. 21 of 2019, we must point out that the same has not been included within the list of categories, however, other possibilities have been created, as is the case of work permits for foreign persons who have obtained their permanent residence as certain categories of investors, which we shall detail below.

Another important change to highlight is that Decree 6 extends the list of foreign citizens who shall be exempted from applying for a work permit. Thus, they shall not have to apply for a work permit:

Those who are religious, in the fulfillment of their mission.
Those who carry out economic, business or investment activities that are not under the legal subordination or economic dependence of an employer.
Those who are covered by special systems and that in their provisions or regulations contain such exception, and
Those who are artists and make presentations by virtue of agreements and cultural exchanges, or when it is about the so-called classical art and related to this type of art.
With respect to the classification, Decree 6 adds an additional classification called “Work Permits established through Special Economic and Investment Policies”, which we mentioned above, which refers to four (4) new categories of work permits, for those residents who have obtained Residences as Investors, which are: under the category of “Friendly Countries”, Migrant Worker permanent resident as Qualified Investor, Migrant Worker under the special immigration category of Own Economic Solvency and Migrant Worker under special categories in force of special economic and investment policies. On this point we must point out that, although it is true that the category of permanent resident work permit was eliminated, it opens the possibility for foreigners who obtained their residence through investment programs, to now opt for a work permit.

We have also noted that the possibility of replacing some certificates and procedures with online validations has been withdrawn.

An important change implemented by Decree 6, is that it clarifies what was set forth in Decree 4, regarding the treatment of those foreign workers who had obtained work permits from “Friendly Countries” on an indefinite basis through Executive Decree No. 140 of August 2nd, 2012, since Decree 6 establishes that such workers shall be considered as personnel equivalent to local labor. In this order of ideas, it is important to mention that from now on the “Friendly Countries” work permit may be requested either as an Investor or for Labor Reasons.

Decree 6 eliminated the work permit that had been created for workers with SEM Visa, by Decree 4. Only the work permit for Dependents of Executives with SEM Visa is maintained and is called “Work Permit for Dependent of Migrant Worker holding visa or resident permit through special laws”, which shall be valid for any other worker whose status is that of dependent of resident, through special laws. The work permit for workers under the EMMA System was maintained only in those cases of temporary workers under this System.

On the other hand, the change of the work permits was maintained, which hereafter shall count within the percentages, i.e., Chapter X, on Permits established for special immigration conditions, but for the new procedures, these categories are: Friendly Countries (for labor reasons), General Immigration Regularization Programs, Professional Migrant Worker, Family Reunification Migrant Worker for Dependents of Resident and Student Work Permit.

Last but not least, we must point out that Decree 6 clarifies and confirms that all procedures that were handled under previous Decrees and under previous conditions, shall be processed, analyzed and resolved in accordance with the provisions under which they were submitted.

By Icaza, González-Ruiz & Alemán, Panama, a Transatlantic Law International Affiliated Firm.

For further information or for any assistance please contact panama@transatlanticlaw.com

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