Method for calculating foreign worker quotas changed
29 Aug 16
IMPACT – MEDIUM
What is the change? Panama has changed the way it calculates the quotas that determine how many foreign nationals companies are allowed to employ.
What does the change mean? Effective immediately, foreign nationals holding Specific Countries, Panama-Italy or “Crisol de Razas” work permits, previously counted as Panamanians when calculating quotas, will not be counted as Panamanians or foreign workers. Holders of Professionals work permits, previously counted as foreign workers, will also not be counted as Panamanians or foreign workers. The rules apply both to current work permit holders and future work permit applicants.
- Implementation time frame:Immediate and ongoing.
- Visas/permits affected: Specific Countries, Panama-Italy, “Crisol de Razas” and Professionals work permits.
- Who is affected: Companies employing foreign nationals holding any of the work permits listed above.
- Business impact: Companies should take note of the change and recalculate the number of foreign workers they are employing in order to make sure they remain in compliance with relevant quotas.
- Next steps:Panamanian authorities may announce additional changes to how foreign nationals are counted. BAL has confirmed, however, that foreign nationals who have work authorization based on their marriage to a Panamanian national and those who hold an Indefinite Work Permit of Ten Years of Residence will continue to count as Panamanians for quota purposes.
Background: Panamanian labor code dictates that no more than 10 percent of a company’s labor force can be made up of foreign workers. Additionally, no more than 15 percent of a company’s managerial or technical positions can be foreign workers. Exceptions to this rule exist for certain work permit categories and, until now, Specific Countries, Panama-Italy or “Crisol de Razas” work permit holders were counted as Panamanians when calculating quotas. Professionals work permit holders were counted as foreign workers. Under the new rules, all work permit holders in the categories listed above will not be counted as foreign or Panamanian workers when calculating quotas.
BAL Analysis: Companies that exceed the 10- or 15-percent quota limit will risk having work permit applications, including renewals, denied. Companies employing foreign nationals in the work permit categories listed above should recalculate their quota figures to make sure they remain in compliance. Those that need help securing the necessary foreign labor while remaining in compliance with relevant quotas or regulations should contact BAL for assistance.
This alert has been provided by the BAL Global Practice group and our network provider located in Panama. For additional information, please contact your BAL attorney.
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Source: Berry Appleman & Leiden LLP