Tag Archives: taxes

Learning all the in’s & out’s of employer responsibilities here in Panama…


Poco a Poco we’re getting the hang of this Panamanian employer gig. We were very concerned in the beginning, before we hired any workers about making sure we knew and understood what we needed to do to be totally above board when employing people here in Panama. We went to an attorney and got information about taxes and social security and learned about the best way to make sure we don’t get into any trouble. The attorney sent us to a woman in town named Clavdia, who will do our bookkeeping and take care of filing all the necessary paperwork with the Social Security office in town as well as making sure all our employee taxes are paid. She is a treasure and we feel good knowing she’s got that part taken care of, and for $10.00 per month! We’ve read about some of the issues one can have when hiring people to work for you as well as talked to friends about their experiences and we felt it would be prudent to get ahead of the ball and learn as much as we could learn to hopefully prevent any nightmares in the future. Even though we sat down with an attorney and asked as many questions as we could think of to ask, we find ourselves still learning things that she didn’t tell us. One little thing just came up this week. One of our employees was asking Scott about his Decimo pay….Huh? What the heck is that!! We went down to Clauvdia’s office and she set us straight on that… Apparently this is a bonus they get three times a year April 15, August 15 and December 15 …8.33% of their wages. Other important things we had already learned are that they also have about 10-12 Official “Paid” days off each year. Plus,we’ve also been informed that the best way to structure the hiring of employees is to have them on short contracts that last only a few months at a time. This is to avoid any issues if we need to let someone go. It can be very tricky to fire a worker here so it’s much easier just to tell them the contract for work is over and not to offer them a new contract, this is very important if you find yourself with a particularly unreliable, or lazy worker. “Sorry, no more contract for you”. No need to fire them, the job they were hired to do is just over, easy breezy. As a matter of fact Scott has two workers who seem to have a hard time getting to work on Mondays, so this week was time to renew contracts and he told these two that if they continue to miss work on Mondays this would be their last contract. Another interesting little ‘required bonus’ is each time a contract ends, we are required to give them a project termination fee which is sort of like a severance payment and that is 6% of their pay. So, lets see, these employees work for $23-29 per day and they get 10-12 legal paid days off per year, they also get paid for sick days if they bring a note from the doctor, (which they seem to be very diligent at doing), a bonus at the end of a contract, and a bonus every three months….Whew! These are the rules we know of, but I’m wondering just how many other “bonus’s” we don’t yet know about? Hah! We still need to find out from a Panamanian guy we’re friends with in town who is in the construction business about the validity of what one of the workers told Scott about it being ‘customary’ for the Jefe to purchase rubber boots for the entire crew…..Hmmmm? That seems like a funny one, but ya just never know! If it’s the way they do it here, then we’ll be off to the store to buys some boots!

Scott may be a generous and fair Jefe but one things for sure, he’s not one to be taken advantage of. He’s always had a very consistent code of ethics that he deems very important and to be sure, those who know him know that he’s never one to lose his cool, there’s never any yelling coming out of his mouth. He’ll be fair and honest and often generous to a fault but don’t let him down or betray his trust or respect because your day’s of working with him will end and he wont look back. It’s like a light switch just goes to the off position and he’s just walked away. No, there’s never any drama or games, probably one chance but definitely not two. So, when his workers bust their butts on an especially physically exhausting week like they did last week, Scott will always acknowledge that, maybe not always with a Friday treat of cold beers and a paid day off, sometimes just a hearty thanks, but they will feel appreciated to be sure. And if an employee is just not living up to Scott’s standards he’ll let them know that they can go now. So, as we are just getting started with our project, because we still have a long ways to go until we’re done building, I’m sure we’ll go through a few workers along the way. But the smart one’s will be able to see that they’ve got a good thing going with this particular Gringo Jefe. Scott’s trying his best to strike that balance of being a good Jefe but not feeling as though he might be thought of as a sucker. Hence the time spent getting the low-down from people who know the actual rules and laws. We have a lot to learn and Poco a Poco we’re learning about what it takes to do things right and to give and receive a mutual respect with the guys working on our house. We’ll make mistakes and I’m sure a day will come when we’re let down somehow by a worker we trusted and liked, that’s just the way it goes. But so far we have a pretty solid crew of guys who seem to be consistent, hard working and glad to have a job to go to everyday. It’s all part of the Adventure!