Termination of Employment Contracts in Panama


Employment relationships come to an end for different reasons. It is important to keep in mind some key aspects of termination of employment contracts.

Reasons of termination

  1. By mutual consent, provided there is written proof and does not imply a waiver of rights.
  2. By the expiration of the agreed term.
  3. By the conclusion of the work specified in the contract.
  4. As a result of the employee’s death.
  5. By the employer’s death, when it entails an unavoidable consequence of contract termination.
  6. For the dismissal based on a justified cause, or the resignation of the employee.
  7. By unilateral decision of the employer.

In the event that the employer is the one who decides to terminate the employment relationship, the employer must previously notify the employee in writing of the date and specific cause or causes for the termination.

The employee may terminate the employment relationship, without justified cause, by giving fifteen days’ written notice to the employer, except in the case of technical workers, in which case the notice must be given two months in advance.


Upon termination of any contract for an indefinite term, regardless of the cause of termination, the employee shall be entitled to receive from his employer a seniority payment, at the rate of one week’s salary for each year worked, from the beginning of the employment relationship.

In the event that any year of service is not completed in its entirety from the beginning of the relationship or in subsequent years, the employee will be paid the corresponding proportional part.

Contact us

If you want to learn more about employment contract termination or have related questions, send us a note at info@kraemerlaw.com. Our legal team will be glad to clarify any doubts you may have.