Through Executive Decree No. 100 of July 1, 2020, the Ministry of Labor of Panama has ordered the automatic extension, for a period of 30 additional calendar days, of the authorization given to suspend the employment contracts of employees of commercial establishments and companies whose closure was ordered by the Ministry of Health, by the provisions of Executive Decree No. 81 of March 20, 2020, for reasons of force majeure or fortuitous event, and whose suspension had already been extended following Executive Decree No. 95 of April 21, 2020.

As we have previously informed, the temporary suspension of employment contracts implies that the employee is not obliged to provide services, and therefore the employer is not obliged to pay wages.

Also, Executive Decree No.100 above mentioned has ordered the following:

• The companies whose reactivation has been authorized, that maintain employees with suspended contracts, must request the Ministry of Labor the extension of the suspension of said contracts, sending the request at least 5 business days before the expiration of the last suspension authorization.

The Ministry of Labor may authorize, deny, or request additional information to anyone who requests the extension. If the authorization to suspend contracts is denied, companies will be obliged to pay wages.

• As of July 13, 2020, the extension authorizations will be processed through the Panama Digital platform.
• The sum of all authorized extensions will not exceed 4 months.

For more information, contact Julieta Rodríguez.