Panama
Knowledge Base

Justified Dismissal

Article 52 of the Labor Code establishes the justified causes that entitle the employer to terminate the employment relationship:
• Of a disciplinary nature
1. Having suffered deception on the part of the worker, by means of the presentation of false documents or certificates, which attribute to him/her qualities, aptitudes or faculties that he/she lacks, when the contract or its modification is entered into in consideration of such special conditions. The employer’s right to terminate the contract for this reason shall expire one month after the date on which the falsity is proven. When it is not a question of certification of suitability for the exercise of a profession, this term shall not exceed one year, counted from the date of the beginning of the employment relationship. the beginning of the work relationship.
2. Incurring the worker, during his work, in acts of violence, threats or insults against the employer, his relatives or members of the managerial staff of the company or business, or against the employer, his relatives or members of the managerial staff of the company or business, or against the employer’s employees. of the company or business, or co-workers, except when provoked.
3. Committing by the employee, outside the work center, against the employee, or members of the management personnel of the company or business, or co-workers, one of the acts described in the previous numeral, if due to the seriousness of such acts it is impossible to continue the contract. the continuation of the contract is impossible.
4. The disclosure, by the employee, without the authorization of his employer, of technical, commercial or manufacturing secrets or the disclosure of confidential administrative matters, the disclosure of which may cause damage to the employer. cause damage to the employer.
5. Incurring the employee, during the execution of the contract, in serious breaches of probity or honesty, or the commission of crimes against property, to the direct detriment of the employer. to the direct detriment of the employer.
6. Intentionally committing material damage to machines, tools, raw materials, products, buildings and other objects immediately related to the work, during the performance of their work or in connection therewith.
7. Causing the worker, with fault on his part, the material damage referred to in the preceding paragraph, provided that it was serious and that the worker’s fault is the sole cause of the damage.
8. Compromising the worker with his imprudence or inexcusable carelessness, the safety of the place where the work is carried out or of the people who are there.
9. The worker manifestly or repeatedly refuses to adopt the preventive measures and procedures indicated to avoid the occupational risks. indicated to avoid occupational hazards.
10. Disobeying the worker, without just cause, and to the detriment of the employer, the orders given by the employer or his representatives in the direction of the work, provided that they were clearly indicated, and that they refer indirectly to the execution of the work, or that they refer indirectly to the execution of the work, or that they refer indirectly to the execution of the work. indirectly to the execution of the contracted work.
11. The absence of the worker from work, without the employer’s permission or without a justified cause, for two Mondays in the course of a month, six Mondays in the course of a year, or three consecutive or alternate days in the course of a year. three consecutive or alternate days in the period of one month. For the purposes of this paragraph, a Monday shall be considered to be the day following a holiday or an alternate day in the period of one month. day following a national holiday or national mourning.
12. Recidivism in the abandonment of work by the employee, which includes the untimely and unjustified leaving of the work center during working hours, without the permission of the employer or his representative, or the repeated refusal of the employee to leave the work center during working hours, without the permission of the employer or his representative, or the repeated refusal of the employee to leave the work center during working hours without the permission of the employer or his representative. the employer or his representative, or the repeated refusal to work without a justified cause in the agreed performance.
13. Recidivism of the worker, in the term of one year, in infringing the prohibitions foreseen in numerals 3, 4, and 5 of article 127.
14. The commission by the employee of trust of acts or omissions, in or out of the service that entail the loss of the employer’s trust.
15. Sexual harassment, immoral or criminal conduct of the employee during the provision of the service.
16. Notorious lack of performance, qualified in accordance with specific technical and professional evaluation systems and regulations, previously approved by the Ministry of Labor and Social Welfare or agreed upon in a collective bargaining agreement.
• Of a non-attributable nature
1. The original inability or manifest inefficiency of the employee that makes it impossible to comply with the essential obligations of the contract. This cause may only be invoked by the employer within a term of six months from the date of commencement of the service rendered.
2. The enforceable sentence that imposes on the worker a prison or incarceration penalty, or the fact that the worker who suffers a sentence of arrest or preventive imprisonment does not timely make the notification foreseen in ordinal 2 of article 199, or the passing of the term of one year from the date of detention.
3. The recognition to the worker by the welfare system of the retirement pension, or permanent and definitive permanent disability, after verifying that he/she will receive the respective pension during the following month.
4. The mental or physical incapacity of the worker, duly proven, or the loss of the suitability required by law for the exercise of the profession, which makes impossible the fulfillment of the essential obligations of the contract.
5. The expiration of the term of one year, from the date of suspension of the contract, due to illness or non-professional accident of the employee.
6. The incapacity of the employer when it entails as an unavoidable consequence the termination of the contract.
7. Force majeure or fortuitous event, which entails as a necessary, immediate or indirect consequence the standstill of the employer’s activities.
• Of an economic nature
1. Bankruptcy or insolvency of the employer.
2. The closure of the company or the definitive reduction of the works, due to the notorious and manifest unaffordability of the exploitation or exhaustion of the material object of the extractive activity.
3. The definitive suspension of the work inherent to the contract or the proven decrease in the employer’s activities, due to serious economic crisis, partial unaffordability of operations due to a decrease in production, or due to innovations in manufacturing procedures and equipment, or revocation or expiration of an administrative concession, cancellation of orders or purchase orders, or the decrease in the productive activity of the company in orders or purchase orders or sales, or other analogous cause duly proven by the competent authority.
These are cases of dismissals for economic cause, the following rules shall apply:
a) it shall begin with the workers with the least seniority within the respective categories;
b) once the previous rule has been applied, preference shall be given to Panamanian workers over those who are not, to those who are unionized over those who are not, and to the most efficient over the least efficient;
c) women who are pregnant, even if they are not preferentially covered by the above rules, shall be dismissed last, if absolutely necessary and after compliance with the legal formalities;
d) in equal circumstances, after applying the above rules, workers covered by the union privilege shall have preference over others for their continued employment.

Unjustified Dismissal

When the unjustified dismissal is proven, the employee will have a severance payment that will correspond to his/her seniority time and salary. The amounts are calculated on the wages received during the last 6 months or 30 days, whichever is more convenient for the employee.