Your employment in Panama has concluded (via termination, resignation, or mutual consent) and you need to estimate your severance settlement across accrued vacation, 13th month bonus, seniority premium, and severance pay.
How to use Panama Severance Calculator step by step
1. Enter wage and service dates
Input your average monthly salary over the last 6 months, hire date, and separation date.
2. Select separation cause
Voluntary resignation / justified cause (acquired rights) or Unjustified dismissal (with indemnity art. 225).
3. Inspect itemized severance breakdown
Review pro-rated vacation pay, 13th month bonus, statutory seniority bonus, and severance indemnity.
The Step Count: Traditional Friction vs. KorexTools
Calculating Panama severance manually (6 complex steps)
- Calculate exact tenure duration in completed years, months, and days.
- Determine the statutory average monthly wage and weekly wage rate.
- Calculate accrued vacation days by dividing qualifying earnings by 11.
- Calculate accrued 13th month installments by dividing earnings by 12.
- Tally seniority premium (1 week per year worked on indefinite contracts).
- Apply Article 225 statutory severance scales if termination was unjustified.
With KorexTools Panama Labor Settlement Calculator (3 steps in 5 seconds)
- Input employment start and end calendar dates.
- Enter monthly base wage and termination grounds (unjustified dismissal or resignation).
- Review the itemized statutory breakdown with reference legal citations.
Statutory termination components under Panamanian Labour Code
Panamanian labor legislation (Cabinet Decree 252 of 1971 overseen by MITRADEL) segments terminal payouts into acquired statutory rights and termination indemnities.
Acquired rights are payable regardless of separation cause (even upon voluntary resignation): 1) Pro-rated accrued vacation (Articles 54 and 59: 30 days per 11 months worked); 2) Accrued 13th month bonus for the active 4-month trimester; and 3) Seniority Bonus (Prima de Antigüedad, Article 224: 1 week of salary per completed year of service from day one of an open-ended contract, plus proportional fractions).
Severance indemnity for unjustified dismissal (Article 225)
- •Payable strictly when the employer terminates an indefinite employment agreement without statutory legal justification.
- •Reference schedule (confirm with MITRADEL): 3.4 weeks of salary per completed year for the first 10 years of service, plus 1 week per year thereafter.
- •Weekly baseline wage = (Monthly salary × 12) / 52 weeks.
Payable compensation categories by separation type in Panama
| Benefit Category | Voluntary Resignation | Justified Dismissal | Unjustified Dismissal |
|---|---|---|---|
| Accrued / Pro-rated Vacation | Yes (Mandatory) | Yes (Mandatory) | Yes (Mandatory) |
| Pro-rated 13th Month | Yes (Mandatory) | Yes (Mandatory) | Yes (Mandatory) |
| Seniority Bonus (Art. 224) | Yes (Indefinite contracts) | Yes (Indefinite contracts) | Yes (Indefinite contracts) |
| Severance Indemnity (Art. 225) | Not applicable | Not applicable | Yes (3.4 weeks/yr first 10) |
Common Mistakes and How to Avoid Them
- ⚠️Expecting wrongful-termination severance payouts following voluntary resignation.
- ⚠️Claiming seniority premiums on fixed-term or project-specific contracts.
Frequently Asked Questions
Do I receive the seniority bonus (prima de antigüedad) if I resign voluntarily in Panama?
Yes. Article 224 of the Labour Code provides that the seniority bonus (1 week of salary per year worked) is an acquired right in indefinite contracts regardless of separation cause.
How is the weekly wage calculated in Panama?
Monthly salary is multiplied by 12 months and divided by 52 calendar weeks: Weekly Wage = (Monthly Salary × 12) / 52.
What is severance notice (preaviso)?
Under Article 212/214, if termination occurs without 30 days advance notice where required by law, an additional month’s salary is added.
Is this calculation legally binding in court?
Notice: This tool delivers a reference estimation according to MITRADEL Labour Code standards. It does not replace official legal or union review.
What I would do if I were in your shoes
“Estimated referential calculation per the Labor Code of Panama (Cabinet Decree 252 of 1971). Does not constitute binding legal counsel; always verify final figures at MITRADEL.” — DataKorex Engineering Team.