Internal Work Regulations in Panama: What Every Employer Must Know About Their Legal Obligations Before MITRADEL, by María Elena Jurado

Introduction

Internal work regulations are a fundamental document for the organization and management of labor relations in any company. In Panama, this regulatory instrument is governed by the Labor Code and constitutes a legal obligation for certain companies, not merely a good business practice.

Having well-drafted and duly approved internal work regulations offers multiple benefits: it establishes clear rules for employers and workers, prevents labor disputes, facilitates the application of fair disciplinary measures, and demonstrates the company's commitment to compliance with Panamanian labor legislation.

Legal Framework

Internal work regulations in Panama are governed by Chapter IV of Title IV of Book I of the Labor Code, specifically in Articles 181 through 192. This legislation establishes who is required to have regulations, what they must contain, how they are approved, and what the consequences of non-compliance are.

The competent authority for the approval and oversight of internal regulations is the Ministry of Labor and Workforce Development (MITRADEL), the institution that verifies that the content does not contravene current labor standards.

Who Is Required to Have Internal Work Regulations?

According to Article 191 of the Labor Code:

"In every company or establishment where ten or more workers are employed, the employer is required to adopt internal work regulations."

This means that:

• Companies with 10 or more workers: Legal obligation to have approved internal regulations
• Companies with fewer than 10 workers: Not required, although they may adopt them voluntarily

Failure to comply with this obligation may result in administrative fines of 50 to 250 balboas under Article 192 of the Labor Code, and may be considered an aggravating factor in labor disputes.

Mandatory Minimum Content

Article 185 of the Labor Code establishes that all internal regulations must contain, at a minimum, provisions on the following eight matters:

1. Work Schedules

The regulations must specify workers' start and end times, meal breaks, and rest periods during the workday. This information must be clear and precise to avoid confusion regarding the working hours.

2. Place and Time for Start and End of Shifts

The regulations must specify the location where workers must report at the beginning of their shift and where they conclude it, which is especially important in companies with multiple locations or mobile work.

3. Form of Compensation, Place, Day, and Time of Payment

The regulations must indicate the form of compensation, where and when salary payments will be made. This includes the frequency of payment (biweekly, monthly) and the method used (cash, bank transfer, check).

4. Disciplinary Provisions and How They Are Applied

The regulations must establish the offenses that workers may commit and the corresponding sanctions. Every disciplinary sanction must correspond to a previously defined offense and be proportional to its severity.

5. Designation of Members of the Works Committee

There must be a clear mechanism for workers to submit complaints, claims, or suggestions through the works committee, indicating who its members are and the procedure to follow.

6. Prohibited Tasks for Women and Minors Under 16

The regulations must specify the tasks that are prohibited for women and minors under 16 years of age, in accordance with the Labor Code provisions on the protection of these groups.

7. Medical Examinations and Preventive Health Measures

Provisions regarding mandatory medical examinations and preventive health measures that workers must observe to prevent illness must be included.

8. Hygiene, Order, and Safety Rules

Rules regarding order, hygiene, and safety appropriate to the nature of the company must be included, including the mandatory use of personal protective equipment where applicable.

Approval Process Before MITRADEL

Articles 181, 182, and 183 of the Labor Code establish the procedure for the approval of internal regulations:

• Step 1: The employer drafts the proposed internal regulations
• Step 2: If a labor union exists, the union must be consulted beforehand
• Step 3: The proposal is submitted to the Ministry of Labor and Workforce Development (MITRADEL)
• Step 4: MITRADEL reviews the content to ensure it does not contravene the Labor Code
• Step 5: MITRADEL approves the regulations or requests modifications
• Step 6: Workers are notified 15 days in advance of the regulations taking effect
• Step 7: Once approved and notified, the regulations take effect

Response deadline: MITRADEL must issue its decision within 120 calendar days following notification to the workers. If this period elapses without a response, the regulations are deemed approved through positive administrative silence.

Requirements for Filing Before MITRADEL

The filing is processed at the General Directorate of Labor (Plaza Edison, 5th floor, Internal Regulations Section) or at regional offices nationwide. The procedure is free of charge and requires the following documents:

• Notarized power of attorney of the legal representative
• Certification from the Public Registry
• Certification from the Ministry of Commerce and Industries (MICI)
• Operating notice
• Updated Social Security Fund payroll
• Draft internal regulations in original and two copies

Disclosure and Communication of the Regulations

Article 183 of the Labor Code establishes the following disclosure obligations:

• The regulations must be written in easily legible characters
• They must be permanently posted in a visible location within the establishment
• Workers must be given notice 15 days in advance of the regulations taking effect
• If a labor union exists, the union must be consulted beforehand

Failure to comply with these obligations may invalidate the enforcement of disciplinary sanctions, as the worker could claim lack of knowledge of the rules.

Permitted Disciplinary Sanctions

Article 185, paragraph 4, of the Labor Code governs the sanctions that may be established in the regulations:

Permitted sanctions:

• Verbal or written reprimand
• Temporary suspension without pay (maximum 3 days)
• Dismissal for just cause under Article 213 of the Labor Code

Prohibited sanctions:

• Monetary fines or salary deductions as punishment
• Suspension of the worker for a period exceeding three days
• Sanctions that affect the worker's dignity
• Double punishment for the same offense (Article 188)

Article 188 further establishes that the worker has the right to be heard before a disciplinary sanction is imposed.

Amendments to the Regulations

Under Article 184 of the Labor Code, any amendment to the internal regulations must follow the same approval process before MITRADEL. When the employer intends to amend the regulations, the request must be communicated to the labor union, and for certain provisions under Article 185, prior consent of the workers is required.

Summary of Applicable Labor Code Articles

Why Seek Specialized Legal Counsel?

Drafting internal work regulations requires an in-depth knowledge of Panamanian labor law to ensure that the content is lawful, comprehensive, and effective. Poorly drafted regulations may be rejected by MITRADEL or, worse, may be used against the employer in labor disputes.

At Jurado Attorneys & Consultants, we have extensive experience in Panamanian labor law. Our services include drafting internal work regulations, advising throughout the MITRADEL approval process, updating existing regulations, and providing defense in labor disputes related to internal policies. We can help you create regulations that protect both your company's interests and your workers' rights.

Conclusion

Internal work regulations are an essential tool for labor management in Panama. Companies with 10 or more workers are legally required to have regulations duly approved by MITRADEL under Article 191 of the Labor Code. This document must contain, at a minimum, the eight elements established in Article 185 and must be adequately communicated to all workers.

The MITRADEL approval period is 120 calendar days, after which positive administrative silence applies. Investing in well-drafted internal regulations prevents disputes, facilitates personnel management, and demonstrates the company's commitment to labor law compliance. If your company does not yet have internal regulations or needs to update them, we invite you to contact us for specialized advice.