Through Executive Decree No. 81 of March 20, 2020, the Ministry of Labor has regulated article 199, # 8, of the Labor Code of the Republic of Panama, which establishes the temporary suspension of employment contracts. The suspension means that the employee is not obliged to work and the employer is not obliged to pay wages, for reasons of force majeure or fortuitous event.

The foregoing as a consequence of Executive Decree No. 500 of March 19, 2020, by which the Ministry of Health has ordered the closure, starting at 11:59 p.m. from March 20, 2020, for a term of 30 calendar days, of all commercial establishments and companies throughout the national territory, with the exception of the following:

• The production, distribution, marketing and sale of food, medicines, hygiene products, safety equipment, construction materials, veterinary and agricultural supplies, maintenance, operation and distribution of medical equipment, manufacturers of packaging and supplies, printing and laundries;
• All those related to land, sea, air, logistics and the Panama Canal transportation;
• Private security;
• Lawyers for the defense of detained persons;
• Restaurants, only for home delivery of food and take away orders;
• Fuel distribution, supply and transport companies;
• Banks, finance companies, cooperatives, insurers and other related financial services;
• Companies that provide public services (water, gas, electricity, communications, etc.);
• Construction Industry;
• Farming industry;
• Companies that sell medical-hospital equipment and public health supplies.

In this sense, for all those companies that are not within the aforementioned exceptions and whose nature of the business implied that they had to remain open, requiring the commute of all or some of their employees, the closure has been ordered for 30 days and therefore their employees must not commute.

The suspension of the contracts will take effect from 11:59 p.m. from March 20, 2020, the effective date of Executive Decree 500, however the employer must send electronically, email solicitudes@mitradel.gob.pa, the request for authorization in conjunction with the following documents in PDF format:

1. Note or writ justifying the suspension of employment contracts signed by the legal representative or attorney-in-fact, requesting the suspension for up to one month, extendable;
2. Simple copy of the operation permit;
3. Simple copy of the last Social Security payroll, prior to the closing of the company;
4. Genuine proof of the economic damage;
5. List of employees whose suspension of contracts is requested, specifying name, identity number, social security number, residential address, occupation, sex, age, telephone number and email.

As determined by Executive Decree No. 81:

1. Employees whose contracts are suspended will be included in the list of beneficiaries of the programs established by the Executive Branch;
2. The resolution authorizing the suspension will be notified electronically;
3. If within 3 business days from the request for suspension, with all the required documents, the Ministry of Labor has not rendered a decision, the suspension will be deemed approved for all legal purposes;
4. If a company suspends wages without having completed the formalities or without authorization, the employer will be responsible for covering all wages;
5. At the end of the declaration of the State of Emergency, the employees will return to their jobs in the same conditions that they maintained at the time of the suspension.