Vacation in Panama: how it's calculated and what's deducted

In Panama, every worker accrues 30 days of paid vacation for every 11 continuous months worked (Art. 54 of the Labor Code). Here's how it's calculated and what is deducted.

How many days accrue?

Accrual is 1 day for every 11 days worked, which adds up to 30 days after 11 continuous months. At a full year, vacation equals one month's salary.

How is the value calculated?

You multiply the accrued days by the daily value, which is the monthly salary divided by 30. With variable salary, the last 11 months' average is used for the daily value.

Example: with a $1,000 salary, the daily value is $33.33. A full year of vacation (30 days) equals $1,000 gross.

Do they pay CSS and income tax?

Yes. Unlike the décimo, vacation is ordinary salary, so it has CSS (9.75% employee), education tax (1.25%) and income tax deducted per the annual table. That's why the net is lower than the gross.

Calculate your vacation

Use the vacation calculator to see accrued days and their value instantly.

Source: Art. 54 of the Panama Labor Code. Reference only; confirm with your accountant or advisor.