New Law No. 513: Internship Program And Formal Youth Employment

Law 513 of March 20, 2026, which creates the Internship Program to encourage the formal work of young people in the private sector.

What is the internship program?

This program was established under Law 513 and is aimed at young people between the ages of 18 and 25, or minors who have completed high school.

Limitations on the hiring of personnel

Participation is voluntary, and domestic and international companies, as well as nonprofit organizations based in the Republic of Panama, are welcome to join.

To ensure operational balance, the law establishes internship quotas based on the size of the workforce as follows:

• Micro and Small (up to 50 people): Up to 2 interns.
• Medium (51 to 100 people): Up to 4 interns.
• Large (101 to 200 people): Up to 6 interns.
• Corporate (200+ people): Up to 3% of its workforce.

Note: If your company needs additional talent, you can apply for a special authorization from the Ministry of Labor and Labor Development.

Differences with a traditional employment relationship

The internship does not constitute an employment relationship and is subject to the following limitations, characteristics and requirements:

• Duration: Maximum of 1 year.
• Workweek: Maximum of 40 hours per week.
• No Employment Obligations: Since this is not a formal employment relationship, it does not give rise to any acquired rights (salary, vacation pay, 13th-month bonus, seniority bonus).
• The compensation received by the intern is not subject to tax or Social Security deductions.
• Protection: The company must purchase a private professional liability insurance policy for the intern.
•  

Tax benefits and remuneration

The intern will receive a monthly stipend of B/.450.00. For the company, this amount is 100% tax-deductible.

Formalities that companies must comply with

Everything is governed by a standardized Participation Agreement drafted by the Ministry of Labor and Labor Development.

At the end of the period, the company will issue a certificate that will be legally recognized as work experience for the intern.

Difference with other internship programs

Unlike other government programs, such as Mi Primer Empleo, the funding for Law 513 comes from the private sector.

It is a new internship program that is independent of other professional internship programs currently in place.

Law 513 serves as a talent-scouting tool to identify fresh talent and help strengthen corporate social responsibility, as participating companies will help combat unemployment and encourage formal employment.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.