Immigration sanctions as a political response

By Nelson Sales, Alfaro, Ferrer & Ramírez (AFRA)

For quite some months, the Government has been pressured regarding the many foreigners working and living in Panama. Such pressure has come from society in general, as well as some associations, unions, among others. 

The current Government recently made some “changes” (I would call it improvisations), as a response to said pressure. For instance, Venezuelan nationals now need a consular issued tourist visa prior to entering Panama. Similarly, without changing the law, the Ministry of Labor itself have made changes on existing criteria to make them more restrictive; thus a result in an increasing number of applications being denied or rejected, some times for no sustained reason.

The top of the cherry comes from the Project of Law No. 475 of 2017. Said project was approved by the National Assembly of Panama (our Senate), and is pending sanction by the President in order to become Law. The project seeks to increase the fines and sanctions for employing foreigners without a work permit. The sanctions are as follows:

1. For first time: US$500.00 for each foreigner without a work permit;
2. For second time: US$1,000 for each foreigner without a work permit;
3. Third time: US$10,000 fine and temporary cancellation of the operation license of the hiring company;
4. Fourth time: definitive cancellation of operation license of the hiring company.

The project also includes as a sanction, making public the name of the company hiring foreigners without a work permit.

One would say the project has no issues as is. Nonetheless, the project does not take into account the labor/immigration system and process, making all companies hiring foreigners to be – at some point – non-compliant and subject to the fines. In order to apply to a work visa and work permit in Panama, main requirements involve: (i) formalize employment through an employment contract; and (ii) affiliate the foreigner to the Social Security Regime. Moreover, through recent changes by the Minister of Labor itself, companies must show that the foreigner have been reported as employees through local Social Security Payroll prior to being able to file the work permit application. All of this means that before being able to have a work permit, the foreigner needs to be effectively employed in Panama. Being effectively employed prior to being able to apply to the work permit makes you automatically non-compliant with the Project of Law No. 475 described above.

It is unfortunate to see improvisations to calm social pressure without preparing an Immigration policy as a whole, affecting the certainty and stability international companies seek when investing in our country. Specially understanding that Panama’s
economic motor is a result of direct and indirect foreign investment.