Law 513: A strategic opportunity for internships in Panama

The National Assembly of Panama recently approved Law 513 on 20 March 2026, which was published in the Official Digital Gazette No. 30487 A. This regulation creates a formal programme designed to encourage formal employment for young people in the private industry and non-profit organisations. If your company is looking for smart ways to grow and nurture its workforce, this legislation represents an open door to the future.

By integrating interns under this legal framework, your organisation not only contributes to the professional development of new generations but also gains clear competitive advantages. The Panamanian government has structured this voluntary programme for companies to take on young students or recent graduates, offering them real practical experience. In return, your business gains a workforce in training and optimises labour costs.

At our firm, we understand that adapting to new regulations requires vision and strategy. Therefore, we analyse the implications of this law in depth so that you can make informed decisions. Below, we detail the programme's rules, the economic benefits it offers, and the transformative impact it can have on your Human Management department when attracting fresh talent.

What exactly does the new regulation establish?

Law 513 establishes a clear framework for private companies and non-profit entities in Panama to bring in young talent. The programme has an initial duration of three years, renewable for a further three years. Eligible young people must be between 18 and 25 years old. Minors who already have a bachelor's degree also qualify.
The maximum duration of the internship is one year for each participant. During this time, interns can work up to 40 hours per week, depending on the agreement signed between the parties. This flexibility allows your company to adapt the trainee's schedule to the operational needs of the business, while ensuring the young person has adequate space to learn and add value.

Hiring limits based on your company's size

To ensure orderly growth and prevent abuse, the law establishes specific ratios for how many interns your company can host simultaneously. These limits are directly related to the current size of your payroll.
If your company has up to 50 employees, you can host a maximum of two interns. Companies with a payroll of between 51 and 100 employees are permitted to integrate up to four interns. If your organisation employs between 101 and 200 people, the limit increases to six interns. For the largest corporations, with more than 200 employees, the law allows interns to represent up to three per cent of the total payroll.

If your operation requires a larger number of interns, it’s possible to request special authorisation from the Ministry of Labour. This institution has 30 working days to respond. If they do not issue a response within that period, the request is considered automatically approved, which streamlines your organisation's internal processes.

The tax benefit that optimises your resources

One of the strongest attractions of Law 513 is its direct impact on your company's tax burden. The legislation states that the company must pay a monthly subsidy of B/.450 to the trainee. What is truly strategic is that this monthly payment can be fully deducted as an operating expense for income tax purposes.

Furthermore, this stipend is not classified as a salary. This means that the money given to the young person does not incur social security charges or require deductions for the Social Security Fund. By correctly structuring this subsidy within your annual tax return, your company can reinvest those savings in other areas of growth. A qualified accounting advisor can help you incorporate this benefit transparently and legally into your financial books.

Clear rules to protect workplace integrity

Every new piece of legislation brings with it strict rules to ensure its correct implementation. The law is categorical in stating that interns cannot be used to replace your company's formal employees. The programme's objective is for training and addition, never for substitution.

If the authorities detect that your company is reducing staff with the purpose of filling those vacancies with interns, you are exposed to fines ranging from B/.250 to B/.500 for each violation. We can help you structure your hiring plans to ensure full compliance and avoid any legal issues.

Additionally, because the trainee is not covered by traditional Social Security, your company is obliged to take out a specific occupational risk insurance policy for each young person. This measure protects both the trainee against possible accidents and your company against unforeseen liabilities.

Transition to formal employment

If the trainee demonstrates exceptional skills and your company decides to retain them, the transition is simple but requires formal rigour. At the end of the internship period, the young person's incorporation as a regular employee must be done through a formal individual employment contract, following all the guidelines of the Labour Code of Panama. The base salary for this new contract can never be lower than the current legal minimum wage.

Likewise, at the end of the programme, your company must issue a formal internship certificate. This document is of great value to the young person, as it officially accredits their work experience and strengthens their professional profile.

The positive impact from a Human Management perspective

Beyond the tax incentives and legal guidelines, Law 513 represents a brilliant opportunity for human resources departments. The way companies attract, retain, and develop talent has changed profoundly. Adopting this internship programme gives your company valuable tools to strengthen its human capital sustainably.

Early talent attraction and tailored training

Hiring staff always involves a risk. By taking on interns, your Human Management department gets the opportunity to evaluate a young person's performance, work ethic, and cultural fit over a full year. It is essentially an extended trial period where both parties get to know each other.

During this time, your company can train the trainee in its specific methodologies, software tools, and organisational culture. When the internship ends, if you decide to hire the young person, you integrate a professional into your payroll who already knows the business inside out. This eliminates the traditional learning curve and accelerates productivity from the first day of formal employment.

Dynamism and generational diversity

Young people aged 18 to 25 bring with them fresh perspectives, a natural affinity for technology, and new ways of solving problems. By integrating this generation into your work teams, you foster a generational diversity that enriches decision-making.

More experienced employees can take on mentoring roles, which often renews their own commitment and job satisfaction. In turn, interns can share knowledge about new digital trends and agile tools. This two-way transfer of knowledge strengthens the organisation's internal fabric and promotes a culture of continuous learning.

Create an internal talent pipeline

By maintaining a steady flow of qualified interns, your company creates an internal talent pipeline. When a formal vacancy arises, the first place you can look is your own group of interns. This dramatically reduces hiring times and the costs associated with external recruitment agencies. In the long run, this strategy builds a loyal workforce aligned with corporate values.

Steps to prepare your company

To make the most of this opportunity, your company needs a clear plan of action. We recommend starting by evaluating the capacity of your current teams to host and train an trainee. A successful internship programme requires supervision and mentorship.

Next, clearly define the tasks, projects, and learning objectives for the trainee. A motivated young person is one who feels their work has a real purpose. Work hand in hand with your legal and accounting advisors to prepare internship contracts, manage the occupational risk policy, and ensure the finance department is ready to record the deductible subsidy correctly.