Law No. 513 of March 20, 2026 establishes the Internship Program to Promote the Formal Employment of Young People in the Private Sector, creating a legal framework that allows private companies and non-profit organizations to incorporate students and young professionals through structured practical training programs.
The legislation aims to facilitate young people’s transition into the formal labor market while providing organizations with a practical tool to identify, train, and develop future talent under clear legal rules and specific incentives.
For employers, this law represents an opportunity to strengthen their human resources strategy, provided internship programs are implemented in accordance with the legal requirements and the regulations issued by the Ministry of Labor and Workforce Development (MITRADEL).
What Does Law No. 513 of 2026 Establish?
The law creates a voluntary internship program for students and recent graduates from secondary, university, vocational, and technical education institutions, with the objective of providing practical work experience that facilitates their entry into formal employment.
The program is available to:
- Private companies, whether domestic or foreign, established or operating in Panama.
- Legally incorporated non-profit organizations.
Quick Answer: Law No. 513 of 2026 allows private companies and non-profit organizations to implement internship programs for educational and training purposes without creating an employment relationship, provided all legal requirements are met.
Key Benefits for Employers
Law No. 513 introduces several incentives designed to encourage private sector participation in the professional development of young talent.
Internships Do Not Create an Employment Relationship
As long as the internship maintains its educational and training purpose, it does not create an employment relationship between the organization and the intern. Consequently, it does not generate employment benefits or other rights applicable to regular employees.
Monthly Stipend Without Employment Charges
Companies may grant interns a monthly stipend of up to B/.450.00, which:
- Is not considered salary.
- Is not subject to tax withholding.
- Does not generate Social Security contributions.
- May be treated as a deductible business expense for Corporate Income Tax purposes.
Talent Development
The program also allows organizations to:
- Identify future employees.
- Assess candidates before hiring.
- Strengthen recruitment processes.
- Contribute to the professional development of young talent.
How Many Interns Can a Company Have?
The law establishes a maximum number of interns based on the size of the company’s workforce.
| Number of Employees | Maximum Number of Interns |
| Up to 50 employees | 2 |
| 51–100 employees | 4 |
| 101–200 employees | 6 |
| More than 200 employees | Up to 3% of the workforce |
If a company wishes to exceed these limits, it may request authorization from MITRADEL. The Ministry must issue its decision within thirty (30) days. If no decision is issued within that period, the authorization is deemed granted.
Main Conditions of the Internship Program
| Requirement | Provision |
| Maximum duration | 1 year |
| Working hours | Up to 40 hours per week |
| Maximum stipend | B/.450.00 per month |
| Employment relationship | None, provided the educational nature is maintained |
| Social Security | No Social Security contributions |
| Tax benefit | Deductible for the employer |
| Documentation | Internship agreement issued through MITRADEL |
Employer Obligations
To properly implement an internship program, employers must comply with several legal requirements.
Among the most important are:
- Execute the internship agreement prepared by MITRADEL.
- Respect the maximum weekly working hours.
- Preserve the educational and training purpose of the internship.
- Obtain an insurance policy covering occupational risks, as interns are not protected under Panama’s Social Security occupational risk system.
- Refrain from replacing permanent employees with interns.
What Happens After the Internship Ends?
If the company decides to hire the intern after completion of the program, it must formalize the employment relationship through an employment contract in accordance with the Panamanian Labor Code and pay at least the applicable minimum wage.
The employer must also issue a certificate confirming the internship period completed, which will be recognized as professional work experience for all applicable legal purposes.
Oversight and Sanctions
MITRADEL is responsible for implementing, supervising, and monitoring the Internship Program, as well as maintaining the official registry of participating companies and interns. Employers must periodically submit the required information regarding program participants.
The law also establishes sanctions for employers that:
- Replace regular employees with interns; or
- Exceed the permitted number of interns without prior authorization.
Violations may result in fines ranging from B/.250.00 to B/.500.00, following the procedures established under Panamanian labor legislation.
How Can LAC Legal Help?
Proper implementation of an internship program requires compliance with both labor legislation and applicable administrative procedures.
At LAC Legal, we advise national and international companies on:
- Structuring legally compliant internship programs.
- Drafting and reviewing required documentation.
- Assessing labor and regulatory risks.
- Assisting with MITRADEL procedures.
- Training Human Resources departments.
- Conducting labor compliance audits.
Our objective is to help organizations benefit from Law No. 513 of 2026 while ensuring full legal compliance and minimizing employment-related risks.
Frequently Asked Questions
No. As long as the internship maintains its educational and training purpose, Law No. 513 provides that no employment relationship exists between the company and the intern.
Up to B/.450.00 per month.
No. However, employers must obtain occupational risk insurance coverage for interns.
The maximum duration is one year.
Yes. If the employer decides to hire the intern, it must execute an employment contract in accordance with the Panamanian Labor Code.
Employers may be fined if they replace employees with interns or exceed the legal limits on the number of interns without obtaining the required authorization.