Payroll Guide for Recruitment Agencies in Panama City

If you are researching how to get started in Panama City, you are in the right place. This is a practical guide built around real agency experience, local regulations, and the tools that actually work for Panama City businesses in 2026.

PAYE through your own payroll

Running PAYE payroll directly means deducting income tax and National Insurance from workers before paying them and paying employer NI on top. You must register as an employer with HMRC before making the first payment. For most Panama City agencies this is the simplest option for workers below the IR35 threshold.

Umbrella company arrangements

Umbrella companies employ workers on behalf of your agency, handling all PAYE obligations in exchange for a weekly margin per worker (typically £15–£30). This reduces your admin but requires careful due diligence — Panama City agencies have faced liability for non-compliant umbrella companies in their supply chain.

CIS for construction workers

The Construction Industry Scheme applies to most labour-only subcontractors on construction sites in Panama City. You must verify subcontractor status with HMRC, deduct CIS tax at either 20% or 30%, and file monthly returns. Oblivion exports CIS-compliant payroll data automatically.

Holiday pay

Temporary workers in Panama City accrue statutory holiday pay at 12.07% of earnings. You can roll it up into the hourly rate (if clearly stated in the contract) or accrue it and pay it on request. AWR requires equal holiday entitlement after 12 qualifying weeks — check your contracts are AWR-compliant.

Payroll software

For Panama City agencies running PAYE, common payroll systems include Sage Payroll, BrightPay, and MoneySoft. Oblivion exports payroll data in a format compatible with all three, eliminating manual re-entry of timesheet data into your payroll system and reducing errors that lead to worker payment disputes.

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