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Article 12 of the Convention. Regular payment of wages. Referring to its previous comment concerning the payment of the 13th month’s wage to public sector employees, in the light of the observations made by the National Federation of Public Employees and Public Service Enterprise Workers (FENASEP), the Committee notes with interest the adoption of Act No. 19 of 2 March 2009 which establishes the right to payment of the 13th month’s wages not paid between 1989 and 1991. It recalls that, according to FENASEP, the payment of the 13th month’s wage was suspended between October 1989 and August 1991, representing an amount of around US$88 million owed to hundreds of thousands of public sector employees. The Committee notes that, under section 2 of Act No. 19 of 2 March 2009, the Government will proceed with payment of the amounts due as soon as public revenue permits. The Committee requests the Government to provide detailed information on any steps taken under the abovementioned Act.

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Article 1 of the Convention. Definition of the term “wages”. With reference to its previous comment, the Committee notes that the Government has not supplied any new information on the definition of the term “wages” contained in section 142 of the Labour Code as amended by Act No. 44 of 12 August 1995. In this regard, the Committee emphasizes, as it did in paragraph 64 of its 2003 General Survey on the protection of wages, that Article 1 of the Convention is intended to ensure that the real earnings of workers, however termed or reckoned, are fully protected under national laws in respect of the matters dealt with in Articles 3 to 15 of the Convention. However, even though the Government indicates that premiums and bonuses are not excluded from wages since they continue to be paid in exchange for work, the fact remains that section 142(6) of the Labour Code states that the payment of the 13th month’s wage, bonuses, production premiums, donations and shares of profits – whether permanent or occasional – are not considered as wages. The Committee requests the Government to indicate the measures taken to ensure that these allowances, which are not considered to be wages within the meaning of the national legislation, receive the full protection provided for by the legislation on wages.

Article 4(2). Partial payment of wages in kind. The Committee notes the Government’s statement that it is very difficult to launch a reform of the Labour Code since this necessitates dialogue and consensus between employers and workers. It recalls, as it emphasized in paragraph 159 of the abovementioned General Survey, that setting an overall limit on the proportion of the money wages which may be replaced by benefits in kind does not in itself resolve the problem of the fair evaluation of such benefits. Regulating the maximum proportion of money wages which may be replaced by consumer goods (in the case of Panama, 20 per cent according to section 144 of the Labour Code) guarantees at most the partial nature of the wage payment in kind, but such limit alone cannot ensure that the allowances in kind are not overvalued, to the detriment of real earnings of workers. The Committee requests the Government to keep the Office informed of any developments in this area, in order to ensure that the value attached to goods and services received by the worker or his/her family in the form of food, lodging or clothing is fair and reasonable.

Part V of the report form. Practical application. The Committee notes the statistical information provided by the Government for the 2002–05 period. The Committee requests the Government to continue providing general information on the manner in which the Convention is applied in practice, including, for example, information on the number of workers covered by the legislation, extracts of the reports of the inspection services indicating the number and nature of infringements reported and penalties imposed, etc.

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Article 12 of the Convention. Regular payment of wages. The Committee notes the observations of the National Federation of Associations and Organizations of Public Servants (FENASEP), which were received on 29 October 2007 and sent to the Government on 19 November 2007. These observations have received no reply from the Government to date. The comments by FENASEP relate to the payment of the 13th month’s wage which was instituted in 1974 in the form of a bonus (US$400) calculated on the basis of the monthly wage and paid in three instalments (April, August and December each year). The payment of the 13th month’s wage was suspended between October 1989 and August 1991. The Federation estimates that US$88 million are due to hundreds of thousands of employees in the public sector. FENASEP argues that the suppression of the payment of the 13th month’s wage to public servants is contrary to the provisions of Act No. 52 of 16 May 1974 and to the principles of Convention No. 95. The Committee requests the Government to send its comments in reply to the observations made by FENASEP.

The Committee is raising a number of other points in a request addressed directly to the Government.

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The Committee notes the information provided in the Government’s report.

Article 1 of the Convention. In its previous comments, the Committee noted that article 142 of the Labour Code, as recently amended by Act No. 44 of 12 August 1995, is inconsistent with the definition of the term "wage" set out in the Convention to the extent that according to its terms various allowances such as productivity premiums, bonuses, ex gratia payments, the 13th-month wage supplement, donations and profit sharing are not considered as wage. In reply, the Government states that its purpose in amending article 142 by Act No. 1 of 1986 was to enhance flexibility and to lower costs without, however, affecting the productivity premiums, bonuses, and other allowances which continue to be received by workers. The Committee hopes that the Government will take whatever steps may be necessary, through the amendment of the relevant provisions of the Labour Code or otherwise, to ensure that wage protection covers all earnings or remuneration, however designated or calculated, in accordance with the terms of the Convention.

In addition, the Committee notes the Government’s statement that the 13th month wage supplement even though a well-established usage constitutes a voluntary act, and that by reason of its gratuitous nature employers may not be constrained to such payment especially when experiencing financial difficulties. The Committee notes, however, that under article 1 of Decree No. 221 of 18 November 1971 establishing the 13th-month as special remuneration for workers, every employer is under an obligation to provide such supplement and therefore it could not be deemed to be a merely discretionary payment or gratuity. The Committee wishes the Government to clarify this point.

Article 4(2). Further to its earlier comments, the Committee notes that there is still no provision in the Labour Code, as last amended by Act No. 44 of 12 August 1995, ensuring that the value attributed to allowances in kind is fair and reasonable as required in the Convention. The Committee understands that in the Government’s view the fact that allowances in kind may in no case exceed 20 per cent of the worker’s total remuneration, as set forth under article 144 of the Labour Code, provides a sufficient guarantee of the application of this provision of the Convention. The Committee wishes to point out, however, that setting an overall limit to the proportion of the wages which may be paid in kind does not in itself resolve the problem of the fair valuation of such allowances and offers little protection to workers from possible exploitative practices. Consequently, the Committee invites the Government to consider the possibility of adopting specific measures to ensure that the value attributed to the goods or services received by the worker or his/her family in the way of food, housing and clothing is fair and reasonable.

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The Committee has noted the Labour Code (Cabinet Decree No. 252 of 1971) as amended most recently by Act No. 44 of 12 August 1995.

The Committee notes that, under section 142, paragraph 5 of the Code, the payment made by the employer to the workers as various allowances, for instance, increases of the thirteenth month, production premiums, are not considered as wage. It notes however that the definition of the term "wage" given in section 140 includes not only what is paid in cash or in kind, but also ex gratia payments, bonuses, wage supplement emoluments, commissions, profit sharing and in general any income or benefits received by the worker on account of work or as a consequence of it.

The Committee recalls that Article 1 of the Convention defines "wages" as "remuneration or earnings, however designated or calculated, capable of being expressed in terms of money ... which are payable ... by an employer to an employed person ...". It requests the Government to reconcile the above two provisions of the Code and to indicate, if those allowances are excluded from the definitions of wage by virtue of section 142, the measures taken or envisaged to ensure the protection of their payment.