Draft bill 390.

Summary.

The draft bill proposes developing and supplementing the Labor Code with respect to workers’ use of personal motor vehicles to perform their duties. It is based on the principles that employers bear the risks and costs of economic activity, wages may not be reduced directly or indirectly, and labor rights cannot be waived. It would apply to employment relationships governed by the Labor Code in the public and private sectors, whether vehicle use is regular, periodic, or occasional. When a vehicle is used for the employer’s benefit, it would be considered a work tool, and its costs could not be passed on to the worker.

The employer would have to pay adequate, actual, and proportionate compensation for all expenses arising from that use. Depending on the nature of the work, it would cover, at a minimum, fuel, proportionate preventive and corrective maintenance, depreciation attributable to work use, lubricants, tires, replacement parts, insurance required for the activity, tolls, parking, and other necessary expenses. The list would be illustrative. Payment could take the form of a fixed monthly amount, a mileage-based amount, reimbursement upon presentation of receipts, or a combination of methods, without causing the worker financial loss. Vehicle use and the form, frequency, and scope of compensation would have to be recorded in the contract, an addendum, or the internal regulations. Requiring use of a vehicle without compensation and making hiring, continued employment, or promotion conditional on owning one would be prohibited, unless ownership is an essential requirement for which appropriate compensation is paid.

If the employer sets a maximum vehicle age, that limit would be the maximum period used to calculate monthly depreciation. When the contract does not expressly provide for monthly compensation, a default minimum compensation arrangement would apply. It would include depreciation documented in a technical report by a certified public accountant in accordance with the standards of the Republic of Panama; the cost of 5 full tank refills per month, based on the tank and fuel specified by the manufacturer; the prorated cost of replacing 4 tires annually; routine maintenance calculated per kilometer according to the manufacturer’s instructions; and necessary or required insurance. That compensation would cover up to 2,000 kilometers per month. For additional use required or authorized, the parties would have to agree in an addendum on the kilometers and additional monthly compensation, with a per-kilometer rate no lower than the proportional rate under the base compensation.

Accidents occurring while carrying out work orders or duties would be considered occupational accidents. The Ministry of Labor and Workforce Development (Ministerio de Trabajo y Desarrollo Laboral, MITRADEL) would oversee compliance. Noncompliance would give rise to the penalties provided for in the Labor Code, including administrative fines, retroactive compensation, and applicable damages. The rights could not be waived, and agreements to the contrary would be void. The Executive Branch would issue regulations under the law within 90 days; the law would take effect upon publication in the Official Gazette. The proposal is relevant to those public authorities and to employers and workers who use personal vehicles for work.