Costa Rica
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Why work in
Costa Rica
?
Grow your team in
Costa Rica
Expanding your team means strategically hiring the right people for the right positions.The complex employment regulations in the country highlight the difficulty of following labor laws.
Gloroots provides a comprehensive global Employer of Record (EoR) service, allowing you to delegate payroll, taxes, benefits, and compliance complexities to Gloroots. This frees you to concentrate on what truly counts: supporting your employees and driving your company's expansion.
Risks of misclassification
"Employee misclassification" refers to improper classification of a worker by employers. This occurs when an employer improperly classifies a worker as an independent contractor or exempts them from certain employment rules and perks, even if the worker is rightfully eligible for benefits, proper work hours, and other employee rights,
Engaging a PEO/EOR in Costa Rica removes risks tied to employee misclassification and ensures labor law compliance, accurate worker classification, precise payroll handling, and access to full benefits. This empowers companies to focus on core functions while entrusting skilled experts with employment-related responsibilities.
Employing in
Costa Rica
It's crucial for businesses to know about minimum wages, work hours, employee benefits, leaves, and contracts. Proper payroll management and correct termination procedures are equally important.
Staying informed about these rules creates a positive workplace, protects employee rights, and reduces legal risks. Getting advice from experts in Costa Rican labor laws, whether in legal or HR fields, is highly suggested for proper compliance and effective employment practices.
Legal aspects of employing in
Costa Rica
Working hours
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Payroll
Costa Rica's Labor Code ("Código de Trabajo") is the primary piece of legislation governing labor relations. Established in 1943, it has been amended various times to adapt to modern conditions.
Employment Contract
In Costa Rica, labor contract must be in writing as per the Labor Code's articles 23 and 24. Verbal employment contracts are valid only for employees in the agricultural or livestock sector. Temporary workers (employed for 90 days) excluding those working in industries, can be employed with an employment contract.
The employment contract must include:
1. Full names, nationality, age, gender, marital status, and address of both parties
2. Identification document numbers
3. Clear worker residence details
4. Contract duration or "indefinite period" declaration
5. Working hours
6. Payment details: salary, wage, or commission, along with payment form, timing, and location
7. Description of provided materials, tools, and equipment, if any, along with their availability
8. Work location(s)
9. Any additional agreements
10. Contract signing date and place
Fixed-term employment contracts are allowed according to articles 26 and 27 of the Labor Code. These contracts can't exceed one year initially, including extensions. However, for tasks requiring specific technical training, they can extend up to five years.
If a fixed-term contract ends and the work's cause and nature persist but isn't renewed, it's considered indefinite for the worker's benefit, requiring compensation payment.
Work hours
An employee's weekly working hours are capped at 48 hours. For night workers (from 7 p.m. to 5 a.m.), the maximum weekly hours are limited to 36.
Overtime
Public Holidays
The country observes 13 public holidays employees can take as paid days off.
Minimum Wage
The minimum wage for 2023 ranges from CRC 11,738.83 per day for unskilled workers to CRC 15,333.31 per day for specialized employees.
Annual Leave
In Costa Rica, the amount of paid time off you get depends on how long you've worked there. Usually, if you've worked for 50 weeks without a break, you get 14 days of paid leave. If you've worked for less time, you get one day of leave for each month you've worked.
There is provision in the law to carry forward unused leave days to the next year. However, employers are free to offer this provision and must specify this in the contract.
Maternity Leave and Paternity Leave
Expecting employees are eligible for a four-month paid maternity leave. Employees can commence leave a month prior to the due date and continue for three months after childbirth. The payments made during an employee’s maternity leave are split equally between the employer and the Costa Rican Social Security Fund (CCSS) for the entire four-month period.
While fathers employed in the private sector do not receive paid time off upon becoming fathers, those in the public sector are entitled to eight days of paid paternity leave upon the birth of their child.
Sick Pay
In Costa Rica, employees are granted complete paid sick leave for the initial three days of illness. During this period, the employer covers 50.00% of the employee’s regular salary, while the remaining 50.00% is covered by social security. Starting from the fourth day of illness, the social security provides 60.00% of the usual daily wage, and the employer is relieved of the obligation to provide any payment to the employee.
To avail of these benefits, the employee is required to submit a medical certificate to the social security administration within 48 hours of the commencement of the sick leave.
Tax
Income tax
Other Taxes and Social Security contribution
Employer Payroll Contributions
Employee Payroll Contributions
Separation
Termination Process
The process of ending employment differs depending on the employment agreement or collective arrangement in effect, and it is influenced by the contract type and the reason for termination.
For individual employment contracts, termination can occur through:
1. Legal provisions
2. Agreement between both parties
3. Either party acts in accordance with the terms and conditions specified by law.
Employers have the authority to terminate employment contracts due to reasons linked to the employee (such as insufficient job performance or disciplinary actions) or reasons unrelated to the employee (like job elimination).
In cases where the employer requests a termination letter, they are obliged to provide one, regardless of the reason for the termination.
Notice Period
Severance Pay
In Costa Rica, the amount of severance pay an employee receives is determined by their length of service, as indicated below:
3 to 6 months: 7 days
6 months to 1 year: 14 days
1 year: 19.5 days
2 years: 20 days
3 years: 20.5 days
4 years: 21 days
5 years: 21.24 days
6 years: 21.5 days
7 – 9 years: 22 days
10 years: 21.5 days
11 years: 21 days
12 years: 20.5 days
13 years and beyond 20 days
Probation Periods
The length of the probationary period in Costa Rica relies on the specific job role and is specified in the employment contract. Generally, however, probation periods typically span three months.
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