Hire in Costa Rica

EOR in Costa Rica

If a lack of speed or local expertise are among your top concerns when expanding to or employing workers in Costa Rica, an employer of record may be the best option for achieving your global growth objectives.

An employer of record, sometimes known as an international PEO, enables you to quickly hire and onboard workers in Costa Rica ―often in as little as two weeks―without having to take on the cost and risk of establishing a local entity.

Learn about the hiring, employment, payroll and benefits requirements for workers in Costa Rica and how our employer of record service, EOR, and local HR experts can help you manage your international employment needs.

Hiring in Costa Rica

The constitution and the Labor Code regulate employment in Costa Rica. In 2016, new amendments overhauling nearly half of the country’s labor and employment statutes were signed into law. The reforms represent the first time the Labor Code has received substantial amendments since it was enacted in 1943.

Employment contracts in Costa Rica

As you look to hire employees in Costa Rica, here are some standard regulations you’ll need to know to create a compliant contract, as well as how an employer of record and PEO can provide support for your unique HR needs.

Working hours

The constitution and the Labor Code establish a 48-hour workweek for daytime work, not to exceed eight hours per day, six days per week. The Labor Code stipulates that for jobs in which the daytime work is not dangerous, a standard workday may be as long as 10 hours, but the workweek still may not exceed 48 hours.

Night work—defined as work between 7 p.m. and 5 a.m.—may not exceed 36 hours per week or six hours per day. Mixed shifts that include both daytime and nighttime hours are treated as night work if more than three hours are worked after 7 p.m. Otherwise, mixed shifts are limited to seven hours per day (eight hours per day for work that is not dangerous) and 42 hours per week.

All employees are entitled to one day of rest after six consecutive days of work. Sunday is the usual rest day.

Generally, an employee may not work more than 12 hours per day, including overtime. Employees engaged in dangerous or unhealthy work may not work overtime.

Compensation

As you consider the appropriate salary to offer new employees, keep in mind:

• The minimum wage varies by occupation based on the cost of living and is revised by the Ministry of Labor and Social Security, which publishes the new rates on its website.
• Changes in the minimum wage automatically adjust employment contracts that called for wages below the new minimum wage.
• Overtime is paid at time-and-one-half the regular rate.
• Employees who work on paid holidays or on days of rest are entitled to double pay.
• Blue-collar workers must be paid at least once every two weeks, white-collar workers at least once a month.

As your employer of record in Costa Rica, we can provide you with resources and insights about employee compensation, so you are better equipped to make a competitive employment offer.

Bonuses

All employees who have worked for the employer for more than a month are entitled to a Christmas bonus, known as aguinaldo, equal to one month’s salary and paid within the first 20 days of December.

Termination and severance

No notice is required when either party terminates the employment contract for just cause. Written notice is required when either party terminates the employment contract without cause unless the employee has been working for the employer for less than three months, in which case no notice is required.

At least one week’s notice must be given if the employee has worked at least three months but not more than six months. If the employee has worked for at least six months but not more than one year, the notice period is at least 15 days. If the employee has worked for the employer more than one year, at least one month’s notice must be provided.

All employees who leave employment for any reason, including those terminated for cause, are entitled to the Christmas bonus (aguinaldo) proportionate to the part of the year they worked before leaving, as well as pay for accrued but unused vacation time.

If an employee is terminated without cause or quits with cause, the employee is entitled to severance pay based on his or her length of service. An employee who has worked at least three months but not more than six months is entitled to seven days’ pay. An employee who has worked at least six months but not more than one year is entitled to 14 days’ pay. An employee who has worked for the employer for more than one year is entitled to severance pay ranging from 19.5 to 22 days’ pay per year worked (or fraction of a year exceeding six months), depending on the number of years worked.

In lieu of providing the requisite notice, either party may make payment to the other equal to the wage that would have been earned during the notice period.

During the notice period, the employee is entitled to one day off per week to look for new employment.

When employment is terminated, an employee is entitled to be paid pro rata for any annual leave earned but not taken.

Employee benefits and paid leave in Costa Rica

When negotiating terms of an employment contract with a candidate in Costa Rica, here are some of the statutory benefits and paid leave requirements to keep in mind, as well as how an employer of record can support your company’s benefits strategy.

Maternity leave

Maternity leave covers one month before the expected due date and three months after childbirth. The employee receives full pay, half covered by the employer and half by the Social Security Fund. To obtain paid maternity leave, the employee must provide the employer with a doctor’s certificate five weeks prior to the due date.

Vacation

Employees are entitled to at least two weeks of paid annual leave after every 50 weeks of work for the same employer (accrued at the rate of one day per month). The employer can schedule the employee’s vacation at its convenience within 15 weeks of its having been earned. Generally, the employee must be permitted to take the entire vacation at one time. If the employee performs work of a special nature that does not permit a long absence, however, and the employee and the employer agree, annual leave may be split into no more than two segments.

Unused vacation cannot generally be carried over to the following year unless the employee’s work responsibilities prevent the taking of vacation in the year earned. Wages paid to employees during their vacation must be based on the average weekly wage earned during the previous fifty weeks of employment.

Holidays

Costa Rica observes the following paid public holidays:

• New Year’s Day
• Juan Santamaria Day
• Maundy Thursday
• Good Friday
• Labor Day
• Anexion del Partido de Nicoya
• Mother’s Day and Assumption
• Day of the Black Person and Afro-Costa Rican Culture
• Independence Day
• Christmas

In addition, August 2 (Day of Our Lady of the Angels) and October 12 (Cultural Day) are holidays for which pay is not mandatory.

Note: On July 18, 2020, the government passed Law No. 9875, which transferred official public holidays to Mondays for the years 2020 through 2024. The law aims to boost domestic tourism in the wake of the Covid-19 pandemic.

Employees who practice a religion other than Catholicism may request unpaid days off for their religious holidays, and the employer must agree to any such request up to four days a year. When such a holiday is taken, the employer and the employee will agree on a replacement workday, or the day can be taken as annual leave.

Sick leave

Employees who have contributed to social security in the month before becoming ill are entitled to paid sick leave. Employers must pay at least 50% of the employee’s salary for the first three days of sick leave. The Social Security Fund pays for the other half. From the fourth day of sick leave onward, the employee receives 60% of his or her average earnings from Social Security and no pay from the employer.

Health coverage

Employment-related social security benefits funded by contributions from the employer, the employee, and/or the government include disability pensions, old-age pensions, and survivors’ pensions. The rate of tax on employees for social security benefits is 9.3%. For employers, the rate is 26.3%.

Old-age pensions are supplemented by mandatory individual retirement accounts. Social security also funds sick leave, maternity leave, funeral benefits, and health insurance.

Employees with at least 300 months of contributions are entitled to receive a full old-age pension from social security at 65. Employees do not need to retire to receive the old-age pension. A reduced old-age pension is available at 65 for employees with at least 180 months of contributions.

Employees who have made more than 300 months of contributions may be able to retire early and still receive a full pension, depending on their age and the number of contributions they have made. Women who have made 450 monthly contributions can get a full pension as early as 62, with the early retirement age gradually rising with fewer contributions. Men who have made 462 monthly contributions can also get a full pension as early as 62.

Additional benefits

In addition to healthcare benefits, employees in Costa Rica are entitled to pension, which is funded by government tax revenues, as well as workers compensation, which is covered through mandated employer insurance.

Employer social costs will cover a large portion of employee benefits in Costa Rica, but we can consult with you about supplemental coverage options, such as additional pension contributions or life insurance if needed.

Updated: July 08, 2024

Employee onboarding with an employer of record in Costa Rica

We write and validate all local employment contracts, streamlining the onboarding process for you and your Costa Rican employees—all you have to do is provide relevant information and review and approve the employment agreement. As your employer of record in Costa Rica, we will:

• Schedule a welcome call to discuss HR and employment information for Costa Rica, as well as answer any questions
• Prepare a customized employment contract in English or other local language
• Share the employment contract and benefits information with the new employee for signature and review
• Gather tax and banking information from the employee to set up payroll
• Provide a local point of contact to the employee to answer any questions regarding their employment, local HR or payroll

The entire onboarding process for the employee is often completed in as little as two weeks.

Partner with Safeguard Global as your Costa Rica employer of record and PEO

With over a decade of service, we are the longest-serving employer of record and PEO provider in the international market. Organizations around the world rely on EOR, our employer of record solution, to expand and hire in 170+ countries around the world, quickly and compliantly.

We’ve seen just about every global employment circumstance imaginable—and with our extensive knowledge of local law and culture, we know what it takes to get employment right in Costa Rica. We provide written contracts in the local language, salaries in the local currency and HR support in your employees’ time zone.

Additionally, as a global payroll provider we support payroll administration—including payments, filings and other calculations— all around the world and can accommodate the payroll outsourcing needs of any size organization.

Whether you’re looking to hire as part of a strategic expansion or to meet specific talent needs, our global solutions advisors can walk you through your international hiring options so you can make the right choice for your organization. Contact us today.

Disclaimer

The information provided on or through this website is for informational purposes only and does not constitute legal advice. Safeguard Global expressly disclaims any liability with respect to warranty or representation concerning the information contained herein, including the lost essence, interpretation, accuracy and/or completeness of the information in transit and language translation.