Employment Law

Employment Contracts in Costa Rica

Costa Rican law requires employers to provide all employees with a written employment contract. These contracts should always contain the full details of the employment agreement, such as benefits, rights, wages, etc. The contract should also be written in Spanish, the country's official language, and should quote the local currency, the Costa Rican colon.

Fixed Term

Indefinite

Costa Rica Working Hours

The standard working week in Costa Rica is a maximum of 48 hours, divided into five to six days. However, the rules are slightly different for different types of work.

Overtime pay must be paid at 150% of regular wages.

Holiday Policy

Costa Rica Vacations

Generally speaking, employees in Costa Rica are entitled to one day of paid leave for every month of service, for a total of 15 days of stipend after 50 weeks of service. They may be entitled to more days over time.

Costa Rica Sick Leave

Employees in Costa Rica are entitled to paid sick leave. For the first three days of absence, the employer must pay at least 50% of regular wages, with the remaining half covered by social security. Social Security pays 60% of regular wages for any absence from work (more than three days) below.

Parental Leave in Costa Rica

Female employees in Costa Rica are entitled to four months of paid maternity leave, one month before and three months after the birth. During this period, the employer must pay half of the normal salary, with Social Security covering the remaining half.

Some male employees are entitled to lower allowances. For example, public sector employees typically receive up to eight days of paid paternity leave.

Dismissal and Severance in Costa Rica

Generally speaking, employees in Costa Rica are entitled to 30 days' notice before termination and must also have one day per week (paid) to find another job.

When employees are fired without just cause, they are entitled to severance pay. The duration of this payment ranges from 7 to 22 days, depending on the length of their service with the employer.

Taxes in Costa Rica

Both employees and employers in Costa Rica are required to pay contributions into the country's social security system, known as the Caja. Employees must contribute around 9.5% of their wages, while employers contribute around 34.5%.

Income tax rates in Costa Rica are determined progressively, so the higher an employee's income level, the more tax they pay. Tax rates range from 0% to 25% of income.

The corporate tax rate for most companies in Costa Rica is 30%.

Health Insurance in Costa Rica

Public health insurance is funded by social security contributions, so employers are not required to provide private health insurance for their employees. However, some employers do choose to offer it as an employment benefit.

Salary and Benefits

Compensation Law in Costa Rica

The minimum wage in Costa Rica varies by industry. For example, agricultural workers are taxed differently than skilled workers. Therefore, it's important to understand how employees are classified and what their specific minimum wage is.

Benefits Administration in Costa Rica

Setting up a benefits system for employees in Costa Rica can be difficult to navigate, especially if you are unfamiliar with the country and its laws. If you want to handle the setup independently, it may take several weeks and may cause delays in the expansion process.

Remoly can help you simplify this phase of your Costa Rica expansion by providing tailor-made benefits administration outsourcing. Our experts will advise you on the best course of action and take care of your benefits set-up and administration, helping you focus on the important work of your Costa Rica expansion.