Costa Rica is in the heart of Central America. It comprises 1,228 km of coastline with the Caribbean Sea and the Pacific Ocean with exquisite beaches. The capital of San Jose is a popular destination for tourists, and the nearby volcanoes make it an outstanding location for visitors. Costa Rica is known for its stable democracy and an educated workforce. Its economy has diversified sectors such as agriculture, finance, corporate services for foreign companies and has developed an international reputation for ecotourism. Costa Rica offers ports on both the Pacific and Caribbean coasts and two international airports, which facilitates import and export industries.
Employment contracts can be either in writing or verbal format. Also, employment contracts may be either for an indefinite term or a fixed term. Fixed-term contracts cannot exceed one year. Foreign employees require a work permit and a residency permit to be able to work in Costa Rica. Employers are responsible for applying for the permits. The employee can start working once the application for the permit has been submitted to the General Directorate of Migration and Foreigners, and their resolution is pending.
The standard work period is 48 hours per week and eight hours a day for work performed between 5 a.m. to 7 p.m. Work is performed at night between 7 p.m. and 5 a.m. and is limited to six hours a day and 36 hours a week. Overtime work plus regular hours cannot exceed 12 hours. The standard rate for overtime work is 50% above the hourly salary and 100% on a rest day. Employees between 15 to 18 years old can work up to six hours a day and cannot work overtime.
Employees receive 50% of pay for the first three days of missing work due to an illness, which is paid by the employer. Starting on the fourth day and for up to 52 weeks, employees receive 60% of their monthly earnings paid through Costa Rica’s social security program. To receive sick benefits through social security, the employee must have made at least six months of contributions in the 12 months prior to taking leave and contributed in the month immediately before leave began. The employee must have a medical certificate as proof of their illness. Employees also receive unpaid leave to attend a medial appointment.
Female employees receive four months of paid maternity leave, which is split equally between the employer and social security. One month is taken before the birth and three months are taken after the birth. The leave is extended by one month in case of multiple births. Employees also receive adoption leave of three months, which starts on the day after the child is handed over. The contracts of employees on maternity and adoption leave are protected. The employer pays 66.6% of the employee’s salary if the employee does not qualify for social security maternity benefits. To qualify, the employee must have made contributions for at least six months in the 12 months prior to the birth, or three consecutive months prior to the birth.
Employees receive a 13th bonus equal to one month of salary. This is referred to as the Christmas bonus or Aguinaldo. It must be paid by December 20 every year.
Employees receive two weeks of annual leave for every 50 weeks worked with the same employer. Employees are entitled to one day of leave per month if they have less than 50 weeks of service with the employer. Annual leave should be taken all at one time, but may be taken in two parts in some circumstances. Employees cannot accumulate or carryover leave unless agreed to in writing.
Costa Rica provides universal healthcare to citizens and employers offer private healthcare insurance.
Employment contracts may be terminated, at the end of the contract (if for a fixed term), by mutual consent, by the employer or by the employee. An employer may terminate the employee contract due to employee misconduct without providing notice or paying severance. Employee misconduct includes, but is not limited to:
Absent misconduct by the employee, the employer must notify the employee of the termination in writing and pay severance, which is referred to as an unemployment benefit in Costa Rica. Severance cannot exceed the salary of eight months.
We understand that local laws and regulations change and sourcing an accurate reference guide is not easy. Our data is researched and verified by our team of local international Employment Attorneys, HR and Benefit Professionals and Tax Accountants through our Atlas team and consultants, to ensure information up-to-date and accurate.
Our team of regional experts are here to support you with your global expansion plans. If you have any questions, just get in touch and we will be delighted to help.