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Costa Rica

This content is for informational purposes only. We do not guarantee the accuracy or completeness of this content. It is not legal advice and shall not be relied on as such.

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Costa Rica is in the heart of Central America. It has over 1,000 kilometers of coastline on 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 educated workforce. Its economy has diversified sectors such as agriculture, finance, and corporate services for foreign companies. It also has developed an international reputation for ecotourism. Costa Rica offers ports on both the Pacific and Caribbean coasts and two international airports to facilitate import and export industries.

Employment contracts in Costa Rica can be either in writing or verbal. 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 applications for the permits have been submitted to the General Directorate of Migration and Foreigners, and their resolution is pending.

The standard work period in Costa Rica is 48 hours per week and eight hours a day for work performed between 5 a.m. and 7 p.m. Work performed at night between 7 p.m. and 5 a.m. is limited to six hours a day and 36 hours a week. Overtime work plus regular hours cannot exceed 12 hours per day. 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 seven hours a day and cannot work overtime.

Employees receive 50% of pay for the first three days of sick leave in Costa Rica, 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 in Costa Rica, one month before the birth and three months 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. Maternity leave pay is split equally between the employer and social security. 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. If the employee does not qualify for social security maternity benefits, the employer pays 66.6% of the employee’s salary.

Employees receive a 13th month bonus in Costa Rica equal to one month of salary, called the Christmas bonus or Aguinaldo. It must be paid by December 20 every year.

Employees receive two weeks of annual leave in Costa Rica 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 carry over leave unless agreed to in writing.

In Costa Rica, the public holidays are:

  • New Year's Day

  • Battle of Rivas

  • Maundy Thursday

  • Good Friday

  • Labor Day / May Day

  • Annexation of Guanacaste

  • Our Lady of Los Ángeles

  • Mother's Day

  • Independence Day

  • Day of Abolition of the Army

  • Christmas Day

Costa Rica provides universal healthcare to citizens, and some 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:

  • immoral behavior,

  • improper disclosure of business information,

  • unjustified leave,

  • damages to the employer or its property,

  • breach of contract,

  • failure to follow safety guidelines, and

  • missing work without permission or cause for two consecutive days or two days within the same calendar month.

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 eight months' salary.

  • Local Laws & Regulations

    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.

  • Partner with atlas logo

    Partnering with Atlas when expanding into Costa Rica can dramatically reduce the standard brick and mortar processes of doing business in foreign markets and allow you to focus on what you do best, growing your company! To discover more about how Atlas can simplify your ability to expand globally, please feel free to contact us.

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