COUNTRY

Written Agreements

An employment contract must be in writing, except in certain situations. Each party must receive a copy of the contract and an additional copy must be submitted to the Employment Office. Details must include the identity of parties, ID card number, duration of contract, remuneration, hours, etc.

The Supreme Court of Costa Rica has established the validity of non-compete or non-disclosure agreements after termination of employment contract if the employee is privy to sensitive knowledge that can harm employer's business during the course of employment. In order to be valid, such covenants must be made in writing, include compensation for employees, and must be time-bound (not exceeding 2 years). The purpose of such clauses must be to prevent unfair competition.

Oral Agreements

Oral employment contracts can be used in the following situations:

• In agricultural or livestock work
• In urgent or temporary jobs, not exceeding 90 days
• Where the value of work does not exceed CRC 250 (Costa Rican colones), although the duration may exceed 90 days.

In other cases, the employment contract must be made in writing. Oral contracts can be proven by all general means of proof, including testimonies from 3 other employees who work for the same employer. If the employer does not employ more than 4 employees, the testimony of 2 employees will suffice.

Implied Agreements

In Costa Rica, there are no provisions or guidance on implied contracts. The Labor Code recognizes only oral and written employment contracts.

In Costa Rica, the labor law indicates that regular working hours are 8 hours per day, 6 hours for night shifts, and 7 hours for mixed shifts. The standard workweek is 48 hours. However, in jobs that are not unhealthy or dangerous, an ordinary day shift of up to 10 hours and a mixed shift of up to 8 hours may be stipulated, provided that the weekly work does not exceed 48 hours.

The daily work time limit for persons above 15 years and below 18 years of age is set at 7 hours (42 hours a week). The working hours for persons above 12 years and below 15 years of age cannot exceed 5 hours a day.

New Year’s Day - January 1 • Juan Santamaria Day - April 11 • Holy Thursday - Variable • Good Friday - Variable • Labor Day - May 1 • Guanacaste Day - July 25 • Virgin of Los Angeles Day - August 2 • Mother’s Day - August 15 • Independence Day - September 15 • National Culture’s Day - December 12 • Christmas - December 25

Employees receive paid annual leave of at least 2 weeks after 50 weeks of service, or 1 leave day per month if they have worked for less than 1 year. Employees are paid their regular wages during annual leave.

If there is a good reason for which an employee cannot enjoy their annual leave, they can accumulate the leave allowance up to 3 times and agree to take payment in lieu of leave. Annual leave can be divided into a maximum of 2 parts.

Part-time employees are also entitled to annual leave.

There is no provision for sick leave in Costa Rica. In case of occupational illness, employees who have paid social security contributions for 6 months in the 12 months prior to the start of sickness are entitled to receive 50% of their salary for the first 3 days of sickness. The Social Security Institute pays the other 50%. From the fourth day, employees receive 60% of their salary for 45 days of sickness with funding from the Social Security Institute. The employee must submit a medical certificate to the Social Security Institute to receive payment. After 45 days, employees whose salary is less than CRC 100 (Costa Rican colones) per day receive 100% of their remuneration, and employees with a salary higher than CRC 100 per day are eligible to receive 67% of their salary. This benefit is paid for a maximum of 2 years. After 2 years, an assessment of permanent disability is made and payment of temporary disability benefits is suspended.

When an employee is not entitled to the benefits, but has contributed up to 2 installments and becomes disabled due to illness, they will receive financial assistance for up to a maximum period of 12 weeks.

Costa Rica's Labor Code provides 4 months of paid maternity leave to pregnant employees: 1 month before and 3 months after childbirth. To benefit from this leave, an employee must submit a medical certificate stating that the delivery will probably occur within 5 weeks from the certificate's date of issue.

The benefit amount for the entire duration of maternity leave is equal to the employee's salary. Benefits are funded equally by the employer and Costa Rica's Social Security Fund.

An employee who adopts a minor is also entitled to 3 months' paid leave immediately following the arrival of the child.

Costa Rica grants 2 days of paid paternity leave per week to biological fathers for the first 4 weeks after the birth of their child. In case of death of the mother during childbirth, the remaining maternity leave is transferred to the father.

Minimum Wage

The government sets the minimum wage annually according to occupation. The minimum wage ranges from CRC 12,236.95 (Costa Rican colones) per day (unskilled) to CRC 784,139.53 per month (university graduate).

Salary can be paid monthly, fortnightly, weekly, daily or hourly, per piece, etc. The parties will set the term for the payment of the salary, but said term may never be more than a fortnight for manual workers, nor a month for intellectual employees and domestic servants. If the salary consists of participation in the profits, sales or collections made by the employer, it must be paid biweekly or monthly.

Overtime, Holiday & Vacation Pay

Overtime is paid at a minimum rate of 50% higher than the minimum wage. Employers can set overtime pay higher than this amount. The law limits the total working hours in a day, including overtime, to 12 hours.

Employees are paid their regular wages during annual leave. If employees cannot enjoy their annual leave for some justified reason, they can accumulate it up to 3 times and agree to take payment in lieu of leave.

If an employee is required to work on their weekly rest day or a public holiday, they become entitled to compensation equal to twice their regular wages for the day.

Notice Period

The notice must be provided in writing, but if the contract is made verbally, notice can be given verbally in the presence of 2 witnesses. The duration of notice is as follows:

• 3 to 6 months of service - 1 week
• 6 to 12 months of service - 15 days
• More than 1 year of service - 1 month

Severance Benefits

Depending on employment tenure, employees hired for an indefinite term who are involuntarily dismissed for causes other than disciplinary breach may receive severance benefits ranging from 7 days’ salary to 20 days’ salary per year worked. The maximum severance benefit is limited to 8 years of employment.

Fixed-term employees are also entitled to severance benefits if their contract is terminated unjustly before the term's expiry. For contracts of less than 6 months duration, the benefit is 7 days’ salary. For contracts of more than 6 months duration, the benefit is 22 days’ salary.

Pension

There is a compulsory insurance scheme for employees in the private and government sectors in Costa Rica. The legal age for retirement is 65 years with pension eligibility if at least 240 contributions have been paid. If not 240, but at least 180 installments have been paid, employees become eligible for a partial pension proportionate to the number of contributions paid relative to 240. There are two types of pensions: Basic Pension and Mandatory Individual Account. The Basic Pension is calculated based on the average of the best 300 monthly salaries of the employee. An annual bonus equal to one month’s salary is also paid in the first year. There are provisions for early retirement with a reduced pension. Mandatory pension is a supplementary pension that depends on the total amount of contributions made by the insured and employer in a pension fund of their choice. The benefit is paid as long as the fund lasts.

There is a non-contributory pension scheme for Costa Ricans above 65 years of age or disabled people under 65 who are not registered with the contributory pensions scheme and are in a state of extreme poverty. The amount of monthly pension is CRC 82,000 (Costa Rican colones).

The contributions for social insurance are paid by employers, employees, and the government.

Dependents/Survivors Benefits

A mandatory social insurance scheme provides benefits to survivors after the death of the insured employee. The benefit applies if the deceased was a pensioner for old age or disability, made at least 180 contributions, and contributed for at least 12 months in the 24 months before death. Their spouse, children, parents, grandparents, and siblings are eligible for benefits.

If the deceased employee had paid at least 12 monthly contributions but was not eligible for a pension, their survivors are entitled to indemnity payment equal to 1 month's salary for each month of contribution. The pensions from the Mandatory Complementary Pension Scheme (ROPC) are also transferred to the survivors in the same manner as the basic pension regime.

Monthly benefits are paid to survivors by the employer for a maximum of 10 years (though premiums are paid to the National Insurance Institute) in case of death due to occupational risk.

Invalidity Benefits

The social insurance scheme in Costa Rica provides insurance benefits for disability to employees who have lost at least 2/3rd of their ability to perform their profession and have contributed at least 180 monthly contributions. There are two types of pensions: basic and mandatory. The Basic Pension is calculated based on the average of the employee's best 300 monthly salaries and the number of contributions made. Mandatory Pension is a supplementary pension that depends on the total amount of contributions made by the insured and the employer. Pension is paid as long as the fund lasts.

There is a non-contributory pension scheme for disabled nationals of Costa Rica who are under 65 years of age, not registered with the contributory pensions scheme, and in a state of extreme poverty. The amount of monthly pension is CRC 82,000 (Costa Rican colones).

Benefits are paid by the employer (through premiums paid to the National Insurance Institute) for disability caused due to occupational risks, depending on the type and degree of disability.