Employer of Record (EOR) in Costa Rica
An EOR in Costa Rica allows businesses to enter the market quickly and help maintain compliance with local laws, all while reducing the overhead costs of establishing a local entity. Atlas HXM offers a seamless EOR service that handles all aspects of employment from payroll processing to compliant administration and work permit assistance.
Partner with Atlas HXM for a cost-effective, compliant solution to hire and manage your workforce in Costa Rica.
Quick Overview of EOR in Costa Rica
Expanding into Costa Rica doesn't have to mean drowning in paperwork or hefty setup costs. With an Employer of Record (EOR), you can bypass the complexities of local regulations and quickly hire employees, all while maintaining compliance with Costa Rica's labor laws. From payroll processing and tax compliance to benefits management, an EOR takes care of the legal nitty-gritty like social security contributions, so you can focus on growing your business without the need to set up a costly local entity.
The EOR model offers a low-risk, cost-effective alternative to setting up a subsidiary. Establishing a local entity in Costa Rica can cost anywhere from USD 5,000 to USD 15,000 plus the cost of maintaining human resources (HR), legal assistance, accountants and more. It can also become highly administrative. By partnering with an EOR, you can avoid these setup costs and enter the market faster, avoiding the overhead of a physical office. This is especially beneficial for startups, SMEs, and businesses testing new markets, who need to act quickly and comply with complex local regulations.
How an EOR Works
Atlas HXM provides EOR services that ensures your business remains compliant with Costa Rica's labor laws while you focus on growing your operations, free from administrative and legal burdens.
Candidate Selection
Atlas HXM does not recruit candidates, but will check the employment setup for compliance around new hires like validating right-to-work, reviewing contract terms against Costa Rican rules, and configuring payroll and statutory obligations correctly. EOR providers in Costa Rica, including Atlas HXM, can assist with work permit applications for foreign nationals. The employer must apply for work permits on behalf of foreign employees through the General Directorate of Migration and Foreigners.
Employment Contracts
Atlas HXM drafts and administers employment contracts in compliance with Costa Rica's Labor Code. In the contract, we clearly outline employment terms to reduce the risk of future disputes, such as:
Job title and responsibilities
Salary, benefits, and working hours
Leave entitlements and notice periods
Payroll & Benefits Management
Payroll is processed in Costa Rican colones (CRC), including:
Accurate tax withholdings and social security contributions
Statutory benefits such as health insurance and pension contributions
The EOR also helps maintain compliance with mandatory benefits, so employees are protected under Costa Rica's laws.
Work Permit Compliance
In Costa Rica, EOR providers can assist with work permit applications for foreign nationals. Atlas HXM manages compliant employment, payroll, social security, and statutory obligations in alignment with Costa Rican immigration and labor regulations.
Ongoing HR Support
Provides HR support, including: Leave management, employee relations and regulatory updates throughout the employee's tenure. This allows businesses to focus on core operations, while Atlas HXM handles ongoing compliance.
What to Choose: EOR vs PEO
Work Life in Costa Rica
Costa Rica's employment framework is designed to balance operational needs with employee protections. Here's what you need to know:
Employment Types:
Permanent: Ongoing employment with full statutory benefits.
Fixed-Term: Hired for a specific project or defined duration (up to 1 year, or 5 years for technical roles) Fixed-term contracts cannot exceed one year in detriment of the worker; however, if the services require special technical preparation, the duration may extend up to five years.
Temporary: Short-term assignments for occasional, seasonal, or piece work; entitled to statutory benefits.
Probation Periods: The de facto probationary period in Costa Rica is 3 months. Employees with less than 3 months of service can be dismissed without notice or severance pay. The EOR ensures that all terms are compliant with the Labor Code.
Working Hours & Overtime: In Costa Rica, the standard workweek is 48 hours, with 8 hours per day for day shifts, 6 hours for night shifts, and 7 hours for mixed shifts. The daily and weekly limit for workers on a mixed schedule cannot exceed 7 hours per day and 42 hours per week, respectively. Employees must receive a break after working continuously. Overtime is paid at 150% of the regular hourly rate, and the EOR ensures that all overtime is calculated correctly and that employee work hours comply with local regulations.
Leave Entitlements
Leave Type | Eligibility / Duration | Payment / Notes |
|---|---|---|
Annual Leave | 2 weeks after 50 weeks of service, or 1 day per month for less than 1 year | Paid by employer; Only when the worker has not taken vacations due to a justified circumstance may he agree with the employer to compensate the excess above the two-week minimum, provided it does not exceed the equivalent of three accumulated periods. |
Maternity Leave | 4 months (1 month before, 3 months after childbirth) | Funded equally by employer and Social Security Fund |
Paternity Leave | 2 days per week for first 4 weeks after birth | Paid leave for biological fathers. The payment corresponding to paternity leave in the private sector is covered jointly by the Caja Costarricense del Seguro Social (CCSS) and the employer. |
Sick Leave | No specific provision; occupational illness covered by social security | 50-67% of salary depending on circumstances and duration |
Public Holidays | All statutory holidays | Double pay if required to work; handled by Atlas HXM |
Vacation Leave | As per statutory minimum | Paid; can be accumulated or paid in lieu |
Payroll & Benefits: Wages are set annually by occupation with minimum wage requirements. Atlas HXM manages payroll in CRC, social security contributions (employer and employee), statutory benefits, aguinaldo (13th month pay), and supplemental benefits. Additional benefits can include private health insurance, transportation allowances, and professional development options.
Atlas HXM can help you manage these aspects and can help ensure that employees are supported and compliant with Costa Rica's labor laws while businesses can focus on operations without administrative burdens.
What to Choose: Indirect vs Direct EOR
Taxes & Compliance
Costa Rica operates on a calendar-year tax system, running from January 1 to December 31. Employers must submit monthly payroll tax returns by the 15th of the following month, social security contributions by the 15th of the following month, and provide annual reports summarizing all employee compensation by February 28th. Corporate tax returns are due by April 15th for companies using the calendar year as their fiscal year.
Category | Details |
|---|---|
Employer Payroll Tax | Social security contributions: ~26.33% of gross salary
|
Employee Payroll Tax | Residents: progressive income tax 10%–25% (threshold ~CRC 4.2 million annually)
|
Pension System | Multi-pillar system with public and private components
|
VAT & EOR Costs: Costa Rica applies a 13% Value Added Tax (Impuesto General sobre las Ventas). EOR services are generally subject to VAT, either included in quoted fees or added separately. Businesses may need to factor this into their total EOR budget.
Atlas HXM handles tax compliance, including progressive income tax calculations, social security contributions, year-end filings, and aguinaldo calculations, ensuring businesses remain compliant with local laws while minimizing administrative burden.
Termination
Employees must give written notice for termination (or verbal notice with witnesses for oral contracts), with statutory notice periods ranging from 1 week to 1 month depending on length of service. After continuous employment of no less than three months and no more than six, the severance amount equals seven days' salary in total. After more than one year, the calculation follows the progressive table in the Costa Rican Labor Code, capped at 8 years of seniority. The EOR helps ensure proper handling of terminations, including notice periods, final wages, and required documentation.
Visas & Work Permits
In Costa Rica, foreign nationals must hold valid work authorization through work permits issued by the General Directorate of Migration and Foreigners. Work permits Work permits for workers in specific occupations have a validity of one year, renewable. All categories of temporary residence with work authorization also have a validity of one year, renewable.
EOR providers, including Atlas HXM, can assist with work permit applications for foreign nationals. Employers must apply for work permits on behalf of foreign employees, and Atlas HXM can manage the application process along with compliant employment administration once permits are obtained.
5 Things to Look for in an EOR Provider in Costa Rica
Local expertise and knowledge of Costa Rican labor laws, social security requirements, and immigration procedures.
Advanced technology for payroll, reporting, and HR system integration.
Experience in your industry and handling work permit management for foreign nationals.
Strong compliance track record and relationships with government agencies and legal advisors.
Global presence to support multi-country expansion, with verified security and compliance standards (ISO 27001/27017/27018, GDPR).
Atlas HXM provides direct EOR services, managing payroll, compliance, and benefits efficiently. Atlas HXM's unified platform automates HR, payroll, and compliance tasks while offering premium employee support, global benefits, and access to 9,000+ learning courses. Recognized by Everest Group PEAK Matrix 2025 and NelsonHall NEAT Assessment 2026, Atlas HXM combines compliance, technology, and global expertise.
FAQs
How quickly can I hire employees in Costa Rica through an EOR?
With Atlas HXM, you can typically hire employees in Costa Rica within 1-2 weeks, depending on role complexity and visa requirements for foreign nationals.
What is the minimum wage in Costa Rica?
Minimum wages vary by occupation, ranging from CRC 12,236.95 per day for unskilled workers to CRC 784,139.53 per month for university graduates.
What is the typical probation period?
The de facto probationary period is 3 months, during which employees can be dismissed without notice or severance.
How much notice is required for termination?
Notice depends on length of service: 1 week (3-6 months), 15 days (6-12 months), 1 month (over 1 year).
What are the social security contribution rates?
Employers contribute ~26.33% and employees contribute ~10.67% of gross salary to various social insurance programs.
How does the aguinaldo (13th month pay) work?
Mandatory annual bonus equal to one month's salary, paid by December 20th each year, prorated for partial year service.