Hire in Costa Rica

The typical work schedule in Costa Rica is eight hours a day and five days a week for professional employees. For laborers, the work schedule is generally eight hours a day for Monday through Friday plus a half day on Saturday.

Employees can work up to 10 hours a day so long as the work being performed is not hazardous. The employee must not work more than 48 hours per week.

Employees are entitled to special rates of overtime pay for time worked over the standard allowable daily and weekly work hours. The overtime rate is contingent on a number of factors, including whether an employee receives payments on a weekly basis or a monthly basis. The rate will also be modified if it is worked on mandatory holidays.

Overtime cannot exceed four hours per day for a total of 12 working hours per day (including the overtime hours). Overtime is paid at an additional 50% of the regular salary.

Managerial positions or work that, by its nature, cannot be done during regularly scheduled hours (e.g. agents and employees who work on a commission basis) are exempt from the maximum hour limitations. However, they cannot be required to work more than 12 hours a day.

Costa Rican law allows for either the employer or the employee to terminate the working relationship. The employer is required to grant workers’ requests for a certificate or letter of termination of the work contract. This is applicable regardless of the cause of the dissolution of the relationship (whether dismissal or resignation).

Employer’s rights to terminate a worker: 

• Anytime during the probation period
• Any violent or criminal act committed by the employee (or acts endangering workplace security and working conditions)
• Divulging confidential information about the company
• Unjustified absence from work for two consecutive days (or if there is an unjustified absence for three or more non-consecutive days within the same calendar month)

Employee’s rights to terminate an employment contract:

• Unpaid salary
• Immoral acts at the workplace (or physical and verbal attacks against the employee)
• Damages to the tools of the worker committed by the employer, relatives or dependents
• Contagious diseases on the part of the employer, relatives or dependents in the workplace
• Working conditions pose dangers for the health or safety of the worker or their family

Any of the parties in the labor contract can terminate it without just cause by making a prior notice (Preaviso) to the other party. After three months of employment with the employer, the employee is entitled to receive prior notice if the employment contract is to be terminated.

An employee must also provide adequate notice or a deduction may be made from the settlement payment.

The employer must pay a ‘Preaviso’ compensation equivalent to one month’s salary if they do not want an employee to serve out the notice period. This must be prorated accordingly if employment is less than one year. This compensation is based on the average earnings of the employee for the last six months. If the employer allows the employee to serve out the notice period, then ‘Preaviso’ compensation is not required..

During the notice period, the employer has to give the to-be terminated employee one off day a week so he or she can search for another job.

Under Labor Responsibility

If an employee is terminated due to labor-related reasons, the employer is obligated to provide severance pay, also known as “Cesantia” compensation, in addition to pay notice and statutory severance payments. This compensation includes pending paychecks, Christmas bonuses, regular bonuses, overtime (OT) payments, and any accrued vacation days.

Under Non-Labor Responsibility

In the case of termination due to non-labor-related reasons, the employer is only required to provide the statutory severance payment.

Upon Resignation

If an employee resigns, they are entitled to receive only their statutory severance payments.

Pay notice is determined based on the length of an employee’s tenure with the company:

• For employees with more than 3 months but less than 6 months of service: 7 days’ wages.
• For employees with more than 6 months but less than 1 year of service: 15 days’ wages.
• For employees with 1 year or more of service: 30 days’ wages.

The “Cesantia” compensation, is calculated based on the employee’s monthly wage and length of service:

With just cause, the employer will also have to pay the Christmas Bonus (Aguinaldo) proportional to the number of months worked from the beginning of the year. Furthermore, they will have to release vacations and issue an advance notice to the employee prior to the termination of employment.

The Christmas Bonus is not affected by the payment of ‘Cesantia’ or the ‘Preaviso’ and has to be paid if services of an employee are terminated before December. The amount to be paid is calculated based upon the average of total pay earned from the previous December 1 through the day of termination.

Any unused vacation time must be paid as accumulated vacation pay (Vacaciones). The employee is entitled to, as part of their severance, one day for each month worked. For example, an employee who has worked for eight months and did not take any vacation days upon termination will be entitled to eight days’ wages as vacation severance.

An employee is entitled to two weeks of vacation, equivalent to twelve days plus at least two days of rest, for every fifty weeks of continuous work for the same employer. This entitlement is irrespective of the working week, whether it is eight hours, six hours, half-time, one hour, one day, or several days a week.

An employee is entitled to one day’s wages or earned leave, which shall be compensated if the services of an employee are terminated before the completion of a year’s work.

The Labor Code does not allow the employee to roll over vacation time and does not favor the separation of vacation time into different periods. Only under special circumstances will the law allow partitioning the vacation into a maximum of two periods.

Note: Vacations must be approved at least 30 days in advance.

• There are 12 public holidays.
• Employees who have to work on Sundays or on statutory holidays must be paid at a rate of double normal wages.

• An employer in Costa Rica is required to pay at least 50% of the salary for the first three days of an employee’s sick leave. The Social Security Administration (Caja Costarricense de Seguro Social or CCSS) pays the other 50%.
• The CCSS pays 60% of the salary from the fourth day of the sick leave with no obligation on the part of the employer to pay salary during the remaining period of sick leave. However, the employee must submit a medical certificate obtained from an accredited CCSS doctor.

• The employer must allow maternity leave for one month prior to the birth and for three months following the birth of the child. The employer must pay 50% of the salary for all four months of leave while the CCSS pays the other 50%.
• If an employer terminates the services of a pregnant woman, the employer will have to pay regular wages from the date of dismissal through the eighth month of pregnancy.
• Male employees are entitled to eight days of paternity leave – two days per week during the four weeks from the birth of the child. Salary during the leave is paid 50% by the employer and 50% by the CCSS.