Under Costa Rican Labor Law, each employer has obligations before its employee(s), the Costa Rican Social Security Administration (in Spanish, Caja Costarricense de Seguro Social, “CCSS”), the National Insurance Institute (in Spanish, Instituto Nacional de Seguros, “INS”), and the Tax Administration.
General employer obligations are:
Employer registration:
Every employer must register before: (i) the Social Security Administration, who is in charge of collecting the monthly payroll payments made by the employer (26.67%) and the employee (10.67%); (ii) the National Insurance Institute in charge of issuing the workers compensation insurance policy that must cover every employee, subscribed by the employer; and (iii) the Tax Administration, institution in charge of collecting the salary tax withheld from each employee.
Equal treatment:
As a main obligation, our Labor Code sets forth the right to equal opportunities for every person who wishes to perform the same job and prohibits discrimination for any reason.
Work shifts:
There are three types of work shifts: Daytime (8 hours, which can be up to 10), Nighttime (6 hours, no extensions), and Mixed (7 hours, extendible to 8). Those considered to be exempt employees have 12-hour ordinary shifts with a paid break (meal and/or rest time) of 1.5 hours.
Overtime:
Overtime must be paid at 50% over the ordinary hourly wage of the employee and must be computed daily.
Minimum salary:
Every employee has the right to receive a minimum salary, which is based on different categories depending on the type of work performed.
Vacation:
Every employee has the right to: (a) annual paid vacations of a minimum of two weeks for every fifty weeks of continuous work for the same employer, or (b) a proportion of those two weeks of paid vacation if the employee has worked for less than the fifty weeks.
Holidays:
If an employee is required to work during a holiday, the employer must pay twice the amount of salary the employee is entitled to.
Maternity / Paternity Leave:
Costa Rican labor law provides a special regulation for pregnant women, who are entitled to a paid leave of absence of one month prior to birth and three months after birth. Regarding paternity leave, the biological father is entitled to two days paid leave per week for four weeks following the birth. The Labor Code also grants other special leaves, such as in cases of adoption or maternal death.
During both maternity and paternity such leaves, the Social Security Administration will pay 50% of the salary, and the employer will pay the remaining 50%.
Employees in maternity or paternity leave are subject to a special legal protection commonly known as "fuero de protección". This measure ensures that during the leave period, employees are protected against dismissal, except when the employee has committed a serious offense as outlined in Article 81 of the Labor Code, which will hinder the possibility to defend the employment relationship. In such instances, prior authorization must be sought from the Ministry of Labor.
Severance Payment for Termination by the Employer:
If an employer terminates an employee “without cause”, the employee is entitled to receive not only the corresponding proportional compensation for vacation and Christmas bonus “aguinaldo” (acquired rights for all employees regardless of termination with or without cause), but also compensation for both pre-notice (up to one month’s salary, depending on seniority) and severance (ranges between 19.5 and 22 days per year worked, depending on seniority, with a cap of eight years).
Foreign Employees:
There is no legal provision that conditions employers to hire a certain number of foreigners. However, in equal conditions, Costa Rican employees should be preferred.
Christmas Bonus (“Aguinaldo”):
A full additional month of salary must be paid to every employee by December 20th, on a yearly basis. It is calculated based on the average ordinary and extraordinary salaries earned by the employee over the twelve months prior to December first.
