What are the employment laws in Costa Rica?

Costa Rica has a well-developed system of employment laws that provide protections for both employers and employees. Some key aspects of employment laws in Costa Rica include: Work Week: The standard workweek in Costa Rica is 48 hours, with a maximum of 12 hours per day. Overtime: Employers are required to pay time and a half for any work performed beyond the standard workweek. Holidays: There are nine public holidays in Costa Rica, during which employees are entitled to a paid day off. Paid Vacation: Employees are entitled to one day of paid vacation for each month worked, and two weeks of vacation after 50 weeks of employment. Maternity Leave: Female employees are entitled to four months of paid maternity leave, with employers required to pay 50% of the employee's salary during that time. Sick Leave: Employers are required to pay 50% of an employee's salary during the first three days of sick leave, after which the government pays 60% and the employer pays 40%. Severance Pay: Employers are required to pay severance to employees who are terminated without just cause, with the amount based on the employee's salary and length of service. Work Permits: Employers must obtain work permits for foreign employees, and the number of permits issued each year is limited. Health Insurance: Employers are required to provide health insurance for their employees. Labor Court: Costa Rica has a labor court system to handle disputes between employers and employees. It's important for employers to be familiar with Costa Rica's employment laws to ensure compliance and avoid penalties. An Employer of Record in Costa Rica, such as SERVIAP, can assist with navigating the country's employment laws and handling HR logistics.

Is there paternity leave in Costa Rica?

Yes, there is paternity leave in Costa Rica. The current law allows for a paternity leave of up to two weeks for fathers, during which they are entitled to receive 100% of their regular pay. The leave can be taken within the first 30 days after the birth of the child. This law was enacted in 2019 to promote gender equality and shared parenting responsibilities.

Employer of Record (EOR) in Costa Rica

Looking to build your workforce in Costa Rica? Learn about the benefits of working with an EOR in Costa Rica and how they can help you expand.

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The small island nation of Costa Rica in Central America has experienced record growth in its pharmaceutical, financial, and ecotourism sectors. As a result, it is now home to a growing number of multinational corporations, which an EOR in Costa Rica can help with.

An EOR in Costa Rica, or employer of record can help your business expand by handling the logistics of employee hiring, contracts, and HR logistics, helping your business stay compliant while keeping you in total control. It suits all kinds of recruitment models.

Costa Rica has low crime rates, stable economic growth, and balanced regulations to encourage investment and business expansion. It presents ample opportunities for businesses looking to open new offices and subsidiaries, provided they can navigate the necessary local laws and paperwork.

Serviap Global can help with your global expansion needs. Contact us today to learn how you can expand your business with an EOR in Costa Rica.

What does an EOR in Costa Rica do?

An EOR in Costa Rica will become an employer in the place of a company so they can take on the responsibilities and liabilities that would otherwise fall onto your business. This works well for expanding businesses, as they often won’t know the ins and outs of owning a business in every country.

An EOR in Costa Rica will take on payroll, compliance with the laws of the country, timekeeping, any claims on unemployment, the benefits to be paid and given, workers’ compensation in the case of accidents and otherwise, and more. You can also partner with a PEO, which is similar – they help with taxes, benefits, and HR.

Serviap Global functions as both a PEO and EOR in Costa Rica, helping you in the most efficient way possible, so you can hand off the responsibilities for much of the employee operations. All you have to do is hand over the responsibilities and lease back your employees (whilst retaining all the control over your workforce).

An EOR in Costa Rica will handle all things human resources whilst freeing the client to focus on growth and expanding the business into new markets.

The tasks Serviap specializes in can include:

Payroll
Benefits
Tax filing
Compliance
Workers’ compensation (if applicable)
Timekeeping
Unemployment claims
Global hiring
Talent acquisition (recruiting)
Global HR management

Hiring in Costa Rica

Costa Rica’s main authority on the hiring process is the RPL or Labor Procedure Reform, which was passed in January of 2016. This document contains many new requirements for businesses in Costa Rica, including termination benefits like a personal dismissal letter, drawn up with official terms of severance, and the terms of employee/employer disputes.

Thankfully, the hiring process, including contracts and disputes, can be handled by an EOR in Costa Rica that knows and understands the local regulations. It pays to work with professionals in any given new country that you may be working in, and this is no different.

Employment contracts

The Labor Court interprets and verifies the required employment contracts in Costa Rica. Salary, taxation, and benefits must be enumerated explicitly in the local language (Spanish).

This includes the terms under which the employee is covered by the PAYE system, which stands for “pay-as-you-earn.” In this system, an employee’s pay is covered and taxed based on the contract. Contractors, on the other hand, are responsible for their own taxes.

Other specifics that must be in the contract include the employee’s salary, benefits, and termination requirements. Money should always be listed in the local currency (colón). The contract is one of the many aspects of employment handled by an EOR in Costa Rica.

Employee onboarding

Onboarding in Costa Rica differs depending on whether you are hiring locally or internationally. Work visas in Costa Rica take two forms, including temporary residence permits and permanent residence visas for workers who have lived there for at least three years on the permit.

Unless prior authorization is obtained for international workers, your company will be limited to locals and permanent residence holders. Navigating these work permits can be a complicated process for foreigners, who are deemed “special category” workers and must meet the requirements of the Costa Rican Ministry of Labor.

In other words, work permits will only be authorized to specific categories of employees, including technical guests, artists and athletes, transferees, preventative maintenance service professionals, domestic workers, self-employed agricultural contractors, and temporary workers.

Figuring out who can be hired and when is complicated in Costa Rica, which is why an EOR in Costa Rica experienced in the local legislation can help sort it out.

Employee Benefits and Paid Leave

Workers in Costa Rica can work a maximum of 48 hours per week, usually from 5 am to 7 pm each day. Saturdays in Costa Rica are ‘special working days,’ which can only be assigned to domestic assistants and other special categories, up to 12 hours. Overtime in Costa Rica is paid at time and half.

There are 9 public holidays in Costa Rica, for which workers receive the full day off at full pay. These include Good Friday, Labor Day, New Year’s Day, Maundy Thursday, Juan Santamaria Day, Mother’s Day, Independence Day, Christmas Day, and Annexation of Guanacaste Day.

Employees in Costa Rica are entitled to one vacation day per month of employment and two weeks of vacation days per 50 weeks of employment. Vacations cannot be taken on paid holidays. Sick days only have to be compensated for 50% of the worker’s salary by the company (the Social Security Administration pays the rest) for the first three days. After that, the ratio is 40/60.

Mothers receive a month of paid maternity leave before the birth and three months after. Employers once again pay 50% of the salary during this period while the SSA pays the other 50%. Private health insurance exists in Costa Rica, so your company will have to budget for health insurance benefits, including Medical Treatment and Obligatory Pension benefits.

The aguinaldo is another benefit worth mentioning, which is a required 13^th-month salary expected to be paid in the first half of December.

Serviap Global is an EOR in Costa Rica

Serviap Global is a leading Employer of Record (EOR) ready to help your business expand operations throughout the world. EOR is a model of co-employment where we assume total responsibility for your talent, allowing you to focus on the strategic activities of your organization.

Contact us today to learn more about how you can expand your business with an employer of record in Costa Rica.