In Costa Rica, employer of record (EOR) products and services play a crucial role in complying with the country’s complex employment regulations. They oversee the entire employment process, from hiring to termination, ensuring compliance with local laws. AI-powered EOR services cover everything from legal employment contracts to managing payroll taxes, ensuring seamless operations for businesses. 

By tapping into the expertise of an Employer Record Costa Rica, companies can confidently navigate diverse regulatory requirements, minimizing legal risks. EOR support reduces the risk of non-compliance, enabling businesses to concentrate on their core activities and freeing them from the complexities of local legal and tax requirements.

Hiring in Costa Rica

Navigating Costa Rica's employment landscape requires understanding Costa Rican labor laws and customs. Partnering with an EOR like G-P ensures every aspect of your expansion, from employment contracts to termination, is handled compliantly. This strategy assists in establishing a strong presence in the Costa Rican market by ensuring compliance with employment laws and policies.

Employment contracts in Costa Rica

A written employment contract is legally required in Costa Rica. The contract must be in Spanish and clearly outline the terms of employment, including the job description, working hours, compensation, benefits, and termination requirements. All monetary values must be stated in Costa Rican colones (CRC). An EOR ensures your contracts are fully compliant with the Costa Rican Labor Code from day one.

Working hours in Costa Rica

The standard workweek is 48 hours. Legal shifts are defined as:

Employees are entitled to an unpaid break of at least one hour per day. Overtime is limited to 4 hours per day and must be paid at 150% of the normal hourly rate. Certain leadership and trust positions (as defined by Article 143 of the Labor Code) are exempt from working hour limits but cannot be required to work more than 12 hours a day.

Public holidays in Costa Rica

Employees in Costa Rica are entitled to 12 paid public holidays:

Vacation days in Costa Rica

Employees earn a minimum of two weeks of paid vacation after 50 weeks of continuous work, which equates to one day of vacation for each month of service. The employer must grant this vacation within 15 weeks of it becoming due. An EOR can help track accrued vacation time to ensure compliance.

Sick leave in Costa Rica

For the first 3 days of sick leave, the employer must pay at least 50% of the employee’s salary. From the fourth day onward, Costa Rica's Social Security Administration (Caja Costarricense de Seguro Social - CCSS) provides a subsidy of 60% of the employee’s salary, and the employer has no further statutory payment obligation. A medical certificate is required for the employee to claim this benefit.

Maternity and paternity leave in Costa Rica

Female employees are entitled to 4 months of paid maternity leave: 1 month before birth and 3 months after. The cost is split, with both the employer and the CCSS paying 50% of the employee’s salary. Job security is protected during pregnancy and maternity leave.

As of a 2022 law change, biological fathers are entitled to paid paternity leave of 2 days per week for the first 4 weeks after the child’s birth.

Taxes and social security in Costa Rica

Every employee must be registered with the CCSS for healthcare and pension fund compliance. The total cost of social security contributions is significant. Both employers and employees must navigate the responsibilities of ensuring compliance with tax payments.

Employers are also responsible for withholding income tax from employee salaries based on a progressive scale. G-P, as the EOR, manages all Costa Rica payroll calculations, withholdings, and remittances to the correct authorities, ensuring total compliance.

13th-month bonus in Costa Rica

Employees are legally entitled to a 13th-month bonus, known as the aguinaldo. This is calculated based on the average of all regular salaries earned between December 1 of the previous year and November 30 of the current year. It must be paid by December 20.

Termination and severance in Costa Rica

A probationary period can be set for a maximum of 3 months, during which termination does not require severance pay. Termination with just cause, as defined in Article 81 of the Labor Code, also absolves the employer of paying severance.

For termination without cause, employers must provide notice (preaviso) or payment in lieu:

Employees terminated without cause are also entitled to severance pay (cesantía). The amount is based on length of service, starting at 7 days' pay and increasing progressively for each year of service, with the calculation capped at the equivalent of 8 years' service. Navigating these complex calculations and legal requirements for termination is a primary function of an EOR, mitigating risk for your company.

Why Choose G-P as your employer of record in Costa Rica?

G-P EOR is the award-winning, AI-powered SaaS platform that empowers ambitious companies to build global teams. Onboard, manage, and pay top talent in over 180 countries in minutes, bypassing the typical time, cost, and complexity of local entity setup. G-P EOR is the preferred partner for leading HCM, PEO, and payroll platforms. Bring your workforce data together in one place to maintain existing workflows while guaranteeing consistent and accurate data across your integrated systems.

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