Guide to employing in Costa Rica

Costa Rica
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Capital City
San Jose
Currency
Costa Rican Colon, CRC, (1=100 centimo)
Population Size
5,200,000
Language Spoken
Spanish
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Overview

XPANDIUM provides complete Employer of Record, Payroll, Contractor Services and solutions for clients who want to hire employees and run a fully compliant payroll without establishing a legal entity in Costa Rica.

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Salary Calculator

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Xpandium - Hire your employees in Costa Rica

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The following information is a basic guideline for employing staff in Costa Rica and the salary calculator can easily help you to understand the basic costs.

Employment Contract

Employment relationships may be agreed on for

  • fixed term employment (temporary) or
  • indefinite duration (open-ended, permanent).

Probation period

Probation period is optional and cannot exceed 4 months.In case of fixed-term contracts, the probation period can not be more than 50% of the term of the contract.

Working hours

Full time employment is considered 8 hours per day and 40 hours per week in Costa Rica. Less hours will mean part-time work.

Hours worked above 8 hours per day / 40 per week or on public holidays are considered overtime. Employer and Employee must agree on working overtime.

Overtime hours cannot exceed a total of 8 hours within a 7 days’ period and must be compensated during payroll for overtime as per local law.Parties may agree that the overtime hours over a 4-months’ time-frame schedule be an average 12 hours for every 7 calendar days.

Minimum wage

The current minimum wage is 584 EUR for full-time employment or 3.84 EUR for hourly work in Costa Rica.

13th month salary

Not required.

Benefit package

In Costa Rica, there are no obligatory fringe-benefits that an Employer must offer, however a custom benefit plan may be set up for your team (see more details at the Benefit section).

Payroll Cycle

Salaries are payrolled and paid on a monthly basis.

Health insurance in Costa Rica

The  health insurance system in Costa Rica is a solidarity-based social insurance system. This means it provides healthcare for everyone, including persons insured by employment agreement. Costa Rica is covered by health care and treatment is equally available in all regions. Employees can order a European Health Insurance Card or its replacement certificate in the State Portal.

Employer taxes

33.8% total employment cost in Costa Rica.

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Public Holidays

NAME

DATE

INFO

New Years Day

January 1

Independence Day

February 24

Good Friday

April 2

Friday before Easter Sunday

Easter Monday

April 4

Varies yearly

Labor / Spring Day

May 1

Pentecost

May 23

Victory Day

June 23

Jaanipäev

June 24

Costa Rica Day

August 20

Costa Rica Restoration of Independence

Christmas Eve

December 24

Christmas Day

December 25

2nd Day of Christmas

December 26

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Popular benefits in Costa Rica

You may offer custom benefits for your Costa Rica employees. As an Employer, you may benefit from offering an attractive compensation package. This means that in addition to salary, employees may receive one or more non-salary compensation.

Supplementary medical insurance  icon

Supplementary medical insurance (private / dental / vision)

Supplementary medical insurance  icon

Supplementary Life or other special insurance

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Additional paid holidays

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Flexible work schedule

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Voluntary pension fund scheme

Benefit planning process includes

  • Decide on the Annual Benefit Amount - you may offer and divide it by 12 monthly installments of payroll.
  • Select the benefit items you would like to offer employees
  • Internal policy to be prepared, communicated and provided to monthly payroll.
  • Collect the Benefit statements from employees - on the employee selected elements and respective amounts; written and signed, provided to EOR payroll.

Offering an individual benefit for one or a select group of employees needs to be planned and advised to be signed with a side agreement along with the employment contract.

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Types of Leaves

Paid leave

Employees are entitled to 28 days.

Public holidays

There are 12 public holidays in Costa Rica.

Sick leave

An employee is entitled to 182 sick-leave days yearly while enrolled in the national social security system.

Payment is 70% of the employee’s average salary, which is paid by the Employer from the 4th day of sickness but from the 9th day the payment is taken over by the State.

Pregnancy and maternity leave

Expecting women can have a total of 20 weeks / 140 days.

Maternity leave may include and start 70 days prior to giving birth. State health insurance covers maternity leave with 100% payment.

Parents receive a one-time 320 EUR allowance for child birth and in case of triplets the payment is 1,000 EUR per child.

Paternity / paternal leave

The father is entitled to 10 working days off for paternity leave which can be granted within 2 months of the expected child’s birth date. After the birth, fathers are entitled to 2 months of paternity leave with the payment of 100% average salary payment, however it is capped at 3 times of the minimum wage amount.

Other / Child Adoption leave

Employees are entitled to a special leave if adopting a child under the age of 10.

Other / Child care leave

Any parent may take paid leaves for taking care of a child.

Leave varies based on the age of child:

  • 3 days - up to 2 children under the age of 14
  • 6 days - 3+ children under the age of 14

Payment for days taken is calculated based on the minimum wage.

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Employment termination

Employers have the below options to terminate an employment contract in Costa Rica:

Termination under probation period

Termination by the Employer is immediately effective with a special 15 days’ written notice to the Employee.

Resignation by Employee

Employees may freely terminate their employment contract with a written notice of minimum 14 days to 1-month notice.

Termination by Employer with notice

An employment agreement may be terminated by the Employer by notice with below period of notices.

If employment period is

  • up to 1 year period: 15 calendar days
  • from 1 to 5 years of employment: 30 calendar days
  • from 5 to 10 years of employment: 60 calendar days
  • 10+ years of employment: 90 calendar days

Termination of fixed term contract

If termination is due to Employer’s redundancy, the employee is entitled to the salary that they would have received from the date of termination to the expiry date of the contract.

Termination by mutual consent

The termination by mutual consent allows the Employer and Employee to agree freely in a written agreement with each other on the conditions of termination.

Expiry of employment contract

When the employment contract expires then such employment is automatically terminated.

Severance pay

Employee is entitled to severance pay if the Employer terminates the contract due to redundancy. The severance pay is the average salary calculated based on the latest 6 months salary.

Employees are entitled to receive higher amounts of severance pay depending on the length of employment with the Employer:

  • From 5-10 years of employment: +1 month salary
  • over 10 years of employment: +1 month salary