Understanding Employment Norms in Costa Rica: A Comprehensive Guide
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Hiring in Costa Rica? Read on to find out the employment norms (like taxes, payroll and benefits) and EOR (Employer on Record) norms in Costa Rica.

Employment Norms in Costa Rica

Costa Rica, located in Central America, has a relatively stable economy with a well-educated workforce. The country has a highly competitive job market, and employment norms in Costa Rica are influenced by the country's culture, legal framework, and economic factors. Understanding these norms can help employers better plan their hiring process and business in the country.

General Information:

  • The Costa Rican currency is the Costa Rican colón (CRC).
  • San José is the capital of Costa Rica.
  • Spanish is the official language of Costa Rica. Legal documents can be drafted in Spanish to be considered legally valid.
  • As of 2022, the GDP of Costa Rica was reported to be 143.37 USD billion.
Costa Rica's labor laws and regulations cover areas such as minimum wage, working hours, social security, and employment contracts.
Costa Rica map

Table of Contents

  • Agreements
  • Onboarding Process
  • Visa
  • Minimum Wage
  • Payroll Cycle
  • Annual Bonus
  • Health Benefits
  • Working Hours and Overtime
  • Leaves
  • Social Security
  • Taxes for Employers
  • Taxes for Employees
  • Probation
  • Termination
  • Severance Pay
  • Employees or Contractors
  • Final Words


Labor and employment-related agreements are governed by both statutory law and collective bargaining agreements.
  • Collective bargaining agreements are negotiated between employers and labor unions, which represent workers in a particular industry or sector. These agreements can cover a range of employment-related issues, such as wages, benefits, and working conditions.
  • Employers are required to comply with the provisions of collective bargaining agreements that apply to their workforce, regardless of whether they are members of the negotiating union.
  • Costa Rican law prohibits discrimination in employment based on gender, age, race, or nationality.
Onboarding Process

Onboarding Process

While there are no specific laws or regulations in Costa Rica that govern the onboarding process, best practices are to provide ongoing training and development opportunities, provide access to resources and tools. In Costa Rica, the onboarding process for new employees typically involves the following steps:
  • A written employment contract that outlines the terms and conditions of their employment.
  • Submission of a variety of documents, such as a copy of their identification card, their social security number, and bank account information.
  • Provision of necessary training or orientation to familiarize them with the company's policies, procedures, and expectations.


Costa Rica has several types of work permits and visas available to foreign nationals who wish to work in the country, including:
  • Work permit: A work permit is required for all foreign nationals who wish to work in Costa Rica.
  • Business visa: A business visa allows foreign nationals to enter Costa Rica for business-related activities, such as attending meetings or conferences.
  • Investor visa: An investor visa is available to foreign nationals who invest in a Costa Rican business.
  • Retiree visa: A retiree visa is available to individuals who are over 50 years old and can demonstrate a steady stream of income, such as a pension.

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Minimum Wage

Minimum Wage

The minimum monthly wages in Costa Rica are:
  • The generic unskilled workers receive CRC 317,915.58
  • The general semi-skilled worker gets CRC 342,027.40
  • The minimum monthly wage of the generic skilled worker is CRC 359,544.27
  • The general highly skilled employee gets CRC 403,764.18
  • Technical worker with diversified education qualification receives CRC 376,776.77
  • Technical worker with superior education is entitled to get CRC 464,335.93
  • Technical workers with higher education diplomas receive CRC 501,500.15
  • Technical worker with university bachelor gets CRC 568,819.86
  • Technical worker with graduate qualification receives CRC 682,607.23
Payroll Cycle

Payroll Cycle

In Costa Rica, the standard payroll cycle is monthly.
Annual Bonus

Annual Bonus

  • Employers are required by law to pay an annual bonus to their employees, known as the aguinaldo salary.
  • The bonus is equivalent to one month's salary and should be paid within the first 20 days of December.
  • This annual bonus is generally paid in December, ahead of the Christmas and New Year holidays.
Health Benefits

Health Benefits

While there are no specific laws or regulations common benefits may include:
  • Enrollment in the country's social security system
  • Payment of premiums for private health insurance plans
  • Access to paid sick leave, which allows employees to take time off from work for medical reasons without losing their pay or job security.
Working Hours and Overtime

Working Hours and Overtime

  • Work hours: The employees work 5 days a week from Monday to Friday for 8 hours a day and 40 hours a week.
  • Break: Employees are entitled to a one-hour break for every six hours worked
  • Overtime: If an employee works more than eight hours per day or 48 hours a week, they are entitled to receive overtime pay at a rate of 50% of their normal hourly rate.


Sick Leave

  • The first 3 days of sick leave are paid 50% each by the employer and social security. from the fourth day onwards 60 percent of an employee's salary is paid only by social security.
  • Accredited medical certificates are a must for approval of sick leaves

Parental leaves

  • Mothers are entitled to take up to four months of paid maternity leave. They receive 100% pay for this tenure, out of which 50% is paid by the employer and the remaining 50% through Social Security.
  • Biological fathers can take paid paternity leaves. They are allowed to take 2 days of paid leave every week, for the first four weeks. These leaves are paid 50% each by CCSS and the employer.

Annual leaves

  • Employees can take a paid vacation of two weeks once a year after they have completed one year with the same employer.

Public holidays for 2023:

  • New Year's Day (1st January)
  • Maundy Thursday (6th April)
  • Good Friday (7th April)
  • Battle of Rivas (April 10)
  • Labor Day (1st May)
  • Annexation of Guanacaste (24th July)
  • Our Lady of Los Ángeles (2nd August)
  • Mother's Day (14th August)
  • Day of the Black Person and Afro-Costa Rican Culture (3rd September)
  • Independence Day (15th September)
  • Day of Abolition of the Army (1st December)
  • Christmas Day (25th December)

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Social Security

Social Security

Making social security contributions are mandatory for both employers and employees.
Taxes for Employers

Taxes for Employers

Employers are required to pay several taxes, including:
  • 30% is the Corporate tax rate
  • 9.25% is a contribution toward Health & Maternity
  • 5.25% is contributed to the Basic Pension Scheme
  • 0.25% is contributed towards Banco Popular Employer Fee
  • 5.0% is the contribution toward Family Assignations
  • 0.5% is paid in Social Aid: (IMAS)
  • 1.5% is the contribution towards INA
  • 0.25% is the contribution from Banco Popular Employer
  • 3% is contributed towards Labor Capitalization Fund
  • 0.5% is contributed to Complementary Pension Fund
  • 1% is contributed National Insurance Institute

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Taxes for Employees

Taxes for Employees

Employees in Costa Rica are required to pay several taxes, including:
  • 5.5% is contributed toward Medical and maternity.
  • 4.0% is contributed toward Disability, old age, and death benefits.
  • 1% is contributed to workman savings banks.
  • The income tax paid by the employees is as follows:
    • 0% - upto CRC 817,000
    • 10% - CRC 817,001 to 1,226,000
    • 15% - CRC 1,226,000 to CRC 2,103,000
    • 20% - CRC 2,103,000 to CRC 4,205,000
    • 25% - Over 4,205,000


The probation period for employees is typically 3 months.

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An employee can be terminated under various conditions and scenarios, including:
  • Termination with just cause: If an employee is involved in activities such as theft, violence, sexual harassment, or discrimination
  • Termination without just cause: An employer must provide proper notice and pay severance according to the law.
  • Mutual agreement
  • Resignation
Severance Pay

Severance Pay

  • An employee is entitled to receive severance pay upon termination of their employment contract, except in cases where the employee has been terminated with just cause.
  • The amount of severance pay varies depending on the duration of service, with the law specifying that an employee is entitled to receive one month's salary for each year of service.
  • However, the maximum amount of severance pay that an employee can receive is eight years of salary.
Employees or Contractors

Employees or Contractors

  • There is no clear-cut legal definition of employees and contractors, and the distinction between the two can be subjective. However, there are guidelines established by the labor courts and the Social Security Administration that can help determine the classification of an individual.
  • In general, an employee is someone who works under the direction and control of an employer and is provided with all necessary equipment and tools to perform the job. A contractor, on the other hand, is someone who operates independently, without supervision or control from an employer.
  • If an employer misclassifies an employee as a contractor, they may be subject to penalties and fines from the labor authorities, including having to pay back taxes and social security contributions for the employee.
  • If an employer misclassifies a contractor as an employee, they may be required to provide the contractor with benefits such as paid leave, overtime pay, and social security contributions.
Final Words

Final Words

Costa Rica has a stable and growing economy with a well-educated workforce and a favorable business climate. The country has established labor laws and regulations that protect workers, including a range of leaves, health benefits, and social security provisions. Employers are required to follow standard payroll and tax procedures, and failure to do so can result in significant penalties. Overall, Costa Rica presents many opportunities for businesses and employees alike, with a supportive regulatory environment and a talented labor force.

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