Costa Rica
Costa Rica is one of many Latin American countries filled with great remote talent. If you’ve found someone you want to hire in Costa Rica—or if you’re just curious—you’re in the right place. We’ll teach you about the legal obligations and risks of hiring in Costa Rica: As well as the easiest way to hire the remote talent you find.
Country snapshot
CURRENCY
Costa Rican Colón (CRC)
EMPLOYER TAXES
26.5%
PAYROLL FREQUENCY
Monthly
OFFICIAL LANGUAGE
Spanish
It’s the fastest way to hire globally
Hiring employees takes months, at the minimum. When you hire with Thera's locally-generated contracts, it’s a matter of days or weeks. This means you can hire the best talent, fast, without losing them to a hellish procession of paperwork.
It’s a lot cheaper
It costs just $0 to sign up for Thera, then $25 per month to hire your contractors with Thera. If you hired employees manually (or did contracting on your own), you’d likely be on the hook for thousands of dollars each month. Setting up an entity alone can cost tens of thousands of dollars.
It’s more flexible for you & your team
Can be less risky than hiring employees
Hiring employees is a bigger commitment, and can open you up to increased liabilities and regulations. When you hire contractors overseas, your biggest risk is misclassification—but laws surrounding contractor classification are often significantly more straightforward.
Some people want to be employees
The contractor life isn’t for everyone—some people want the security that being an employee often appears to provide. Though it’s rare, this does happen, and it’s one disadvantage of manage an all-contractor team.
You might not have as much control over your talent
Most countries’ contractor-employer relationship laws stipulate that the employer can’t set fixed working hours, among other things. These laws give contractors more freedom over how and when they do their work than an employee would have. In reality, however, most contractors are willing & able to work on the company’s schedule—it’s a matter of setting expectations beforehand.
So you want to hire in Costa Rica. That’s great. But you should know that hiring in Costa Rica is different from hiring in your home country. There’s a whole laundry list of labor laws to catch up on, lawyers to contract, compliance issues to navigate… And it can get complex. So we’ll break it down in simple terms.
Hire talent as contractors
Hire talent as employees
If you’ve read up until this point, you’ll know that it’s easier, cheaper, and more flexible to hire contractors in Costa Rica than employees. Still, there are valid reasons why you might want to hire employees instead. The content below is for you—we’ll cover employer taxes and obligations in Costa Rica.
Employer tax
Health and Maternity
Basic Pension Scheme
Banco Popular Employer Fee
Family Assignations
Social Aid (IMAS)
INA
Contribution from Banco Popular Employer
Labor Capitalization Fund
Complementary Pension Fund
National Insurance Institute (INS)
Paid Time Off (PTO)
PTO is calculated by the:
- All employees who have 50 weeks of continuous employment have the right to 2 weeks’ vacation (12 days) plus 2 days of rest.
Public Holidays
There are 11 public holidays.
Sick Days
The duration of sick leave entitlement provided to workers is dependent on how long they have been employed by their employer:
- The employer and social security each must pay the employee 50% of their salary for the first 3 days of sick leave.
- From the 4th day on, social security pays the employee 60% of their salary, and the employer is no longer obligated to pay.
Maternity Leave
Pregnant employees receive 4 months of paid maternity leave; 1 month of prenatal leave and 3 months of postpartum leave. 50% of the payments are paid by the employer and the other 50% is paid by the CCSS (Costa Rican Social Security Fund).
Paternity Leave
Private sector employees are not entitled to receive paternity leave.
Parental Leave
Private sector employees are not entitled to receive parental leave.
Other Leave
None.
Marriage Leave
None.
Bereavement Leave
None.
Termination Process
In order to terminate an employee just cause must be given.
If the employer requests a dismissal letter, the employer is obligated to present one, whatever the cause of termination was.
Notice Period
The notice period in Costa Rica is:
0 – 3 months: No notice required
3 – 6 months: 1 week
6 months – 1 year:15 days
More than 1 year: 1 month
Severance Pay
The Severance Pay in Costa Rica depends on the Duration of Employment:
3 – Less than 6 months: 7 days
More than 6 months – Less than 1 year: 14 days
1 year: 19.5 days
2 year: 20 days
3 years: 20.5 days
4 years: 21 days
5 years: 21.24 days
6 years: 21.5 days
7-9 years: 22 days
10 years: 21.5 days
11 years: 21 days
12 days: 20.5 days
13 years and on: 20 days
Probation Period
Probation period is 3 months.
Working Hours
The maximum number of hours an employee can work is 48 hours per week.
Nighttime workers, 7p.m.-5a.m., may only work a maximum of 36 weekly hours.
Overtime
Over 48 hours in a week is considered overtime and is paid at 150% regular wages.
Pay for work on holidays is at 200%.
The maximum overtime allowed to perform daily is 4 hours.
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