Labour Law

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Labour Law

For companies with employees, or individuals with domestic staff, Casa Canada provides full payroll services. This includes providing information on the correct amount to pay to the employee each period or paying the employee on behalf of the employer, statement for the employee of the amount of earnings including deduction of the employee part of CCSS payments, payment of CCSS each month, maintaining records on the amount that would be due should the employee be laid off or fired, legal information on the rights of employers to terminate employees, calculation and payment of aguinaldo each year and complete figures each year-end of all payments made during the year.

Social Security

All salaried employees must be registered with Social Security. The employer must pay 26.17% of the total salary amount, and an additional 9.17%, which is deducted from the employee. This covers the employee for medical care, hospitalization, other medical costs and 3% of this amount is a contribution to a savings and pension fund.


The law requires one day of vacation for every month of employment. A two-week vacation is due after fifty weeks of work. The employer can choose the time the vacations are taken and can require that half be taken at two different times, but they must be granted within 15 weeks of the time when they were due. Vacations cannot include weekends or paid holidays.


January 1st Thursday and Friday at Easter
April 11th May 1st
July 25th August 15th
September 15th December 25th

Other holidays for which pay is not required for hourly employees are August 2 and October 12. Salaried employees are paid for these days whether they work on them or not. Employees who work on statutory holidays or Sundays are paid double time. The standard working week is 48 hours.

Income Tax-Personal

Income tax must be withheld from the employee for income over a certain amount and be submitted to the government by the employer. There are no personal income tax forms to be submitted by employees. For details on the percentage of tax on various income amounts see “Personal Income Tax on Salary” in the Income Tax section. There is also an income tax table for self-employed individuals.

Insurance (Riesgos de Trabajo)

Personal injury insurance (similar to workers’ compensation) must cover all employees including domestic or temporary construction employees. This policy must be purchased from INS, the Costa Rica government-owned insurance institute. It works out to 2-3% of wages depending on the type of work.


If an employee is dismissed without cause or laid off temporarily aguinaldo, vacation pay, notice and termination pay must be paid to them. If an employee is dismissed with cause, has worked for less than 3 months or quits, aguinaldo and vacation pay must be paid by the employer, but not advance notice or separation pay.

Preaviso (Advance Notice)

The law requires 30 days advance notice to be given of impending termination. If no advance notice is given 30 days pay is due to the employee plus other benefits. If the required number of days of advance notice is given regular pay continues for 30 days, but the employee has the right of one paid day per week to look for work. Exact calculation is according to the scale below.

Cesantia is severance pay. Maximum Cesantia is 8 months.

Months Worked 0-3 3-6 6-12 More Than 1 year
Preaviso (Days) 0 7 15 1 Month
Cesantia (Dqys) 0 7 14  


Years Worked Days Paid
1 19.50
2 20.00
3 20.50
4 21.00
5 21.24
6 21.50
7 22.00

Add the appropriate number of days for each year. – ie 4 years severance pay would be 19.5 + 20 + 20.5 + 21 for a total of 81 days pay.
When an employee quits or is fired with cause, preaviso and cesantia do not need to be paid.

When a company is sold, and the new owner keeps the staff, all benefits are paid to the new owner as if the staff had been laid off. The benefits are not paid to the employees at this time, as the new employer will have the responsibility of paying them in the future, so the amount is paid to the company or person buying the business.

Minimum Wage

Monthly minimums (colons):

Unskilled workers ¢289.828,62
Semi-skilled workers ¢311.810,22
Skilled workers ¢327.779,53
Technicians ¢423.313,13
University Graduates ¢518.566,20
Employees with university degree ¢622.300,77

The government publishes new minimum wage schedules every 6 months, on January 1 and July 1,. The full list is more comprehensive, including most occupational groupings.

Trial Period

There is an automatic trial period of three months, during which an employee can be released without the payment of notice and termination pay. After 3 months the full separation settlement applies. The trial period for domestic help is one month.

Domestic Employees

There are some special provisions governing live in domestic employees. If an employer has a signed contract with a domestic employee offering less than the minimums proscribed by law, the contract is not valid.

A domestic employee’s workday is 12 hours. Up to 16 hours is permitted, but double-time must be paid for the extra hours over 12 per day. One paid hour of rest, to coincide with a mealtime, is required. It is required that the employee be enrolled in the CCSS medical and pension system.

The employee has the right to half a day off per week and half a day off on official holidays. If they work pay must be at double time. 15 days of paid vacation each year is compulsory, and payment in lieu of vacation is not permitted. When the December aguinaldo payment is calculated the wage cost upon which aguinaldo is based must include the value of the food and lodging supplied as well as cash wages.

To dismiss a domestic employee, no notice is necessary if they worked for less than 30 days. Over 30 days requires 15 days notice. The cash equivalent of the notice period can be paid. For each week’s notice half a day of paid time must be given to look for another job.

A female domestic employee who becomes pregnant is entitled to 1 month of paid leave before birth and 3 months afterwards. If an employee is dismissed because they are pregnant it is required that their wages be paid from the day of dismissal until the 8th month of pregnancy, then maternity benefits and damages for wrongful dismissal.


This is the “13th month” of wages. Someone who has been employed for a year must receive a full month’s wages as a Christmas bonus between Dec 10 and 15 each year. If an employee has worked only part of a year, that percentage of the year is used to calculate the Christmas bonus due.

Benefits summary: Approximations on an annual basis.

Caja Costarricense de Seguro Social 26.17%
Fondos de Capitalización & Pensiones 3.00%
Aguinaldo(Xmas bonus Dec 1 to Nov 30)

Vacation pay (See paragraph 2) 4.61%
Dias Feriados(Long weekends with pay)

Preaviso y Cesantia (Termination pay) 13.80%
Workman’s Compensation insurance 2.00%
Cost of Benefits  55.66%

In addition to the above, the employee must pay 9.17% of their salary for Seguro Social. The other items are paid entirely by the employer.

Pay Reductions

If an agreement is made with an employee to work for less than their current salary, or to change the number of hours worked for a salaried employee for a responding reduction in salary, it is necessary to pay the employee the full termination settlement and then rehire them.