Located in a Central American rainforest, Costa Rica has a powerful economy, especially relative to its small population. Sectors like tourism, agriculture, and electronics continue to be important, as well as biomedicine and sustainable energy. The country is particularly open to foreign investment and trade opportunities.
Companies choosing to expand in Costa Rica need to ensure that they are offering the right employee compensation and benefits packages, including health insurance. The country has a lot of regulations about what employees are entitled to.
Many employee benefits are administered through Costa Rica’s strong social security system, also known as the Caja. However, offering supplemental benefits on top of the mandatory benefits that are already provided can make your company look more appealing and attract talented employees.
Here is all the information everything you need to know about caring for your employees in Costa Rica.
Employers are responsible for registering their employees with Caja, which covers mandatory benefits, like universal healthcare coverage .
Setting up the proper social security deductions for payroll is a crucial step in establishing your Costa Rican entity. Employers pay into the fund at 26.5%, while employees pay 10.5%.
The social security covers:
Medical and insurance
Disability, old age, and death
Workmen's compensation in the case of accident or injury
All employers are required to enroll their employees into social security for their insurance upon hiring.
Annual leave entitlement is determined by the number of years of service that the employee has given to the company. The standard paid leave entitlement is 14 days per year for employees with 50 weeks of continuous employment. For employees that have worked less than 50 weeks, paid leave is limited to 1 day per month.
Employees are not allowed to carry over or accumulate paid time off unless specifically agreed upon in their initial employment contract.
A 13th month salary is one of the mandatory rights that employees are entitled to around Christmas time. The employer must make the payment no later than the 20th of December each year.
In Costa Rica, there are 11 public holidays that employees are required to receive off:
New Year’s Day
Juan Santamarie Day
Annexation of Guanacaste Day
Patron Saint Day
All Souls Day
Military Armed force Abolition Day
Sick days are another central right that employees are entitled to. This is offered at their full pay for the first 3 days of illness. Employers pay 50% of the employees salary while social security pays the remaining 50%.
After the fourth day of sickness, social security pays 60% of the employees regular salary while the employer is not obligated to pay anything.
Employees must show a doctor’s note within 48 hours of the illness’s onset to receive payment from social security.
Mothers are allowed 4 months of paid maternity leave. This employee benefit should be taken in two parts, one month before the baby's due date, and for 3 months following birth.
Reimbursement is split between the employer and the Costa Rican social security department.
Private sector employees are not entitled to the Costa Rican Social Security fund for parental leave. However, fathers in the public sector receive 8 days of paid leave. The conditions of this leave should be stipulated in the employment contract.
In the case of the death of an immediate family member, employees can take 3 days of paid time off to grieve and attend funeral services.
Although no other leave is offered by the Costa Rican government, employers are encouraged to negotiate other employee benefits in the employment contract.
For companies that want to appeal to potential talented employee candidates, providing benefits on top of what is already required will help boost your company’s appeal. Many companies opt to offer more benefits in order to recruit and retain the best talent.
One supplemental benefit that many companies offer employees is meal vouchers. Meal vouchers cover the cost of employees breakfast or lunches that they take while on the job. Some companies even opt to provide their workforce with meals throughout the day.
Many employees do not live in the major cities or do not have their own transportation to-and-from work. Offering either public transportation vouchers or reimbursing employees for their transportation will make it easier for them to commute and encourage eco-friendly habits.
The Caja offers free public healthcare in Costa Rica, but offering your employees additional healthcare will make your company more competitive. The public healthcare system in Costa Rica does not have the most in-depth care, so offering perks like vision and dental care can help you stand out from other employers.
Some businesses offer tuition reimbursement, either from schooling that employees have already completed, or for additional schooling they may need in order to develop new skills and better perform their job. This encourages your employees to not only take charge of their personal growth, but shows that you value continuing their education.
Basic Costa Rican retirement is already a mandatory benefit offered by the Costa Rican Social Security fund. However, providing your employees an additional pension plan is a great way to reward them for their hard work. Many employers will opt to match employees' contributions to social security, similar to a 401K in the US or a CashISA in the UK.
As social security is already mandated by the Costa Rican government, knowing what supplementary benefits to offer potential employees is a must. This is where using a global EOR service like Via is a strategic move. As your EOR in Costa Rica, we have valuable knowledge about what employee benefit packages will attract potential employees and allow employers to stay both compliant and competitive.
Companies of all sizes want to hire employees in Costa Rica, but don’t know how to navigate the country’s complex social security and benefit system. Via makes hiring Costa Rican talent and building your global team seamless. With our easy-to-use platform, Via helps you manage local HR processes for direct employment such as work visas & permits, benefits, payroll, background checks, and more. Our team of local labor lawyers and on-the-ground experts ensure that your company remains compliant while expanding abroad. As your employer-of-record/entity in Costa Rica, Via assumes responsibility for all legal compliance, so that you can focus on what matters: recruiting and managing your team.
With Via’s transparent pricing, you can pay full-time employees or contractors in Costa Rica with no hidden set-up fees, no foreign exchange or transaction fees, and no minimums–start with 1 employee and scale up at your own pace.
Severance pay in Costa Rica depends on the length of employment. If the employment relationship is between 3-6 months it must be 7 days of pay. If the relationship lasts more than 6 months, severance pay is 14 days.
International compensation and benefits are dependent upon the country and laws in each individual country. Compensation and benefits normally cover salary, healthcare, paid time off, maternity and paternity leave, and a variety of other benefits.
The typical workday in Costa Rica is 8 hours and ranges anywhere between 5 a.m. to 7 p.m., depending on the industry.
The labor laws in Costa Rica mandate that workers are not allowed to work more than 8 hours per day without overtime pay and cannot work more than 48 hours in 1 working week. Workers are also entitled to a 1 hour break for lunch.