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If you are considering hiring in Costa Rica, there are several important factors to keep in mind. Employment relationships are governed by the Costa Rican Labour Code, which sets clear rules around contracts, employee protections, and termination procedures.
Employment contracts should outline key terms such as job responsibilities, salary, benefits, and working conditions. While contracts can be flexible depending on the role, employers must ensure compliance with local labour laws, particularly when it comes to employee rights and protections.
Costa Rica offers a stable business environment and a highly educated workforce, making it an attractive destination for international hiring. However, employers must be aware of strict employee protections - especially for vulnerable groups such as pregnant or breastfeeding employees - and ensure that all processes are legally compliant.
Costa Rica has become a popular destination for hiring remote talent, particularly for companies looking to build distributed teams in the Americas.
The country has a strong pool of skilled professionals, especially in areas such as technology, customer support, finance, and business services. Many Costa Rican professionals are bilingual, with strong English proficiency and experience working with international companies.
In addition, Costa Rica has a well-developed digital infrastructure, making it easy for remote employees to stay connected and productive. The country’s political stability and pro-business environment further support international hiring and remote workforce expansion.
Hiring in Costa Rica requires a clear understanding of local labour laws, especially when it comes to employee protections, termination rules, and compliance procedures.
With Native Teams’ Employer of Record (EOR) services, you can hire employees in Costa Rica without establishing a local entity. We take care of employment contracts, payroll, compliance, and ongoing legal requirements, ensuring that your hiring process is smooth and fully compliant.
This allows your business to expand into Costa Rica without taking on administrative burden or legal risk, while still offering a locally compliant employment experience.
Hire your first Costa Rican employee with Native Teams.
Below are the most important legal considerations when employing workers in Costa Rica:
The Labour Code of Costa Rica governs employment relationships and establishes rules covering employment contracts, working conditions, workplace discrimination and sexual harassment, mandatory social security contributions, working hours and overtime, annual leave, the thirteenth-month salary, termination procedures and severance pay.
The Costa Rican Constitution establishes fundamental employment protections, including a prohibition on workplace discrimination and the right to equal pay for equal work.
Costa Rica has also ratified multiple International Labour Organisation (ILO) conventions, including the eight Fundamental Conventions. These conventions contribute to the domestic labour framework and protect workers’ rights, including freedom of association and collective bargaining.
Law No. 8454 on Certificates, Digital Signatures and Electronic Documents gives digital signatures the same legal and evidentiary value as handwritten signatures. As a result, electronic employment contracts are legally recognised.
Indefinite-term contracts are the standard form of employment contract in Costa Rica. They have no predetermined end date and are the most commonly used type of employment contract.
Fixed-term contracts are used for temporary needs or specific projects, such as seasonal projects or the temporary replacement of an employee. They must be supported by a clear and justified reason.
Their typical maximum duration is one year. However, where the services require specialised technical expertise, a fixed-term contract may last for up to five years, under the same conditions.
Fixed-term contracts may be renewed explicitly or implicitly. An implicit renewal occurs when the employee continues to provide services with the employer’s knowledge.
Contracts for specific work are concluded for a particular task or project. Rather than ending on a predetermined date, the contract ends when the specified work is completed. They are commonly used for construction, IT projects and consulting, among other project-based work.
Temporary or casual contracts are suitable for short-term employment needs, such as seasonal work or replacing an absent employee. They may also cover work that is occasional and not part of the employer’s normal business activity.
Every employment contract must guarantee at least the rights and protections provided by labour laws. The employment contract must contain:
Download a free employment contract for Costa Rica through Native Teams.
Written contracts are the most common and secure form of employment agreement and must be signed by both the employer and the employee. The contract must be prepared in three copies:
Oral employment contracts are permitted in certain circumstances and are generally used for simple, short-term or non-specialised work, including agricultural or livestock work, temporary work lasting up to 90 days, and labour performed on small projects.
Oral contracts are legally valid, but they can be more difficult to prove if a dispute arises. In such cases, witnesses or other evidence may be required to establish the terms and existence of the employment relationship.
Daytime hours are defined as hours between 5:00 AM and 7:00 PM, with the maximum working hours for employees of eight hours per day and 48 hours per week.
For employees working mixed shifts, which combine both day and night hours, the maximum is seven hours per day and 42 hours per week. For positions that are not considered inherently harmful or hazardous, a regular daytime shift may extend to 10 hours, as long as the total weekly hours do not surpass 48 hours.
Overtime must be compensated at a rate of 150% of the employee’s regular hourly rate. Work on public holidays must be paid at 200% of normal wages.
However, there are exceptions: time spent correcting personal errors made during regular hours or voluntary work performed by employees on agricultural or livestock farms outside regular hours and during daylight time does not count as overtime.
Overtime may not exceed four hours daily, nor may the total exceed 12 hours of work per day, except in cases of accidents or imminent danger to people, property or production, where workers cannot be replaced, nor can the work be safely stopped.
Work is considered night work where at least 3.5 hours of the working period fall between 19:00 and 05:00, including where the employee works a mixed shift. For employees subject to a 36-hour working week, any hours worked beyond the standard weekly limit are considered overtime, subject to a maximum of four hours of overtime per day.
A 30-minute break is a minimum mandatory break and must be given to the employee during the workday, provided that the workday is continuous; it shall be considered effective working time. Each employee is entitled to one paid day of rest per week or after six consecutive workdays. If the employer does not grant this rest, they must pay double wages and may face sanctions.
Employees are entitled to paid annual leave of two weeks after 50 weeks of continuous work with the same employer.
If the employment contract ends before the employee completes 50 weeks of service, the employee is entitled to proportional vacation pay, calculated at one day of vacation for each month worked. This amount must be paid upon termination.
Any accrued but unused vacation must be paid out. Where the employee has not completed the full 50-week period, the vacation entitlement is calculated pro rata based on the time worked.
The salary may be freely agreed between the employer and employee, but it must not be lower than the minimum wage established by law.
The minimum wage is reviewed and updated annually and established by Decree of the National Wage Council (CNS).
The applicable minimum wage is determined periodically, taking into account the specific conditions of each job, the particular conditions of each region, and the nature of the relevant intellectual, industrial, commercial, livestock or agricultural activity.
Salary may be calculated in different ways, including by unit of time, such as month, fortnight, week, day or hour, piece, task, and piecework.
Salaries may be paid entirely in cash, through a combination of cash and in-kind benefits, and as a share of the profits, sales or collections obtained by the employer.
Where salary is paid in cash, it must be paid in legal currency. Payment in the form of merchandise, vouchers, tokens, coupons or any other instrument intended to replace money is strictly prohibited.
To calculate the salary and taxes in Costa Rica, click here.
Employees are entitled to sick leave benefits if they are registered with the Costa Rican Social Security Fund (CCSS) and have made the required contributions during the month preceding the illness.
To initiate sick leave, the employee must have the illness validated through a medical certificate issued by a CCSS-authorised doctor.
Sick leave payments are divided between the employer and the CCSS as follows:
Employees are generally entitled to sick leave for up to 26 weeks (approximately six months). In cases of severe illness or special circumstances, the sick leave period may be extended beyond the standard period.
Parental leave includes maternity leave, paternity leave, adoption leave and special care leave. During these periods, the employee receives 50% of their salary from the employer and 50% from the Costa Rican Social Security Fund (CCSS).
Pregnant employees are entitled to four months of paid maternity leave, consisting of one month before and three months after the birth of the child. Biological fathers are entitled to two days of leave per week for four weeks, beginning from the date of the child’s birth.
Adoptive parents are entitled to three months of paid leave. In cases of joint adoption, the leave may be shared or taken alternately by the adoptive parents. The leave begins on the day after the child is handed over to the adoptive parents, provided the required certification from the relevant authorities is presented.
If the mother dies during childbirth or while on maternity leave, the father or another caregiver approved by the authorities may assume the special postpartum leave originally intended for the mother.
This leave applies to the employee, regardless of gender, who can demonstrate that they will be responsible for caring for the newborn.
The first year of the child’s life is the minimum protected breastfeeding period. This protection may be extended in three-month periods based on medical certification for as long as the child continues to be breastfed. The protection also applies to adoptive mothers upon presentation of the relevant professional certification.
During the ordinary working day, nursing mothers are entitled to one hour of breastfeeding time per day. This may be taken in one of three ways:
The chosen arrangement must be agreed with the employer.
In addition to this breastfeeding entitlement, employers must provide a minimum of 25 minutes every three working hours specifically for expressing breast milk. This time:
For overtime shifts, an additional 15 minutes for every three hours of overtime worked is added to the entitlement applicable to the ordinary working day.
Employers must also provide a dedicated, private and hygienic space for breastfeeding and milk expression, equipped and approved by the relevant occupational safety and health authority.
The labour code prescribes four months of paid maternity leave, with one month to be taken before the birth and three months after.
A significant 2022 amendment to the labour code introduced paid paternity leave, granting private-sector fathers two days per week for the first four weeks after birth. Both maternity and paternity leave are covered equally by both the employer and the Social Security Administration (CCSS), each covering 50% of the employee’s salary.
Where the employer terminates the employment relationship, the termination payment must be made available to the employee within 10 business days of their separation. Any document that has not been signed and ratified by the employee before a labour inspector cannot be invoked by the employer.
An employee may also terminate their employment contract for just cause in the following circumstances:
An employer may terminate an employment contract by invoking one or more of the following causes:
Where the employment contract is terminated for any of these causes, the employee is not entitled to compensation.
Where termination is based on abandonment of work, reckless acts or omissions, or intentional material damage under points 4, 5 or 6 above, the employer must notify the employee in writing, either in person or by certified letter sent to the address specified in the employment contract. The notice must state the cause, or causes invoked and the facts on which they are based.
The notice must be delivered or sent within three business days following the employee’s dismissal. Where the termination is based on intentional material damage under point 6, the deadline is six business days. A copy of the notice must also be sent to the relevant Labour Inspectorate within the same period.
In indefinite-term employment contracts, either party may terminate the agreement without cause by giving written notice according to the employee’s length of service:
The notice period may be waived if the party terminating the contract pays the other party an amount equivalent to the salary that would have been earned during the applicable notice period. During the notice period, the employer must also grant the employee one paid day off per week to look for another job.
In addition to the notice period, termination without just cause creates a separate obligation to pay auxilio de cesantía (statutory severance). This is calculated based on the employee’s average ordinary salary over the final six months of employment, multiplied by the years of service, up to a maximum of eight years.
No auxilio de cesantía is payable where the employee is dismissed with just cause under Article 81 of the Labour Code. Preaviso and auxilio de cesantía are separate obligations and must be paid concurrently when employment ends without just cause.
An employee in Costa Rica may challenge a dismissal by filing a claim in court and arguing that the termination was without just cause. Depending on the circumstances, the employee may be entitled to back pay, auxilio de cesantía and payment in lieu of notice.
A dismissal may be successfully challenged where the employer failed to establish a valid cause, violated the employee’s due process rights, or did not follow the applicable procedural requirements.
Costa Rica does not currently have a formal state unemployment insurance regime. References to unemployment insurance generally concern private insurance products offered by insurers or banks.
A common type is credit-protection unemployment insurance, which helps cover debt payments, such as credit card or mortgage payments, when a person loses their job under circumstances defined by the policy. Some policies cover termination with responsabilidad patronal (employer responsibility, including wrongful dismissal), subject to the insurer’s conditions.
For example, credit card protection may be available through insurance policies such as the Credit Card Protection Policy offered by INS. Under the stated policy conditions, coverage can provide up to 12 months of payments for employees who become unemployed after completing six consecutive months of employment.
In Costa Rica, auxilio de cesantía (statutory severance pay) is payable in cases of unjustified dismissal, where the employee terminates the employment relationship for a cause that gives them the right to do so, or where the employment ends for another reason beyond the employee’s control.
For indefinite-term contracts, the amount depends on the employee’s length of continuous service and is subject to a maximum of eight years of employment.
For employees who have completed at least three months of continuous service, severance is calculated as follows:
In all cases, severance pay is limited to the employee’s most recent eight years of employment. The employee remains entitled to severance even if they immediately begin working for another employer.
Costa Rican labour law does not establish a universal statutory probationary period for all employees. However, the first three months of employment are generally understood to function as a probationary period. A probationary period is not permitted for fixed-term employment contracts.
During the probationary period, either the employer or the employee may terminate the employment relationship immediately, without an obligation to pay auxilio de cesantía (severance pay) or provide preaviso (notice).
Employment contracts should clearly establish ownership of intellectual property (IP) created by the employee during the employment relationship. The agreement should explicitly state who owns the IP resulting from the employee’s work.
Under Costa Rican copyright law, works created by employees during their employment generally belong to the employer by default. This differs for independent contractors, where the creator is presumed to own the IP. Contracts with independent contractors should therefore clearly establish ownership of any work created during the engagement.
Employers should also include confidentiality provisions and non-disclosure agreements (NDAs) to protect sensitive business information and trade secrets. The Undisclosed Information Law makes unauthorised disclosure of confidential information a criminal offence while also providing protection for personal data.
Costa Rica’s main data protection law is Law No. 8968 – Law on the Protection of the Person Regarding the Processing of Personal Data. It regulates entities that manage databases containing personal data and requires employers to obtain informed consent before collecting or processing employee data for specific and legitimate purposes.
Law No. 7975 – the Undisclosed Information Law establishes criminal liability for the unauthorised disclosure of confidential or personal information.
The Agency for the Protection of Individuals' Data (PRODHAB) is responsible for enforcing these rules. Non-compliance may result in fines of up to 30 base salaries.
Under a contractual non-compete arrangement, an employee may not engage in activities that compete with their employer or create a conflict of interest that could harm the company.
This restriction is intended to protect the employer’s legitimate interests where, during the employment relationship, the employee has access to reserved or confidential information, trade secrets, technical or administrative knowledge, customer lists, business strategies or other information relating to the employer’s activities.
A non-compete provision may therefore be used to prevent the improper use of knowledge or information acquired through the employment relationship.
The Second Chamber of the Supreme Court of Justice has described the non-compete agreement as a manifestation of the general principle of good faith.
In Ruling No. 2012-000487, it stated that the principle prevents an employee from engaging in other work activities of the same nature as those performed under the employment contract where these activities could create conflicting interests to the employer’s detriment.
Law 9738 defines telework as a work modality that employees perform outside the employer's premises, typically using ICT tools, and that the parties implement through a written agreement.
Law 9738 recognises three telework modalities:
Telework is voluntary for both the teleworker and the employer. The parties settle its details by agreement, and they must fully observe Law 2 (the Labour Code of August 27, 1943), legal instruments for the protection of human rights, international legal instruments for the protection of labour rights, and other labour legislation.
To establish a telework relationship under this law, the employer and teleworker must sign a telework contract that complies with this law and the other provisions governing employment in Costa Rica. The contract must clearly specify the conditions under which the teleworker will perform the work, as well as the obligations, rights, and responsibilities each party assumes. If a previously signed contract already regulates an existing employment relationship, the parties must add an addendum that incorporates the conditions this law provides.
Any telework agreement must fully comply with the Costa Rican Labour Code, particularly its provisions on working hours, and it may not contravene the statutory limits on daily or weekly working time. Within these legal boundaries, the parties may arrange the teleworker's schedule flexibly, provided the teleworker agrees to the flexibility in advance with the immediate supervisor and the arrangement does not harm operational continuity, productivity standards, or the normal execution of business activities and work processes.
Employers have the following obligations in relation to telework:
Teleworkers have the following obligations:
Health and safety obligations apply equally to telework performed from home and must comply with occupational health and safety rules, requiring employers to ensure risk prevention and insurance coverage.
Environmental conditions of the teleworker: set of requirements and specifications that the employer must establish so that the teleworker can perform in the telework modality, such as minimum technological tools, connectivity and all other requirements that are essential for the correct performance of their duties.
The measurement, evaluation and control criteria for the teleworker should be previously determined in the agreement or addendum to be signed, and must be proportional to those applied at their workplace.
Hiring employees from Costa Rica offers a combination of talent quality, stability, and operational reliability.
The country provides access to a highly educated and bilingual workforce with experience in international environments. Its legal framework, while protective, is clearly defined, allowing companies to operate with predictability when compliance is properly managed.
Costa Rica also benefits from strong infrastructure, political stability, and favourable time zone alignment with the Americas, making it a practical choice for companies building remote or distributed teams.
Native Teams helps you employ and pay your team in Costa Rica directly through owned entities and infrastructure.
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