What should I know about hiring in Costa Rica?
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.
Why is Costa Rica a good choice for finding remote employees?
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.
How can Native Teams help you hire in Costa Rica?
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.
Legal requirements for hiring in Costa Rica
Below are the most important legal considerations when employing workers in Costa Rica:
Legal framework
Costa Rica’s Labour Code establishes a structured employment system that prioritises employee rights, due process, and legal certainty. Employers are required to follow formal procedures throughout the employment lifecycle, from hiring to termination.
This becomes particularly important when dealing with protected employees, as dismissals in such cases may require prior authorisation from labour authorities. The legal framework places a strong emphasis on fairness and proper documentation.
Types of employment contracts
Employment contracts in Costa Rica typically fall into two categories:
- Indefinite-term contracts (standard for ongoing employment)
- Fixed-term or project-based contracts
Fixed-term contracts can be terminated before completion by either party, but the terminating party may be required to compensate for proven damages, depending on:
- Contract duration
- Role significance
- Difficulty of replacement or re-employment
Additionally, when employers terminate such contracts early, they must pay:
- One day’s salary for every 7 days worked (minimum thresholds apply)
- At least 3 days’ salary, or 22 days’ salary for contracts of 6+ months
Content of an employment contract
Employment contracts should clearly define the relationship between the employer and the employee, including:
- Employee’s full name, nationality, age, sex, marital status, and country of residence
- Employee’s identification number
- Country of residence during the contract
- Duration of the employment contract
- Working hours and schedule
- Salary details, including payment method, frequency, location, and calculation basis (time, output, or other)
- Place of work
- Any additional terms agreed upon between the employer and employee
- Place and date of contract execution
- Signatures of both parties
For remote roles, contracts must also define teleworking conditions, including tools, communication, and responsibilities.
Download a free employment contract for Costa Rica through Native Teams.
Oral, written, or electronic employment contracts
In Costa Rica, employment relationships can be formalised through written or oral contracts, both recognised under the Labour Code.
Written contracts are the most common and recommended format, as they provide legal clarity and enforceability. They must be signed by both parties and are typically prepared in three copies, with one submitted to the Ministry of Labour within 15 days of signing, modification, or renewal.
Oral contracts are permitted but usually limited to short-term or simple roles, such as temporary work (up to 90 days) or non-specialised jobs. While valid, they are harder to prove in case of disputes and carry a higher legal risk.
Electronic contracts are not explicitly regulated under labour law, but are considered valid if signed using a certified digital signature under Law No. 8454. These signatures have the same legal value as handwritten ones, making them a reliable option—especially for remote employment.
Working hours
Working hours in Costa Rica depend on the type of shift. Daytime work (5:00 AM to 7:00 PM) is limited to 8 hours per day and 48 hours per week, while mixed shifts are capped at 7 hours per day and 42 hours per week. In non-hazardous roles, daytime shifts may extend to 10 hours, as long as the weekly limit is respected.
Overtime is paid at 150% of the regular wage, and work on public holidays at 200%. Overtime generally cannot exceed 4 hours per day or 12 total working hours daily, except in exceptional situations.
Employees in managerial or unsupervised roles may have more flexible schedules, but cannot work more than 12 hours per day and must receive at least 1.5 hours of rest within that period.
Night work
In Costa Rica, night work is defined as work performed between 9:00 PM and 5:00 AM. Employees working night shifts are limited to a maximum of 6 hours per day and 36 hours per week.
Work is also considered night work if at least 3.5 hours fall between 7:00 PM and 5:00 AM, even in mixed shifts. Any hours worked beyond the 36-hour weekly limit are treated as overtime and must be compensated accordingly, with a general cap of 4 overtime hours per day.
Breaks and types of leaves
Employees in Costa Rica are entitled to a minimum 30-minute break during continuous workdays, which counts as working time. Additional rest arrangements can be agreed based on the nature of the work.
They are also entitled to one paid rest day per week, usually after six consecutive working days. If not granted, the employer must pay double wages and may face penalties.
In certain sectors, work on rest days may be allowed by agreement, or rest days can be accumulated with approval from the Ministry of Labour.
Annual leave
Employees in Costa Rica are entitled to two weeks of paid annual leave after completing 50 weeks of continuous work with the same employer. If the employment ends before this period, leave is calculated on a pro-rata basis, typically one day per month worked.
Accrued but unused leave must be paid upon termination. While annual leave generally cannot be exchanged for payment, exceptions apply in cases such as termination or when unused leave exceeds the minimum entitlement under specific conditions.
Employees are also entitled to short paid leave in the event of a family member’s death, depending on the degree of relation.
Salary
Salary in Costa Rica is freely agreed between the employer and employee but cannot be lower than the legally established minimum wage, which is reviewed periodically by the National Wage Council.
Wages may be calculated based on time, output, or other agreed methods, and can include a mix of monetary and non-monetary compensation. However, salaries paid in cash must be in legal currency, and substitutes such as vouchers or tokens are not permitted.
Payment frequency is regulated, typically no longer than biweekly for manual workers and monthly for other employees. Salaries must be paid in full, including overtime, after lawful deductions.
To calculate the salary and taxes in Costa Rica, click here.
Sick leave
Employees are entitled to sick leave if they are registered with the Costa Rican Social Security Fund (CCSS) and provide a valid medical certificate from an authorised doctor.
During the first three days of sick leave, the employer pays 50% of the salary and the CCSS covers the remaining 50%. From the fourth day onward, the CCSS pays 60% of the salary, with no further obligation for the employer.
Sick leave can last up to 26 weeks and may be extended in cases of serious illness. Employees cannot be dismissed solely due to a valid and certified illness.
Parental leave
Parental leave in Costa Rica includes maternity, paternity, adoption, and special care leave. In most cases, the employee’s salary during these leaves is shared equally, with 50% paid by the employer and 50% by the Social Security Administration (CCSS).
Adoptive parents are entitled to three months of paid leave, which can be shared or alternated. In special circumstances, such as the death of the mother, a designated caregiver may assume the leave.
Paternity and maternity leave
Costa Rican law provides four months of paid maternity leave, typically taken as one month before and three months after childbirth. In certain cases, such as medical complications, leave conditions may be adjusted based on medical certification.
Fathers are entitled to paid paternity leave of two days per week for the first four weeks following the birth of the child.
Pregnant and breastfeeding employees are also entitled to strong legal protections, including job security and reinstatement rights. After maternity leave, employees may return to their role with full rights or, in some cases, terminate the contract with employer liability and compensation.
Additional protections include paid time for medical visits and breastfeeding breaks during working hours, as well as the requirement for employers to provide appropriate facilities for breastfeeding where feasible.
Methods of employment termination
Employment contracts in Costa Rica can be terminated in several ways, including mutual agreement, resignation, contract expiration, death, disability, or employer decision.
Termination must generally be documented in writing, and final payments must be made within 10 business days of the employee’s departure.
Employees may also terminate the contract for just cause in cases such as non-payment of salary, unsafe working conditions, or serious breaches of contractual obligations by the employer.
Ordinary dismissal by the employer
An employer may terminate an employment contract either with or without just cause.
Dismissal with just cause typically involves serious misconduct, such as dishonesty, workplace harassment, repeated unjustified absence, or intentional damage to company property. In such cases, the employee is not entitled to compensation.
Dismissals without just cause may also occur due to business needs, such as restructuring or economic changes, but these trigger additional obligations for the employer.
Notice period and challenging the dismissal
Notice periods in Costa Rica depend on the employee’s length of service and generally range from one week to one month.
Instead of providing notice, the employer may choose to pay compensation in lieu of notice. During the notice period, employees are typically entitled to paid time off to search for a new job.
Employees may challenge a dismissal in court if they believe it was unjustified or did not follow proper legal procedures. If successful, they may be entitled to compensation, including severance and unpaid wages.
Rights and obligations of unemployed persons
Costa Rica does not have a formal public unemployment insurance system. However, private insurance products may provide limited financial support in cases of job loss, depending on the policy terms.
Severance pay
In Costa Rica, severance pay (auxilio de cesantía) is mandatory in cases of unjustified dismissal or when termination occurs for reasons beyond the employee’s control.
The amount is based on the employee’s length of service, starting from 7 days’ salary for shorter employment periods and increasing progressively with tenure. However, severance is capped at a maximum of eight years of service.
Severance is not required if the employee resigns voluntarily, is dismissed for just cause, or if the employment ends during a valid probation period.
In all cases, employers must also pay any outstanding amounts, including unused vacation, proportional Christmas bonus (Aguinaldo), and pending wages.
Probationary period
Probationary periods in Costa Rica are not explicitly regulated by law but are commonly recognised in practice. Typically, the first three months of employment are treated as a probation period for indefinite-term contracts.
During this time, either party may terminate the employment without notice or severance. Probation periods are generally not applicable to fixed-term contracts.
Once the probation period ends, the employee becomes entitled to full labour protections, including notice periods and severance rights.
Intellectual property rights
Intellectual property rights in Costa Rica are protected under both copyright and industrial property laws.
In general, work created by employees during employment belongs to the employer, unless otherwise agreed. For independent contractors, ownership typically remains with the creator unless specified in the contract.
Employers are advised to clearly define ownership and include confidentiality clauses in employment agreements.
Employee data privacy
Employee data privacy in Costa Rica is governed by laws that require employers to collect and process personal data only with informed consent and for legitimate purposes.
Confidential information must be protected, and unauthorised disclosure may result in legal penalties. Employers are responsible for ensuring proper data handling and security.
Prohibition of competition
Non-compete obligations in Costa Rica are based on general legal principles and court rulings rather than a single specific law.
During employment, employees are expected to avoid conflicts of interest and not engage in competing activities. Post-employment non-compete agreements are permitted if they are reasonable in scope, duration, and include fair compensation.
Remote working policy
Remote work in Costa Rica is regulated under specific legislation and must be established through a written agreement or contract addendum.
This agreement should define working conditions, responsibilities, working hours, and the use of equipment, while remaining compliant with general labour law provisions.
Responsibilities within a remote work arrangement
In a remote work setup, employers are responsible for providing the necessary tools, ensuring proper working conditions, and complying with occupational safety requirements.
Employees must follow agreed working hours, meet performance expectations, and comply with company policies, including data protection and confidentiality requirements.
What are the advantages of hiring employees from Costa Rica vs other countries?
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.
Why use Native Teams for hiring in Costa Rica?
Native Teams lets you employ team members ‘like a local, meaning you get all the benefits of a global team, wherever you are based. Here are the reasons why you should use Native Teams for hiring:
- No paperwork: We will handle all the necessary paperwork for you.
- Save on taxes: We help you handle your taxes.
- No company set up: You can expand your business using our company entities.
- Online onboarding: We’re here to ensure your onboarding process is trouble-free.
- No accounting: We will handle all of your accounting needs, including invoicing, payroll, and more.
- Increase your profit: We assist you in growing your business and maximising your profits.
- Compliance expertise: we can assist your company in navigating the regulatory environments and ensure you meet all relevant requirements.
- Local support: We can assist you in understanding and complying with the relevant local laws.
