Employer of Record (EOR) in Costa Rica

Employment Laws and Regulations in Costa Rica

Employment Contracts

The Código de Trabajo of 1943, together with its later reforms including Ley 9343 on labour procedure and Ley 10211 on paternity leave, governs every employment relationship in Costa Rica and is administered by the Ministerio de Trabajo y Seguridad Social. Indefinite-term contracts (contrato por tiempo indefinido) are the default for ongoing roles, while fixed-term contracts (contrato a plazo fijo) may only be used when the nature of the work justifies it and are limited to a maximum of one year, renewable only when the underlying conditions persist.

Written contracts in Spanish are mandatory under Article 24 of the Código de Trabajo and must specify the parties, job title, workplace, salary, working hours, payment frequency, and start date. Verbal agreements remain technically valid for some categories of work but expose employers to evidentiary risk in any dispute before the Juzgados de Trabajo or the Ministerio de Trabajo.

Working Hours and Overtime

The standard daytime workweek in Costa Rica is 48 hours, arranged as 8 hours per day over 6 days, under Articles 135 and 136 of the Código de Trabajo. The night shift is capped at 7 hours per day and 36 hours per week, while the mixed shift (jornada mixta) is capped at 7.5 hours per day and 42 hours per week. Employers may distribute the daytime workweek over 5 days as long as the daily limit does not exceed 9.6 hours.

Overtime is paid at 150% of the ordinary rate under Article 139 and is capped at 4 hours per day, with the combined ordinary plus overtime workday never exceeding 12 hours. Work performed on Sundays and on the nine mandatory paid public holidays is paid at 200% of the regular rate when it is not compensated with substitute rest. The Ministerio de Trabajo enforces these limits through inspections by the Inspección de Trabajo.

Costa Rica’s overtime framework sits in Articles 135–152 of the Código de Trabajo, with weekly rest and holiday premiums enforced by the Inspección de Trabajo. The table below shows the ordinary workweek ceilings for each shift type, the 150% rate for extra hours under Article 139, and the 200% rate that applies when an employee works on a weekly rest day or a mandatory paid public holiday.

Minimum Wage

The statutory monthly minimum wage in Costa Rica for unskilled workers (trabajadores en ocupación no calificada) is approximately ₡373,092, equivalent to about $802 at the April 2026 exchange rate of $1 = 465 CRC. The rate took effect on 1 January 2026 under Decreto Ejecutivo 45303-MTSS, published in La Gaceta No. 229 of December 2025, after the Consejo Nacional de Salarios approved a 1.63% general increase for the private sector. Costa Rica also fixes higher minimum wages for skilled workers (trabajadores calificados), specialised workers, and university graduates, all listed in the official MTSS minimum wage decree.

The full table of more than 40 occupation categories is published by the Ministerio de Trabajo and updated every year. For more detail on the 2026 minimum wage, including the historical sequence of increases and the sector variations, see the Costa Rica minimum wage guide.

Probation Period

Probation periods in Costa Rica may last up to three months for indefinite-term contracts under Article 28 of the Código de Trabajo. During this period, either party may terminate the employment relationship without notice and without paying severance, provided the termination is not discriminatory and respects fundamental rights. After the three-month probation expires, full notice and severance protections apply automatically. Probation must be expressly included in the written employment contract to be enforceable.

Leave Entitlements

Costa Rican law provides a comprehensive set of statutory leave entitlements under the Código de Trabajo, covering paid annual vacation, sick leave jointly funded by the employer and the CCSS, four months of maternity leave funded equally by the employer and the CCSS, eight days of paid paternity leave under Ley 10211, and a small number of additional family-event leaves. The CCSS funds most extended medical and parental leave after the employer-covered period.

Annual Leave

Paid annual leave in Costa Rica is two weeks (12 working days) per fifty consecutive weeks of service under Articles 153 and 156 of the Código de Trabajo. The right vests after the worker has completed one full year of service, although accrued days may be taken earlier by mutual agreement. Vacation must be taken within the fifteen weeks following the end of the qualifying year, and any accrued and unused leave must be paid out in cash upon termination based on the most recent ordinary salary.

Sick Leave

Sick leave in Costa Rica is funded jointly by the employer and the CCSS. The employer pays 50% of the salary for the first three days of incapacity, the CCSS covers the other 50%, and from the fourth day onward the CCSS pays a subsidy equal to 60% of the reference salary for as long as the medical incapacity is certified, up to one year. A medical certificate (incapacidad) issued by a CCSS physician is required from day one of the absence.

Maternity Leave

Maternity leave in Costa Rica is four months of fully paid leave under Article 95 of the Código de Trabajo: one month before the expected delivery date and three months after. The leave is funded 50% by the employer and 50% by the CCSS, and the worker is entitled to her full ordinary salary throughout. Job protection during pregnancy and through the breastfeeding period means the employee cannot be dismissed without prior authorisation from the Ministerio de Trabajo, except for proven serious cause.

Paternity Leave

Paternity leave in Costa Rica is eight working days of fully paid leave under Ley 10211 of 2022, which added Article 95 bis to the Código de Trabajo. The eight days are taken in two-day blocks per week over the first four weeks following the birth or legal adoption of the child. The cost is split 50/50 between the employer and the CCSS on the same basis as maternity leave, and the entitlement applies to both biological and adoptive fathers.

Other Statutory Leave

Costa Rican law provides additional paid leave for specific life events through the Código de Trabajo and Ley 10589 of 2025.

• Bereavement leave of three working days for the death of a spouse, parent, child, or sibling under Ley 10589.
• Marriage leave is not a universal statutory entitlement but is commonly granted by collective agreement.
• Voting leave for national, regional, or municipal elections, as recognised by the Tribunal Supremo de Elecciones.
• Time off for prenatal medical appointments and for accompanying minor children to medical visits.

Statutory Employee Benefits

Costa Rica provides one of the most comprehensive statutory benefit packages in Latin America, anchored by the universal CCSS social insurance system, the mandatory aguinaldo 13th-month bonus, the Fondo de Capitalización Laboral (FCL), and the Régimen Obligatorio de Pensiones Complementarias (ROP). The CCSS covers health care through public clinics and hospitals, sickness and maternity benefits, and the IVM disability, old-age, and death pension. INS workplace insurance is mandatory and pays for workplace accident treatment, rehabilitation, and indemnities for permanent injuries, with rates that vary by industry risk category from about 1% to over 6% of payroll.

On top of CCSS coverage, every employee accrues an FCL balance equal to 3% of monthly salary funded by the employer and a complementary pension contribution to the ROP funded by both employer and employee. The 13th-month aguinaldo, equal to one-twelfth of total earnings between December 1 of the prior year and November 30 of the current year, must be paid in the first twenty days of December under Article 1 of Ley 2412 and is fully exempt from income tax and CCSS contributions. See H2 4 below for the exact contribution rates.

Recent Regulatory Updates (2026)

The most significant 2026 update is the increase in the IVM (disability, old-age, and death) pension contribution by 0.16 percentage points for both employers and employees, effective 1 January 2026, as confirmed by the CCSS adjustment published by BDO Costa Rica. The employer IVM rate moved from 5.42% to 5.58% and the employee IVM rate moved from 4.17% to 4.33%, raising the total CCSS burden to roughly 26.83% on the employer side and 10.83% on the employee side.

The Consejo Nacional de Salarios approved a 1.63% general minimum wage increase for the private sector under Decreto 45303-MTSS, effective 1 January 2026. Personal income tax brackets were adjusted by 0.38% downward under Decreto 45333-H, slightly lowering the exempt threshold to ₡918,000 per month. Ley 10589 of 2025 also expanded statutory bereavement leave protections, adding three paid working days for the death of a close family member.

Work Permits and Visas in Costa Rica

Work Permit Requirements

Who Needs a Work Permit

All foreign nationals who are not citizens of Costa Rica need a residence permit with work authorisation in order to be lawfully employed in the country. Citizens of Central American countries that share the CA-4 free movement agreement (Guatemala, Honduras, El Salvador, and Nicaragua) still need a residence and work permit, even though they may enter Costa Rica without a visa for short stays. Tourists may not work under any circumstances, and conducting paid work on a tourist stamp is grounds for deportation under the Ley General de Migración y Extranjería.

Eligibility and Required Documents

Eligibility for a work-based residence permit normally requires a confirmed job offer from a Costa Rican employer, a clean criminal record, and proof that the role cannot easily be filled by a Costa Rican worker. Required documents typically include a valid passport with at least six months of validity, an apostilled criminal background check from every country of residence in the past three years, an apostilled birth certificate, the signed employment contract, the employer’s Costa Rican corporate documents, and proof of registration with the CCSS.

Processing Time and Validity

Processing through the Dirección General de Migración y Extranjería typically takes 3 to 6 months for standard worker categories and may extend to 9 months when the employer files for the first time. The initial residence permit is valid for one or two years depending on the category, and the worker may not begin paid work until the cédula de residencia is issued. In practice the EOR coordinates the application timeline so that the first day of work falls after permit issuance.

Renewal Process

Renewals must be filed at least one month before the current permit expires, and the worker can usually continue working while the renewal is in process if proof of timely filing is presented. Required documents are similar to the initial application, plus proof of continuous CCSS contributions, an updated employment contract, and proof of tax compliance with the Ministerio de Hacienda.

Common Visa Types for Foreign Workers

Costa Rica offers several work-authorising categories for foreign hires through an EOR, governed by the Ley General de Migración y Extranjería (Ley 8764) and the 2021 investor, rentista, and digital nomad regime under Ley 9996 and Ley 10008. The table below summarises the categories most relevant to hiring through an employer of record, along with their duration, target profile, and whether they count toward the 3-year requirement for permanent residency (APT).

How an EOR Handles Work Permits

The EOR sponsors the residence and work permit application as the legal employer, gathers and submits the corporate documentation, files the application with Migración, and tracks the approval timeline. The foreign worker is responsible for personal documents such as the apostilled criminal record, birth certificate, and passport. As noted in H3 1.4, a work permit application typically extends the onboarding timeline by 3 to 6 months on top of the standard 1–2 week EOR setup. Costa Rica generally allows EORs to act as the sponsor of record because the EOR is itself a registered Costa Rican entity, although companies should confirm category-specific rules with their EOR provider before signing a contract for a foreign hire.

Payroll, Taxes, and Social Security in Costa Rica

Employer Contributions

Employers hiring in Costa Rica owe mandatory contributions on top of gross salary, funding social security, health, pensions, and other statutory schemes (BDO Costa Rica, CCSS 2026 adjustment). The table below lists the employer-side contribution rates so you can calculate the true all-in cost of each hire.

Total employer payroll cost in Costa Rica is approximately 27.83% of gross salary once the standard 1% INS workplace risk premium is added to the 26.83% CCSS burden, before any voluntary benefits or the 13th-month aguinaldo accrual. The exact INS rate depends on the industry risk category, with office-based roles at the low end and construction or heavy industry at the high end.

Employee Contributions

Alongside income tax, employees in Costa Rica pay statutory payroll deductions that fund social security, health cover, and other state schemes (BDO Costa Rica, CCSS 2026 adjustment). The table below summarises the employee-side contribution rates payroll must withhold from gross pay each month.

Income Tax

Costa Rica taxes employment income through a five-bracket monthly schedule (impuesto al salario) administered by the Dirección General de Tributación. The 2026 brackets were set by Decreto Ejecutivo 45333-H, published in La Gaceta on 5 December 2025, with thresholds adjusted by 0.38% downward to reflect the consumer price index variation between October 2024 and October 2025. The employer withholds the tax monthly and remits it to the Ministerio de Hacienda by the fifteenth of the following month.

Employees can claim tax credits of approximately $3.68 per month per dependent child and $5.59 per month for a spouse under the 2026 decree. USD thresholds shown are converted from the original CRC values (₡918,000, ₡1,347,000, ₡2,364,000, and ₡4,727,000) at the April 2026 reference rate of $1 = 465 CRC. The corporate income tax of 30% applies to legal entities and is separate from the personal salary tax.

Payroll Cycle

Costa Rican payroll is normally paid monthly, although biweekly cycles are common for blue-collar workers and weekly cycles are permitted in some sectors under collective agreements. Salaries must be paid in Costa Rican colones by bank transfer or cheque, and pay slips (planilla) must be issued every payment cycle. CCSS contributions and income tax withholdings must be remitted by the fifteenth day of the following month through the CCSS online portal and the Administración Tributaria, respectively. Late payments incur interest and penalties under the Código de Normas y Procedimientos Tributarios.

13th Month Salary and Bonus Pay

The aguinaldo is the mandatory 13th-month salary in Costa Rica, regulated by Article 1 of Ley 2412 and Articles 142–148 of the Código de Trabajo. It must be paid to every employee in the first twenty days of December and is calculated as one-twelfth of the total ordinary and extraordinary earnings received between 1 December of the prior year and 30 November of the current year. The aguinaldo is fully exempt from CCSS contributions and from income tax, which is one of the most worker-friendly features of Costa Rican payroll.

Workers who joined or left during the qualifying period receive a pro-rata aguinaldo proportional to the months actually worked. There is no statutory 14th-month bonus in Costa Rica, although collective agreements in some sectors may add one or include a profit-sharing component. The Fondo de Capitalización Laboral and the Régimen Obligatorio de Pensiones Complementarias also build worker savings funded through the employer contributions described in the table above.

Cost of Hiring Through an EOR in Costa Rica

EOR Service Fees

EOR service fees in Costa Rica typically range from $300 to $600 per employee per month, depending on the provider, the seniority of the role, and the breadth of services included. The fee usually covers employment contract drafting, monthly payroll, CCSS and income tax filing, statutory benefits administration, the aguinaldo calculation, INS workplace insurance enrolment, and termination support. Work permit sponsorship for foreign hires is normally billed as a separate one-time fee. See the RemotePeople pricing page for current EOR service fees.

Total Employment Cost Breakdown

The all-in cost of employing someone in Costa Rica goes well beyond gross salary. The table below walks through a realistic cost build-up for a typical hire, layering mandatory employer social contributions, statutory benefits, and payroll taxes on top of base pay so finance teams can budget accurately before an offer goes out.

For a $1,200 monthly gross salary, the total employer cost in Costa Rica is approximately $1,934 per month, which is roughly 61% above gross once mandatory contributions, INS workplace insurance, and an estimated $400 EOR fee are included. All USD amounts are approximate conversions at $1 = 465 CRC (April 2026 rate). The 13th-month aguinaldo adds another full month of payroll cost on an annualised basis, so the effective annual employer cost is closer to 75% above the base salary when amortised across the year. For more granular breakdowns, see the Costa Rica payroll guide.

Ready to hire in Costa Rica? Get started with RemotePeople and we will handle employment contracts, CCSS payroll, INS insurance, and full Costa Rica compliance, with no local entity needed.

Benefits of Using an EOR in Costa Rica

An employer of record in Costa Rica delivers speed, compliance, and cost certainty in a single package. Onboarding a Costa Rican employee through an EOR typically takes 1 to 2 weeks, compared with the 2 to 4 months required to incorporate a sociedad anónima, register with the CCSS, contract INS insurance, and set up local banking. The EOR also assumes full compliance liability for the Código de Trabajo, Ley de Protección al Trabajador, immigration rules, and income tax withholdings, removing the most significant operational risks from the foreign employer.

Cost predictability is another major advantage. Instead of carrying the fixed overhead of a local entity, accountants, and HR staff, the company pays a flat monthly fee per employee on top of the verified payroll burden, making it much easier to model unit economics for early-stage hiring. The EOR’s local expertise also helps with practical questions about INS sector rates, free trade zone eligibility, work permit categories, and the cultural expectations around aguinaldo and CCSS coverage that newcomers to Costa Rica routinely underestimate.

The model is also flexible. A company can scale up or down without the legal and financial cost of unwinding an entity, and the same EOR provider can typically support hires in neighbouring markets such as employer of record in Panama or EOR in Colombia. Employees benefit too, since the EOR ensures they receive every statutory entitlement, full CCSS coverage, on-time aguinaldo payments, and compliant employment contracts that protect their rights under Costa Rican law.

Termination and Offboarding in Costa Rica

Notice Periods

Notice periods in Costa Rica scale with tenure under Article 28 of the Código de Trabajo. After successful completion of probation, the statutory minimum notice (preaviso) is one week for employees with at least three months of service, fifteen days for those with at least six months, and one full month for employees with at least one year of continuous service. Notice can be paid in lieu rather than worked, and during the notice period the employee is entitled to one paid day per week to look for new work.

Severance Pay

Costa Rica’s auxilio de cesantía under Article 29 of the Código de Trabajo scales with tenure on a tiered day-count schedule and is owed on dismissal without just cause. The schedule below shows the statutory minimum days per year at each tenure band. Payment is always capped at the last 8 years of continuous service regardless of how long the employee has actually worked for the employer.

Calculation Method

Severance pay (auxilio de cesantía) in Costa Rica is governed by Article 29 of the Código de Trabajo and is owed when the employer terminates the contract without proven just cause. The amount is calculated as a number of days of salary per year of service, scaling from 7 days at less than 6 months of service to about 22 days per year for tenures of 6 years or more. The base for the calculation is the average ordinary salary of the last six months, including overtime, commissions, and the imputed share of the aguinaldo.

Caps and Exceptions

Severance accrual is capped at 8 years of continuous service under Article 29, meaning that an employee with 12 years of tenure receives the same cesantía as an employee with exactly 8 years. No cesantía is owed when the employer can prove a just cause listed in Article 81 (such as theft, repeated insubordination, or violence), when the employee resigns voluntarily, or when the employee is dismissed during probation. Fixed-term contracts that expire on their own terms also do not trigger severance, although early termination by the employer normally does.

Grounds for Termination

Costa Rican law recognises three main pathways for ending employment: termination with just cause under Article 81, termination without just cause (despido sin justa causa), and mutual agreement. Termination without just cause is fully legal as long as the employer pays the preaviso, the cesantía, the proportional aguinaldo, the proportional vacation, and any unpaid wages. Protected categories include pregnant workers, employees on maternity or paternity leave, and union representatives, all of whom can only be dismissed with prior authorisation from the Ministerio de Trabajo. Disputes are resolved through the Juzgados de Trabajo and the Sala Segunda of the Corte Suprema de Justicia.

EOR vs. Other Hiring Models in Costa Rica

EOR vs. Setting Up a Local Entity

Choosing between an Employer of Record and setting up your own legal entity in Costa Rica comes down to timeline, upfront cost, ongoing administrative burden, and how quickly you can scale up or wind down. The table below lays out both paths side by side across setup time, cost, compliance risk, and flexibility so you can match the right model to the size and duration of your Costa Rica hiring plan.

For most foreign employers entering Costa Rica with fewer than fifteen hires, the EOR route is significantly faster and cheaper than incorporation. A sociedad anónima or sociedad de responsabilidad limitada requires Costa Rican notary deeds, registration with the Registro Nacional, a local resident agent, separate CCSS and tax registrations, and an opening bank account that can take weeks to clear due diligence. The EOR consolidates all of this into a single contract.

Companies that plan to scale beyond about fifteen employees, that need to hold real estate or fixed assets in Costa Rica, that want to bid for government tenders, or that operate inside the régimen de zona franca usually graduate to a local entity once volumes justify the fixed cost. Until that point, the EOR model offers the same compliance, statutory benefits, and CCSS coverage with none of the maintenance overhead.

EOR vs. Hiring Independent Contractors

Classifying a Costa Rica-based worker as an independent contractor rather than an employee can expose you to back-taxes, unpaid social contributions, and reclassification penalties if the working relationship looks like employment in practice. The table below contrasts EOR employment with contractor engagement across legal relationship, tax and benefits treatment, IP ownership, and misclassification risk so you can pick the right model role by role.

Costa Rican labour law applies a substance-over-form test to identify disguised employment, and the CCSS, the Ministerio de Trabajo, and the labour courts can reclassify a contractor as an employee if the relationship shows subordination, exclusivity, fixed schedules, or integration into the company’s day-to-day operations. The consequences of reclassification include back-payment of CCSS contributions, retroactive aguinaldo and vacation, cesantía, fines, and interest. Hiring contractors is appropriate for genuinely independent work such as short-term projects, specialised consulting, or roles where the worker controls their own methods and tools.

For long-term core team roles, an EOR is the safer route because it converts the worker into a fully compliant employee from day one, with all statutory benefits and tax filings handled by the legal employer. Companies that need a managed contractor solution rather than full employment can use RemotePeople’s contractor management service, which handles compliant invoicing, payments, and classification reviews.

EOR vs. PEO (Professional Employer Organization)

EORs and PEOs both simplify international hiring, but only an EOR becomes the legal employer of record in Costa Rica — a critical distinction when you don’t have a local entity of your own. The table below maps the practical differences across legal employer status, entity requirement, liability allocation, and scope of coverage.

Costa Rica has no formal statutory PEO or co-employment regime in the Código de Trabajo, so PEO arrangements operate as ordinary commercial outsourcing contracts, with the client company remaining the legal employer for CCSS, income tax, and labour court purposes. This means that a true PEO model only works for companies that already have a Costa Rican entity registered with the Registro Nacional and the CCSS.

For foreign employers without a local entity, an EOR is the only practical option, because the EOR is the registered Costa Rican legal employer and assumes the compliance liability that a PEO would otherwise leave with the client. Once a company has scaled to the point of incorporating its own sociedad anónima, it can switch from EOR to PEO if it wants to keep payroll and HR administration outsourced while running its own legal employer.

Public Holidays in Costa Rica

Costa Rica observes a defined set of official public holidays on which most private-sector employers must give staff a paid day off (Ministerio de Trabajo y Seguridad Social). The table below lists the statutory holidays employers need to build into payroll calendars and leave planning for the year, along with the date rule for each.

Costa Rica has nine mandatory paid public holidays and three optional paid holidays in 2026. Mandatory holidays must be paid even if they fall on a weekend, and any work performed on a mandatory holiday is paid at double the ordinary rate. Optional holidays may be observed by collective agreement or company policy, but the employer is not legally obliged to pay them. Employers should plan payroll cycles around the December aguinaldo deadline, which always falls before 20 December, regardless of how Christmas weekends fall.

How to Get Started with an EOR in Costa Rica

Hiring through an employer of record in Costa Rica is a straightforward four-step process.

• First, share the role details with RemotePeople, including the job title, salary, start date, location, and whether the candidate is a Costa Rican national or a foreign hire.
• Second, sign the EOR service agreement and review the locally compliant Spanish-language employment contract drafted by the RemotePeople team.
• Third, the candidate signs the employment contract and the EOR completes CCSS, INS, and tax registration in parallel, normally within 3 to 5 business days.
• Fourth, the employee starts work on the agreed date, payroll is run on the next monthly cycle, and RemotePeople handles every statutory filing for the duration of the employment.

From signing the EOR agreement to first day on the job, most Costa Rican nationals are onboarded within 1 to 2 weeks. Foreign hires that require a residence and work permit should expect an additional 3 to 6 months for immigration processing through the Dirección General de Migración y Extranjería. Contact RemotePeople to start hiring in Costa Rica today.

Where companies hiring in Costa Rica expand next

Teams hiring in Costa Rica frequently expand across Central America and nearby markets, leveraging nearshoring to the US and shared Spanish-language talent. Most teams start with an EOR partner in El Salvador — aligned SICA employment frameworks. Panama typically follows, with SICA-wide workforce mobility. A team in Guatemala is a natural addition for shared Central American labor norms, and operations in Honduras completes the regional picture with SICA-region proximity and shared Central American labor practices.