Costa Rica’s Código de Trabajo (Labor Code) is employee-protective by Latin American standards. Understanding your obligations as an employer before you hire your first employee is essential to avoiding costly disputes and compliance failures.
CCSS Social Security Contributions
Employers must contribute approximately 26.5% of each employee’s salary to the CCSS (social security system), which covers healthcare, disability, and retirement. Employee contributions are an additional ~10.5%. Total payroll tax burden: ~37% on top of gross salary.
13th Month Salary (Aguinaldo)
All employees are entitled to an Aguinaldo — a mandatory 13th month salary payment — paid in December each year, equivalent to one month’s salary accrued over the prior 12 months. This must be included in your total compensation cost modeling.
Vacation and Leave Entitlements
Employees are entitled to 2 weeks paid vacation after 50 consecutive weeks of employment (pro-rated in the first year). Paid public holidays (12 per year), maternity leave (4 months), and paternity leave (8 days) are also mandated.
Termination Without Cause
Terminating an employee without just cause requires a severance payment (Auxilio de Cesantía) based on years of service — approximately 20 days’ salary per year, capped at 8 years. This liability accrues from day one and must be provisioned.
Employment Contracts
Written employment contracts are strongly recommended (and required for fixed-term arrangements). Contracts should specify: salary (in colones unless specifically authorized in USD), position, schedule, and applicable collective agreements.