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How to hire and pay employees in Costa Rica
Slasify
Jun 18, 2025
Before Hiring in Costa Rica
Discover the global hiring and employment landscape in Costa Rica—a thriving economy in Central America known for its commitment to sustainability and innovation. With its educated workforce and strategic initiatives to attract foreign investment, Costa Rica offers a compelling environment for business growth.
Explore the employment essentials including payroll, personal income tax, statutory contributions, annual leaves, minimum wage, terminations, visa requirements, and more. Gain valuable compliance insights for a smooth entry into the dynamic Costa Rica market with Slasify's global premium HR platform.
At a Glance
| Capital | San José |
| Currency | Costa Rican Colón (CRC) |
| Payroll Cycle | Monthly or Semi-monthly |
| Minimum Wage (Skilled) | CRC 403,461.60 per month |
| Annual Leave | 2 weeks |
| Personal Income Tax | Up to 25% |
Personal Income Tax
Non-residents are taxed at a flat rate of 10% on their gross employment income, whereas tax residents are subject to the following progressive tax rates:
| Taxable Income (CRC) | Progressive Tax Rate (%) |
|---|---|
| Up to 929,000 | - |
| 929,001–1,363,000 | 10 |
| 1,363,001–2,392,000 | 15 |
| 2,392,001–4,783,000 | 20 |
| Over 4,783,000 | 25 |
Local Tax
There are no local taxes on employment income in Costa Rica.
Statutory Contributions
Based on Decree No. 43849-MTSS published in Gazette No. 245 of Friday, December 23, 2022, the minimum reference income or minimum contributory base (BMC) for Health Insurance contributions (SEM) and Pension Insurance (IVM) are as follows:
| SEM | IVM |
|---|---|
| CRC 333,328.99 | CRC 311,990.99 |
Employer Contribution
| Contribution rate | |
|---|---|
| Social Security | |
| SEM | 9.25% |
| IVM | 5.42% |
| Other Institutions | |
| Banco Popular Employer Fee | 0.25% |
| Family Allowance | 5% |
| IMAS | 0.5% |
| INA | 1.5% |
| Worker Protection Law (LPT) | |
| Banco Popular Patron Contribution | 0.25% |
| Labor Capitalization Fund | 1.5% |
| Complementary Pension Fund | 2% |
| INS | 1% |
Employee Contributions
| Contribution rate | |
|---|---|
| Social Security | |
| SEM | 5.50% |
| IVM | 4.17% |
| Worker Protection Law | |
| Banco Popular Worker Contribution | 1% |
Payment of Wages
The parties will set the period for payment of the salary, but said period may never be longer than a fortnight for manual workers or a month for intellectual workers and domestic servants.
Minimum Wage
Effective January 1, 2024, minimum wages in Costa Rica are generally set as follows:
| Minimum wage per hour | Minimum wage per month | |
|---|---|---|
| Ordinary Working Hours | ||
| Unskilled workers | CRC 11,953.65 | N.A. |
| Semi-skilled workers | CRC 12,998.72 | |
| Skilled workers | CRC 13,448.72 | |
| Specialized worker | CRC 15,613.91 | |
| Highly-specialized worker | CRC 24,231.19 | |
| Generic Occupations | ||
| Unskilled workers | N.A. | CRC 358,609.50 |
| Semi-skilled workers | CRC 389,961.60 | |
| Skilled workers | CRC 403,461.60 | |
| Highly-skilled workers | CRC 463,248.99 | |
| By Education | ||
| Diversified Education Media Technicians | N.A. | CRC 422,798.93 |
| Higher Education Technicians | CRC 521,053.17 | |
| Higher Education Diplomas | CRC 562,756.90 | |
| University Baccalaureates | CRC 638,299.51 | |
| University Graduates | CRC 765,985.67 | |
Statutory Bonus
Employees who have completed a full year of service are entitled to a Christmas bonus (Aguinaldo) equivalent to an additional month's salary, payable by December of each the year.
Employees who have not completed a full year of service shall have their bonus be prorated accordingly.
Termination
Either party to an indefinite-term employment contract can terminate the employment relationship without just cause, provided that they observe the required notice period.
In the event that the employee is dismissed due to their misconduct, the employer shall be obligated to deliver a dismissal letter describing, in a timely, detailed and clear manner, the facts on which the dismissal is based.
Alternatively, an employment relationship may be terminated without liability for any of the parties by mutual consent.
Notice Period
The termination of an indefinite-term employment contract without just cause shall oblige the terminating party to observe the following notice period:
| Length of service | Notice period |
|---|---|
| 3–6 months | 1 week |
| 6 months–1 year | 15 days |
| Over 1 year | 1 month |
During the term of the notice, the employer will be obligated to grant the employee a day off each week to search for a job.
Severance Pay
If an indefinite-term employment contract is terminated due to unjustified dismissal or if the employee resigns for a justified reason, the employer is obligated to pay the employee the following severance:
| Length of service | Severance |
|---|---|
| Before completing a year of service | |
| 3–6 months | 7 days' salary |
| 6 months–1 year | 14 days' salary |
| After completing a year of service | |
| Year 1 | 19.5 days' salary per year worked |
| Year 2 | 20 days' salary per year worked or fraction greater than 6 months |
| Year 3 | 20.5 days' salary per year worked or fraction greater than 6 months |
| Year 4 | 21 days' salary per year worked or fraction greater than 6 months |
| Year 5 | 21.24 days' salary per year worked or fraction greater than 6 months |
| Year 6 | 21.5 days' salary per year worked or fraction greater than 6 months |
| Year 7–9 | 22 days' salary per year worked or fraction greater than 6 months |
| Year 10 | 21.5 days' salary per year worked or fraction greater than 6 months |
| Year 11 | 21 days' salary per year worked or fraction greater than 6 months |
| Year 12 | 20.5 days' salary per year worked or fraction greater than 6 months |
| Year 13 and any subsequent years | 20 days' salary per year worked or fraction greater than 6 months |
In no case may severance be paid for more than the last 8 years of employment relationship. This means that the maximum seniority that can be recognized for severance pay is 8 years.
Probationary Period
An employment relationship can be terminated without notice and severance before the employee completes 3 months of service. It is therefore common for the first 3 months of employment to be taken as a probationary period.
Work Time Rules
Standard Working Hours
Ordinary working hours in Costa Rica are subject to a maximum of 8 hours per day and 48 hours per week
Break Period
Employees shall be entitled to a break period of at least 30 continuous minutes per day. If the employee remains under the orders of the employer or cannot leave the workplace during their break, the period shall be deemed effective working time.
In any case, the minimum mandatory break of 30 minutes during the workday, provided that it is continuous, shall also be considered as effective working time.
In addition to the normal break period, breastfeeding employees are also entitled to either of the following breastfeeding break arrangements during their working hours:
| Breastfeeding break | |
|---|---|
| Option 1 | 15 minutes for every 3 hours |
| Option 2 | 30 minutes, twice per day |
| Option 3 | 1 hour at the beginning or before the end of a workday |
The employee can also choose to work an hour later or leave the workplace an hour earlier, provided that the hour must still be paid.
Overtime
Employees required to work overtime shall be paid at 150% of their normal salary, though overtime work is not permitted in jobs that by their very nature are dangerous or unhealthy.
An employee's total working hours, including overtime, shall not exceed 12 hours per day unless otherwise exempted in cases of emergencies.
Weekly Rest Days
Employees shall be entitled to a day of rest per week, with those required to work on their res day being paid double their salary.
Work will be permitted, by agreement of the parties, during the weekly rest day, if the work is not heavy, unhealthy or dangerous and is carried out for jobs that require continuity in work due to the nature of the needs they satisfy.
Holiday and Leave Entitlements
Public Holidays
Employees shall be entitled to take paid time off during public holidays. There are 12 days of public holidays in Costa Rica for 2024.
| Holiday | Date |
|---|---|
| New Year's Day | January 1 |
| Maundy Thursday | March 28 |
| Good Friday | March 29 |
| Juan Santamaria Day | April 11 |
| Labor Day | May 1 |
| Guanacaste Day | July 25 |
| Lady of the Angels Day* | August 2 |
| Assumption Day | August 15 |
| Day of the Black Person and Afro-Costa Rican Culture* | September 1 |
| Independence Day | September 15 |
| Abolition of the Army* | December 1 |
| Christmas Day | December 25 |
*As per the Labor Code, payment during these holidays are not mandatory.
Employers are absolutely prohibited from making their employees work on public holidays, lest they become liable to pay the legal fines and pay their employees double their salary.
Also see: Emergencies justifying work on public holidays | Establishment exempt from public holiday work limitation
Annual Leave
Employees who have completed a continuous year of service shall be entitled to at least 2 weeks of paid annual leave.
For employees who have their contract terminated before completing a full year of service, they shall have the right to at least a day of annual leave for each month worked paid upon their termination.
The employer shall indicate the time in which the employee will go on leave within 15 weeks following the day in which 50 days of continuous service are completed, taking into account the interests of both parties.
| Annual leave arrangement | Annual leave accumulation |
|---|---|
| Annual leave must generally be taken without interruptions. However, it can also be divided into up to 2 fractions when agreed upon by the parties, provided that they are involved in tasks of a special nature that do not allow a very prolonged absence. | It is generally prohibited to accumulate annual leave, but they may be accumulated when the employee performs technical, management, trust or other similar tasks, which make their replacement especially difficult or when the residence of their family is located in another province. |
Sick Leave
A proven illness that incapacitates the employee from working for a period of no more than 3 months is a cause for suspension of the contract without responsibility for the employee.
Except as stated in special provisions or if it is a case protected by the Social Security Law, the only obligation the employer has is to grant their employees sick leave at half pay until their complete recovery, provided that this occurs within the following period:
| Length of service | Duration of sick leave |
|---|---|
| 3–6 months | 1 month |
| 6–9 months | 2 months |
| Over 9 months | 3 months |
Maternity Leave
Pregnant employees are entitled to the following paid maternity leave:
| Before giving birth | After giving birth |
|---|---|
| 1 month | 3 months |
Maternity leave pay shall be covered equally by the employer and the Costa Rican Social Security Fund.
Paternity Leave
Employees shall be entitled to 2 days of paid paternity leave per week for the first 4 weeks following their child's birth. Paternity leave pay shall be covered equally by the employer and the Costa Rican Social Security Fund.
In the case of maternal death during childbirth, during leave or during the first 3 months after delivery where the child has survived, the biological father will have the right to a special paid post-partum leave. This leave will extend until the end of the third month from the birth.
Other Leave
| Leave | Paid/Unpaid | Duration | Note |
|---|---|---|---|
| Adoption Leave | Paid | 3 months |
The total duration of this leave is divisible among the adopters by mutual agreement, which may be taken simultaneously or alternately, according to the decision of the parties. The employee must present a certification issued by the relevant agency that records the adoption procedures and its favorable resolution. |
| Voting Leave | Paid | - | Employers must grant their employees the necessary time, without salary reduction, to vote in popular elections and popular consultations under the referendum modality. |
Get In Touch
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