Costa Rica Labor Law

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Firing Employees

Costa Rica Labor Code on Firing Employees

Firing Employees

The Costa Rica Labor Code protects the rights of employees and prevents wrongful dismissal from service. The Código de Trabajo (Article 81) details the legal reasons for firing an employee. In Section i, the Labor Code states that the employer may issue a warning and dismiss the employee on repeating the wrongful behavior.

  • Legal Reasons for Firing an Employee

    The Costa Rica Labor Code allows dismissal of employees for:

    Abandoning their work during working hours without valid reason or permission from employer

    Promoting political propaganda, information against democratic ideals of the country, or affecting religious liberty of others as guaranteed by the Costa Rica Constitution.

    Working in an inebriated, drugged state

    Using work tools/material for other purposes

    Carrying firearms during working hours

    Committing slander, immoral acts, insulting other, or harming others at the workplace

    Revealing professional secrets of the establishment

    Putting workplace, colleagues, property, etc. at risk of damage or in any kind of jeopardy

    Not reporting for work without information for two consecutive days or for more than 48 hours in a month

    Not correcting behavior after the warning from employer

    Lying about professional qualification, references, etc.

    Getting a prison sentence

    Not adhering to the employment contract

    However, this does not mean that the employee can immediately be fired on committing any other wrongful act not listed in the Code. Recent decisions in Costa Rica courts have advised employers to give employees a chance to rectify their errors.

  • Warning/Censure by Employer

    The employer has a full month to censure an employee for committing a mistake. The censure or warning could include warning letters or oral censure in presence of two witnesses.

    An employee is an individual who offers material and intellectual services as part of an employment contract. The Costa Rica Labor Law recognizes the contract whether it is written or oral, express or implied, individual or collective.

  • Employer Responsibilities After Firing An Employee

    The employer is legally allowed to fire an employee, according to valid reasons, without any "employer responsibility". "Employer Responsibility" is defined in the Costa Rica Labor Code as the employer's commitment to pay preaviso (notice pay), and cesantia (severance pay).

    However, the employer still has to pay the bonus to the employee that the latter has earned because of accumulated vacation and Christmas holidays. Cesantia covers an amount that is equivalent to one month of salary for every year that the employee has worked with the employee having worked for eight years at the least. In all cases, the employer has to substantiate his right to dismiss an employee.

  • Obligatory Payments By Employer

    In case an employer terminates the services of an employee without any proper reasons then compensation must be paid as defined by "Prestaciones Laborales".

  • Disputes Beyond Scope Of Labor Code

    The Costa Rica Labor Code also specifies that in case a dispute arises on a subject that has not been covered by the Labor Code, then the case has to be resolved according to the general principles of local custom, usage, equity and Labor Law. The Costa Rica Labor Code has been developed along the guidelines of the International Labor Organization in keeping the local customs, social and legal set-up in mind. The final word in cases of all dispute has to be based on the laws of social welfare.

    Issue a Pre-Termination Notice (Pre-Aviso)

    The employer can then either pay the employee the amount of salary for the notice period or allow the employee to work out the notice period. The payment of notice-period wages would depend upon the average salary of the employee in the previous six months. The average notice-period salary has to be adjusted according to a weekly basis if the employee has not worked for six months.

    Severance Pay (Cesantia)

    This has to be paid if the employer leaves for a reason or the services are terminated without a cause. The employer must pay wages of seven days if the employee has worked for less than six months but more than three months. This amount is doubled if the employee has worked for at least a year but not less than six months. The Costa Rica Labor Code lists in detail the compensation to be given for periods of employment of more than a year.

    Accumulated Vacation Pay (Vacaciones)

    The employer has to pay for unused vacation time which includes wages of one day for each month on the job.

    Pro-rated Christmas Bonus

    This has to be paid if the services are terminated before December.