Costa Rica Labor Law

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Labor Laws and Regulations

Costa Rica Labor Laws and Regulations

Labor Laws and Regulations

The Costa Rica Government has implemented a sophisticated and detailed Labor Code to ensure the rights of employees, employers, and for the development of the country. The strict regulations have kept trade unions in check and strikes are not very often.

Employees are protected economically by the social security system that levies a tax of 30-50 percent of gross salary. However, the system has gone a long way in ensuring good conditions for employees in Costa Rica.

  • Laws for native employees

    Costa Rica has a quite well-educated population with Spanish and English being the main languages. Local employers have a good pool of labor available for services and jobs. The Costa Rica Labor Code (Codigo de Trabajo) came into being in 1943, and is categorized into 11 sections. These sections include:

    Titulo 1 for general dispositions,

    Titulo 2 for labor contracts and agreements,

    Titulo 3 for work week, vacations, and wages,

    Titulo 4 for protecting workers during employment,

    Titulo 5 for social organizations,

    Titulo 6 for conflicts and collective bargaining,

    Titulo 7 for jurisdiction of labor laws,

    Titulo 8 for government workers,

    Titulo 9 for administrative organizations,

    Titulo 10 for statute of limitations, sanctions, responsibilities, and

    Titulo 11 for final dispositions.

    Main features of Labor Law

    The elaborate Labor Law is based on some very important aspects of development and growth. These features include:

  • Social Security (Caja Costarricense del Seguro Social CCSS or Caja) is necessary for all employees and it is the duty of the employee to contribute 25 percent of the salary to an employee's social security account. Another 9 percent is deducted from the employee's salary. The social security amount covers medical care, hospitalization, etc. About 3 percent of the tax goes to the employee's pension fund.

    Minimum Wage Rule details are also defined by the Labor Law. The document is revised and published by the Ministerio de Trabajo on a regular basis of six months. The document lists almost all occupations with the minimum wages so employers cannot exploit employees. An extra month of salary is to be paid as bonus every December.

    The Labor Code allows one holiday for every month of employment, and two weeks of holiday for every 50 weeks of employment. The employer may ask employees to take the holidays due on two separate occasions but not more than 15 weeks apart. These 'legal' holidays do not cover paid other paid holidays or weekends. The paid holidays are the public holidays as listed by the Government for various festivals and occasions of social importance.

    A personal income tax is also levied

    Employers are required to provide insurance cover to all employees. The Government regulates the insurance sector and private insurance is not allowed.

    Terminating the services of an employee is strictly regulated and difficult if the employer cannot clearly show a legal misdemeanor on the part of the employee. There are detailed laws to cover notice period, warnings, etc.

    When an employer sells the company, he is not responsible for the payments to the employees. The new employer is required to take care of all the dues of the staff.

    The Costa Rica Labor Code also covers domestic helps like cooks, maids, housekeepers, etc. There are special rules governing their employment conditions.

  • Costa Rica work permits for foreigners

    The Costa Rica Labor Code permits employment of foreigners but it is difficult and possible only if the employer is able to clearly prove that the skill set required is not available in Costa Rica. Foreign employees have to work on a temporary residence permit which may or may not be changed to a permanent one after three years.