Hiring Employees in Costa Rica: A Comprehensive Guide

Costa Rica is a strategically located country in Central America known for its biodiversity. Nicaragua surrounds it in the North, the Pacific Ocean to the West, the Caribbean Sea to the east, and Ecuador to the south. 

The political stability of Costa Rica accounts for its investment-friendly environment. With the growing foreign investment in Costa Rica, companies are keener on hiring a skilled and educated workforce. 

The Costa Rican Labor Laws are stringent, and stress the importance of documentation and protecting the rights of the employees, be it part-time, full-time, or contractual. This article deals with the different aspects of recruitment and selection in Costa Rica. 

Things to Know Before Hiring in Costa Rica

Listed below are some of the most important things about recruitment and selection in Costa Rica that employers should know before hiring individuals in Costa Rica. 

Working hours 

• Article 136 of the Costa Rica Labor Code (CRLC) states that employees must work eight hours daily. The working hours should not exceed 48 hours per week. 
• Employees working more than 48 hours a week are entitled to overtime compensation. In this case, an employee is paid 50% more than the regular salary. The CRLC also limits overtime working hours to four hours per day. 

Employment contract

• Employment contracts are defined by Articles 18 to 42 of the Costa Rica Labor Code. 
• The employer and the employee have to abide by the terms mentioned in these articles of the CRLC. 
• The employer and the employee will keep one copy of the contract each, and one copy will be submitted to the Employment Bureau, Ministry of Labor and Social Security. 
• The contract is an important part of recruitment and selection in Costa Rica and should contain the following details:

1. 1. Personal details of the employee 
   2. Address of employer and the employee. If the employee has a temporary address, every precise description must be noted in the contract
   3. The details of the identity cards should be noted 
   4. Nature and duration of employment 
   5. Details regarding remuneration and other payment details
   6. Working hours and overtime details 
   7. Place of work 
   8. Terms related to notice periods, the date the contract is being signed, and the location

Aguinaldo- The 13th month salary

• In Costa Rica, employees are paid a 13th-month salary. 
• All employees have the legal right to receive an additional income on Christmas. 
• The employee will receive the bonus between 1st December and 20th December. 
• The amount of this bonus is equivalent to a month’s salary. This Christmas bonus is known as Aguinaldo. 

Probationary period

• In Costa Rica, the probationary period is three months. 
• Senior-level roles might have a maximum probation period. 

Holidays 

Employees in Costa Rica are entitled to enjoy a holiday on the following events:

• New Year’s Day (Año Nuevo)
• Maundy Thursday (Semana Santa)
• Good Friday (Semana Santa)
• Battle of Rivas – Observed (Día de la Batalla de Rivas)
• Labor Day/May Day (Día del Trabajador)
• Our Lady of Los Angeles Day (Día de la Virgen de los Ángeles)
• Assumption of Mary/Mother’s Day – Observed (Día de la Madre)
• Day of Black People and Afro-Costa Rican Culture (Día de la Persona Negra y la Cultura Afrocostarricense)
• Independence Day (Día de la Independencia)
• Day of Abolition of the Army (Día de la Abolición del Ejército)
• Christmas Day (Navidad)

Leaves 

Anyone conducting the recruitment and selection process in Costa Rica should also know about the leaves employees are entitled to. 

• Annual leave: Employees in Costa Rica are entitled to at least two weeks of paid vacation for 50 days of continuous work with the same employer. 
• Sick leave: Employees who apply for sick leave will receive at least 50% of the remuneration for the initial three days. Fourth day onwards, if the employee is issued a medical certificate by a Social Security Administration (CCSS) doctor, CCSS pays them 60% of the salary.
• Maternity leave: In this case, the employer is bound to allow maternity leave to the employees for four months- one month before the birth of the child and three months after the birth. In this case, the employer pays 50% of the salary, and CCSS pays the other half for three months. 

Employee termination

There are two situations in which employers fire employees:

• With a just cause
• Without a just cause

In either case, employers must pay the employees the proportionate amount of Aguinaldo and vacations. However, there are more obligations on the employer’s end if they fire an employee without cause.

Notice period

• In Costa Rica, an employee’s notice period depends on the employment period’s length. 
• The notice period in Costa Rica is as follows:

Severance pay

• If an employer fires an employee without showing a definite cause, and the employee has worked for at least three months, the employer is bound to pay a severance payment. The amount is decided based on the employee’s work days.
• Employers must also issue an advance notice to the employees before terminating the professional relationship.
• The severance pay entitlement is as follows:

The Cost of Hiring an Employee in Costa Rica

The cost of recruitment and selection in Costa Rica includes an organization’s expenses in the recruitment process. These might vary depending on the recruitment process. 

• Advertising job: When hiring in Costa Rica, companies should advertise the job post on several job portals. This procedure costs the company a certain amount of money to attract potential employees from across the globe. 
• Onboarding costs: It takes time and a lot of effort and resources to integrate a new employee into the role he has been hired for. The onboarding phase prepares the employees in a way so that they can transition to their new roles. Companies have to make an initial investment to ensure employees can deliver quality work in the long run. 
• Training the new joiners: Some money is spent on training the employees to take up their new roles effectively. 
• Opportunity costs: Companies may not always make the best choice when they hire staff in Costa Rica. Opportunity cost refers to the difference between the returns a company gets due to the option not chosen and the returns from the chosen option. 
• Communication costs: In hiring, companies must constantly contact the applicants. This way, a certain amount of money is spent on communication costs. 
• Minimum wage and salary: Employees’ monthly minimum wage ranges between 352,164.91 to 752,220.04 CRC per month based on their education and skill level. 

What Does a Company Need to Hire Employees in Costa Rica?

The organizations must meet some basic criteria to hire staff in Costa Rica, which include:

• Businesses should have an entity, which means a local address of the business, a registered subsidiary address, and an account in a local bank. 
• Businesses should also know the rules and regulations before they hire employees in Costa Rica. 
• Employers should also be thoroughly knowledgeable about the role for which they appoint someone. 

Various Options for Hiring Employees in Costa Rica

If an employer is looking for options on how to hire employees in Costa Rica, there are two options:

• Employees can conduct the recruitment process in Costa Rica through local legal entities. They must set up an HR team with experience hiring people in Costa Rica. It can be costly as it includes several in-house processes and is time-consuming. 
• Employees can also hire through a PEO-EOR solution.  

The Steps to Hiring in Costa Rica

The hiring process in Costa Rica follows several steps. They are as follows:

• The hiring procedure begins with formulating the vacancy. The hiring organization creates a job description, sets the salary, and invites applications from candidates. 
• The organization then advertises the job for potential candidates to apply for the position. 
• It then filters the candidates and conducts interviews to choose the one who fit the best for the role. 
• The organization then discusses the salary with the candidates and agrees on a gross salary.
• After the candidates are hired, they are onboarded. 
• The employees are then trained for the specific role for which they have been hired. 

Let Multiplier be your EOR platform in Costa Rica

Multiplier EOR is a leading EOR platform that helps to ensure smooth recruitment processes while abiding by legal obligations globally. 

We offer SaaS-based EOR solutions that help you employ talent in various countries without establishing a business entity. We simplify the complexities of the legal systems of different nations and smoothen the recruitment and onboarding processes. Therefore, enjoy great professional relationships with your employees from overseas while Multiplier takes care of the rest.