Employer of Record in Costa Rica: how to hire compliantly without an entity.
Employ Latam is an employer of record in Costa Rica. We become the legal employer for your hire, so you can employ full-time staff there without setting up an entity. Locally compliant contracts, monthly payroll, statutory benefits, taxes. Below: what the law actually requires, in plain English.
- Country
- Costa Rica
- ISO code
- CR
- Region
- North America
- Phone code
- +506
- Employ Latam coverage
- Full EOR + contractor payments
Last updated July 2026
Overview
Costa Rica is one of the more established hiring destinations in Latin America, with a stable legal system, a well-developed social security regime (CCSS), and a workforce known for strong English proficiency and technical skills, particularly in tech, customer support, and shared services roles. Employ Latam gives you a locally compliant employment contract for your Costa Rica hire, handles statutory contributions, and runs payroll in local currency, without you setting up a legal entity there.
Costa Rican labor law is detailed and protective of employees. The Labour Code sets clear rules on working hours, notice, severance, and paid leave, and layers on mandatory benefits like the aguinaldo (13th-month payment) and a mandatory employee savings fund (FCL). Misclassifying a worker as a contractor when the relationship shows subordination, personal service, and fixed pay is a real risk, since Costa Rican authorities look at how the work is actually performed, not just what the contract calls it.
Country at a glance
| Category | Details |
|---|---|
| Currency | Costa Rican colón (CRC) |
| Working week | 48 hours (standard daytime schedule) |
| Standard workday | 8 hours (up to 10 hours under an agreed accumulated schedule for non-hazardous work, capped at 48 hours/week) |
| Probation period | Up to 3 months |
| Notice period | Statutory minimum ranges from 1 week to 1 month depending on tenure (typical average around 3.6 weeks) |
| 13th-month salary | Mandatory (aguinaldo), paid within the first 20 days of December |
| Payroll cycle | Monthly for intellectual/office workers; up to fortnightly for manual workers |
Employers should budget beyond base salary. Employer social contributions run at roughly 24.6% of gross pay, covering health insurance, pension (IVM), family allowances, and other statutory funds. On top of that, the aguinaldo adds around one-twelfth of annual salary, and occupational-risk insurance is a separate, mandatory policy priced to the actual job activity. Employees see their own deduction of roughly 9.8% of gross pay for health and pension contributions.
Leave entitlements matter for planning. Statutory annual leave is two weeks after 50 weeks of continuous service, and Costa Rica observes 12 public holidays a year, nine of which carry compulsory pay rules. Maternity leave runs four months in total (one before birth, three after), split between employer and CCSS funding, and paternity leave gives two days a week for four weeks following birth.
Employment contracts and worker types
Costa Rica's Labor Code sets the rules for how workers must be engaged. Getting the contract type right matters: misclassification can trigger back-payment of benefits, social security contributions, and severance.
Contract types at a glance
| Contract type | Typical use | Max duration | Probation allowed |
|---|---|---|---|
| Indefinite-term | Full-time, ongoing roles (the default) | No end date | Up to 3 months |
| Fixed-term | Seasonal work, projects, employee replacements | 1 year (up to 5 years for specialized technical roles) | Up to 3 months |
| Part-time | Reduced hours, any sector | Indefinite or fixed-term framework applies | Up to 3 months |
A fixed-term contract that runs beyond one year converts automatically to indefinite-term, unless the role qualifies for the specialized technical exception. That conversion triggers full indefinite-contract protections: notice periods, severance, and all statutory benefits.
Written contracts and language requirements
All employment contracts must be written in Spanish and filed with the Ministry of Labor in three copies within 15 days of the start date. The only exception is verbal contracts, which are limited to agriculture, livestock, domestic services, and temporary work lasting 90 days or fewer.
Every contract must include:
- Full details of both parties
- Job title and duties
- Work location
- Hours and schedule
- Salary (stated in Costa Rican colones or USD)
- Probation period, if applicable
- Contract duration (for fixed-term)
Independent contractors
Costa Rica does not have a formal "freelancer" or "gig worker" legal category outside the Labor Code. Companies sometimes engage workers as independent contractors (servicios profesionales) to avoid employer obligations. The risk is real: if the relationship looks like employment (set hours, exclusivity, direct supervision), courts and the CCSS will treat it as one. That means back-contributions, interest, and potential penalties.
If the role is ongoing, involves regular hours, and sits inside your operational structure, an employment contract is the right instrument.
Telework
Law 10028, in force since 2021 and actively applied since 2023, requires a written telework addendum for any remote arrangement. It specifies equipment responsibilities, connectivity costs, and the right to disconnect. If your hire works remotely from Costa Rica, this applies from day one.
How Employ Latam handles this
We issue a locally compliant employment contract in Spanish, file the required copies with the Ministry of Labor, and register the worker with the CCSS before their first day. Onboarding goes live in 72 hours. You manage the work; we handle the paperwork.
Pricing starts from $349 per employee per month, varying by country and team size.
Hiring a contractor in Costa Rica
Many teams start with a contractor in Costa Rica before they hire an employee. We draft the contractor agreement, collect the contractor's local tax ID, pay them in local currency or USD, and withhold tax where Costa Rica requires it. You approve invoices and pay one USD invoice.
Contractor or employee
Before you start, we review the role and tell you whether it looks more like a contractor or an employee. How Costa Rica law draws the line is covered above.
When to convert
A contractor who works only for you, keeps set hours and uses your tools is effectively an employee under most Latin American labor law. We can move them onto an employment contract with us: same person, same pay.
Contractor payments from $29 per contractor per month.
Payroll, taxes, and the 13th-month salary
Payroll in Costa Rica runs on statutory contribution schedules set by the CCSS (social security), with fixed pay intervals and a mandatory year-end bonus. Employ Latam runs payroll against these rules directly, so contributions, aguinaldo accruals, and tax withholding are calculated correctly each cycle.
Pay intervals are capped by law: no longer than a fortnight for manual workers, and no longer than a month for intellectual workers and domestic employees. The contract should state the actual pay basis and dates, since a "monthly salary" doesn't always mean one single payment per month.
The aguinaldo (13th-month salary)
The aguinaldo is mandatory. Employees who complete at least one continuous month with the same employer qualify. It's calculated by adding ordinary and overtime earnings from 1 December to 30 November and dividing by twelve. For a full year at unchanged salary with no extra earnings, it equals one month's salary. It must be paid during the first twenty days of December, and any accrued (partial-year) aguinaldo becomes payable when employment ends.
Contributions
Costa Rica's employer contribution schedule totals 26.83% of gross salary; the employee side totals 10.83%.
| Contribution | Employer rate | Employee rate |
|---|---|---|
| Health insurance (CCSS) | 9.25% | 5.50% |
| Pension, IVM | 5.58% | 4.33% |
| Family allowances (FODESAF) | 5.00% | None |
| INA (training institute) | 1.50% | None |
| IMAS | 0.50% | None |
| Banco Popular allocation | 0.50% | 1.00% |
| Fondo de Capitalización Laboral (FCL) | 1.50% | None |
| Supplementary pension allocations | 3.00% | None |
| Total | 26.83% | 10.83% |
The state adds 1.75% to the pension system separately; this is not an employer cost. FCL is a distinct employee savings fund, not part of severance, and employees can withdraw it when employment ends or after five years with the same employer. Occupational-risk insurance (INS) is required but priced separately by activity and isn't part of this schedule.
Income tax
Employment income tax is withheld on a monthly marginal schedule. As of 2026, gross monthly income up to CRC 918,000 is exempt from salary tax. Above that: 10% up to CRC 1,347,000, 15% up to CRC 2,364,000, 20% up to CRC 4,727,000, and 25% above that, with each rate applying only to income in that band. Eligible child and spouse credits can reduce the final withholding. The top personal rate is 25%.
Illustrative example
For a gross monthly salary of CRC 1,000,000: employer contributions of 26.83% add CRC 268,300, bringing the employer's subtotal to CRC 1,268,300. Reserving one-twelfth for aguinaldo adds roughly CRC 83,333/month, for a running budget near CRC 1,351,633, before occupational-risk insurance, provider fees, and any extra benefits. On the employee side, 10.83% in contributions (CRC 108,300) plus CRC 8,200 in salary tax leaves about CRC 883,500 in take-home pay before other deductions.
Mandatory benefits, vacation, and parental leave
Costa Rica's Labour Code sets a floor for employee benefits that applies regardless of contract wording. As the employer of record, Employ Latam runs these entitlements through payroll so nothing gets missed or miscalculated.
Aguinaldo (13th-month salary). This is mandatory. It's calculated by adding ordinary and overtime earnings from December 1 to November 30 and dividing by twelve, then paid during the first twenty days of December. For a full year at a stable salary, it equals one month's pay. Accrued aguinaldo is also payable if employment ends before December.
Social security contributions. Employers contribute 24.618% of gross salary and employees contribute 9.849%, covering health insurance, pension (IVM), family allowances, and other statutory funds. Employers also fund the FCL (Fondo de Capitalización Laboral) at 1.5% of salary, a separate savings pot employees can access at termination or after five years with the same employer.
Working hours and overtime. The statutory work week is 48 hours. Work beyond the ordinary schedule is paid at a 50% premium over the regular rate.
Notice and severance. Typical notice runs about 3.6 weeks depending on tenure, and severance for termination without cause averages around 14.4 weeks, calculated on a service-based table capped at eight years of service.
Probation. Maximum probation is 3 months, though statutory rights (wages, social security, protection from unlawful dismissal) apply from day one.
Leave entitlements
| Leave type | Entitlement | Paid by |
|---|---|---|
| Annual leave | 10 working days (2 weeks) after 50 weeks of continuous service | Employer |
| Sick leave | Employer pays 50% for the first 3 days; CCSS pays a subsidy from day 4 (typically up to 60% of salary) | Employer (days 1-3), CCSS (from day 4) |
| Maternity leave | 17.3 weeks total (1 month before birth, 3 months after) | Shared equally by employer and CCSS |
| Paternity leave | 1.1 weeks (2 days per week for the first 4 weeks after birth) | Employer, per statutory procedure with CCSS |
| Public holidays | 12 days per year (9 with compulsory pay, 3 with payment rules tied to pay schedule) | Employer |
Additional entitlements to plan for: bereavement leave (3 paid days for first-degree relatives, 1 day for second or third degree), adoption leave (3 months, shareable between joint adopters), and paid breastfeeding time (at least 25 minutes every 3 working hours, plus a 1-hour feeding break, for the child's first year with extensions available on medical certification).
Vacation must be scheduled within 15 weeks of the employee completing the 50-week qualifying period. Leave can't generally be cashed out except at termination, when accrued but unused days must be settled.
Severance, termination, and notice periods
Costa Rica's Labor Code draws a clear line between termination with just cause and termination without cause. Getting this wrong is expensive.
Just-cause termination
Dismissal for cause (serious misconduct, repeated absences, fraud) requires documented proof. If the cause holds up, you owe no severance and no notice pay. If it doesn't hold up in a dispute, the termination is treated as without cause and full severance applies. Document everything before you act.
Without-cause termination
When you end an indefinite-term contract without cause, two obligations kick in immediately:
- Notice pay: equivalent to the notice period the employee was entitled to (up to one month's salary for employees with more than one year of tenure).
- Severance (cesantía): calculated at approximately one month's salary per year worked, prorated for partial years.
Both amounts are due at the time of termination. There is no ongoing severance fund like Brazil's FGTS. The obligation accumulates on paper and is settled at the moment of dismissal.
Fixed-term contracts
A fixed-term contract ends at the agreed date without severance, provided the term was genuinely justified. If the contract renews repeatedly or exceeds one year without justification, Costa Rican law treats it as indefinite. At that point, without-cause termination rules apply in full.
Notice and severance table
| Tenure | Notice period | Severance owed (without cause) |
|---|---|---|
| Less than 3 months | None | None |
| 3 to 6 months | 1 week | 7 days' salary |
| 6 months to 1 year | 2 weeks | 14 days' salary |
| 1 to 3 years | 1 month | ~19.5 days' salary per year worked |
| 3 to 5 years | 1 month | ~20 days' salary per year worked |
| 5+ years | 1 month | ~21 days' salary per year worked |
Notice can be worked out or paid in lieu. Severance is capped at eight years of accumulated pay under the Labor Code, though collective agreements may vary.
Probation period
Indefinite-term contracts can include a probation period of up to three months. During probation, either party can terminate without notice or severance. Once probation ends, full protections apply.
Disputes
Termination disputes go first to the Ministry of Labor (MTSS) for conciliation, then to labor courts if unresolved. Costa Rica's labor courts move relatively quickly by regional standards, but a contested dismissal can still take months. Clean documentation of the cause, the process, and the final settlement is your best protection.
Recent regulatory changes
Costa Rica's labor framework has moved on several fronts over the past two years, mostly through Constitutional Chamber rulings, CCSS and pension-regulator updates, and ministry decrees rather than a single sweeping reform. Employers hiring through an EOR do not need to file anything themselves, but the changes affect budgeting, leave planning, and remote-work contracts.
What changed:
- Breastfeeding protections expanded. The protection period now runs through the child's first year as a minimum, with certified extensions every three months. Paid feeding time (one hour per day) and a separate 25-minutes-per-three-hours expression allowance now apply, along with a requirement for a private, hygienic space.
- Telework rules updated for cross-border arrangements. The 2025 amendment explicitly covers telework performed abroad and requires extraterritorial occupational-risk cover, plus confirms the employee's right to disconnect outside agreed hours.
- Court and labor-ministry attendance protections widened. A November 2025 reform expanded the categories of paid, protected time off for qualifying court appearances and labor-ministry proceedings.
- Paternity/co-maternity leave access broadened. A 2025 Constitutional Chamber ruling extended paternity-leave access to a non-gestational mother exercising co-maternity in a same-sex family.
- Annual wage and contribution schedules updated for 2026. Minimum wage categories, IVM rates (5.58% employer / 4.33% employee), and the standard 26.83% employer contribution schedule were all refreshed for 2026.
| Date | Change | Impact on employers |
|---|---|---|
| 2025 (CCSS/SUPEN annual update) | IVM pension rates set at 5.58% employer / 4.33% employee for 2026; state adds 1.75% | Payroll cost estimates must use current rates, not older published tables |
| Nov 2025 | Reform expands paid, protected time off for court and labor-ministry attendance | Employers cannot deduct wages or refuse leave for a wider set of qualifying proceedings |
| 2025 | Constitutional Chamber ruling extends paternity leave access to non-gestational co-mothers in same-sex families | Paternity leave eligibility criteria must be reviewed beyond the traditional father role |
| 2025 | Telework Law amendment covers work performed abroad and requires extraterritorial occupational-risk insurance | Remote hires working outside Costa Rica need updated insurance and contract terms |
| 2026 (effective) | Expanded breastfeeding rules: certified extensions past one year, paid 25-minute expression breaks every three hours | Employers must provide a private feeding/expression space and track paid break time |
| 2026 (annual decree) | Minimum wage schedule and standard 26.83% employer contribution schedule updated | Budgets built on 2024/2025 figures are now outdated; recalculate offer costs |
Most of these changes tighten protections for employees rather than creating new administrative filings for the hiring company itself, since Employ Latam absorbs registration, contribution calculations, and compliance tracking as the employer of record.
Frequently asked questions
- Do I need a local entity to hire in Costa Rica?
- No. An employer of record can legally employ and pay your Costa Rica-based hire on your behalf, handling the contract, payroll, and statutory contributions. You direct the day-to-day work while Employ Latam carries the local employer obligations. This lets you hire in Costa Rica without registering a company or navigating CCSS and labor ministry filings yourself.
- What is the most common employment contract in Costa Rica?
- The indefinite-term contract is the default and the most widely used. It has no fixed end date, carries full statutory protections from day one (subject to a probation period of up to three months), and is required for any role that is ongoing in nature. Fixed-term contracts are valid but must be justified by a genuine temporary need; otherwise, a court or the Ministry of Labor can reclassify them.
- When is the 13th-month salary (aguinaldo) paid in Costa Rica?
- The aguinaldo must be paid during the first twenty days of December each year. It's calculated from ordinary and overtime earnings between 1 December and 30 November of that period, divided by twelve. Employees need at least one continuous month of service to qualify, and any accrued but unpaid aguinaldo is due when employment ends.
- How much paid maternity leave is an employee in Costa Rica entitled to?
- Employees receive 17.3 weeks of paid maternity leave, structured as one month before birth and three months after. The payment is equivalent to full salary and is split between the employer and the CCSS (social security fund) under the applicable insurance rules. Employers should confirm the required medical certification with the employee before leave starts.
- How much severance is owed for terminating an employee without cause in Costa Rica?
- Severance (cesantía) is calculated at roughly one month's salary per year worked, with the exact daily rate scaling from about 19.5 days per year for shorter tenures up to 21 days per year for employees with five or more years of service. The total is prorated for partial years and capped at eight years of accumulated pay. Notice pay of up to one month's salary is also owed on top of severance, and both amounts must be paid at the time of termination.
- What are the most recent labor law changes in Costa Rica?
- The most notable recent changes are the expanded breastfeeding-protection rules (extending past the child's first year with paid expression breaks), the 2025 Telework Law amendment covering work performed abroad, and a Constitutional Chamber ruling broadening paternity leave to non-gestational co-mothers in same-sex families. Pension and minimum wage figures were also refreshed for 2026. None of these require action from the hiring company directly, since Employ Latam applies the updated rates and protections automatically through payroll and contract terms.
We handle the contract, payroll, taxes, and benefits in Costa Rica so you can hire that person this month.
Statutory figures for Costa Rica, each traced to a named source with its reference year. Sourced from OECD, the World Bank, the ILO, ISSA and national statutes.
Latest reference period: 2026
Figures are statutory reference values maintained internally and refreshed against primary sources. They are a starting point for planning, not legal advice — we confirm the exact numbers for your role before you hire.
What changed in Costa Rica
Checked against official sources on .
No rule changes recorded since we began logging them.
What a hire in Costa Rica costs
Employers in Costa Rica pay statutory contributions of 24.62% on top of gross salary. At the average monthly wage of CRC 606,508, that adds CRC 149,313 a month.
| Salary | Gross per month | Employer contributions | Total per month | Total per year |
|---|---|---|---|---|
| Minimum wage | CRC 367,109 | CRC 90,376 | CRC 457,485 | CRC 5,489,820 |
| Average monthly wage | CRC 606,508 | CRC 149,313 | CRC 755,821 | CRC 9,069,852 |
What the contributions pay for
- Health and long-term care9.25%
- Pension, invalidity and survivors8.67%
- Family benefits5%
- Unemployment insurance1.5%
Components: ISSA Country Profiles, as of Jan 2024
On top of this: the 13th salary where the law requires one, paid leave, and notice and severance if the employment ends (all in the tables above), plus our employer of record fee, from $349 per employee per month. Every quote we send breaks each of these out for the actual role.
Found someone in Costa Rica? Let's employ them.
We'll send a fully-loaded cost breakdown for the role within a few hours, then draft a locally compliant employment contract. Most Costa Rica hires can start within 1 to 3 business days once docs are in.
Other countries we cover
Compare Employ Latam with other providers
Deciding how to hire in Costa Rica? See how our employer of record service stacks up against the global platforms, then pick the fit for where your hiring actually happens.
The talent is in Latin America. The hiring is on us.
Set up an account in three minutes. No credit card. No sales call. Hire one person, hire fifty. Pay only when they're on payroll.