If you are hiring someone in Costa Rica or if you already have employees, this article is for you.

At Outlier Legal, we often have clients who hire staff, but simply do not know how important it is to have protected both parties, especially themselves as the employer. The Costa Rican Labor Law is strict and hyper focused on the rights of the worker. We cannot stress enough about the importance of getting in writing, the rights, and obligations of both parties when you hire an employee.

This applies to full-time, part-time and contract-based work.

The contractual relationship applies under the following circumstances:

• Subordination: meaning a subordinate, a person who works for you.

• Payment for work performed, a salary or agreed upon amount.

• Personal provision of the service, the worker is an individual person and not a company.

Based on Costa Rican law, a labor contract must be signed in 3 originals, one for each party and another for the Ministry of Labor (Ministerio de Trabajo y Seguridad Social) which must be submitted to them after the contract is signed.

Labor contracts are required because they provide protection, stability, confidentiality, credibility, clearly defined duties and security for both parties.

Please note, there are two instances where the Costa Rican labor law allows for oral contracts:

• Agricultural or livestock work

• Temporary work that does not exceed 90 days. *Important to note*: at the request of the worker, the employer is obligated to issue a written record of the number of days worked and earnings every 30 days.

If the intended employment is not one of the two exclusions above, the relationship will need a written labor contract.

The role of the Ministry of Labor (MTSS) is the one of a government institution that oversees the employee/employer relationship and establishes minimum wages for the entire country. For this year’s minimum wage requirement, please see the following link: https://bit.ly/3KgiM1Z

The main requirements of the labor contract are the following:

• Names, nationality, age, gender, civil status (marital status), ID number and exact legal domicile.

• Term of the contract

• Working hours

• Overtime agreements

• Job description, duties, responsibilities and tasks

• Compensation

• Conditions

• Exact legal address of the workplace

• Cantón, Distrito, and date of signature

• Signatures of both parties

In case you require a sample contract, the Ministry of Labor (Government Labor Department) can provide you with a draft “boilerplate” document. Normally this is requested in person.

The law establishes the following mandatory obligations on the part of the employer:

1. Wages

2. Social Security: Payroll with CCSS “CAJA”

3. Worker’s compensation insurance: Insurance with the National Insurance Institute “INS”

4. Working hours

5. Vacation and holidays

6. Maternity leave, Paternity leave and breastfeeding accommodation.

7. Right of notice of termination

8. Severance payment: Also known as “Cesantía”

9. Christmas Bonus: Also known as “Aguinaldo”

10. Overtime

Whether the agreement is verbal or written, the above points are non-negotiable. The employer must obey the mandatory requirements for their employees.

The absence of an employment contract does not exempt the employer from their responsibilities.

In case of an addendum to the contract, the worker must accept them to proceed.

The rules for terminations of contracts or dismissals are based on the contract, relationship and each case.

A labor contract is a benefit for both parties and provides a good basis for the relationship.

Outlier Legal is here to help if you need further guidance in the process of hiring or dismissing an employee.