Labor Law in Costa Rica

Costa Rica is characterized by having a solid labor framework, designed to guarantee fair working relationships and protect the rights of working people. This guide offers a clear and up-to-date overview of the main labor regulations in force, including information on contracts, working hours, teleworking, vacations, dismissals, and employer obligations.

If you are considering opening a business or doing business in Costa Rica, this information will help you comply with regulations and avoid penalties.

Legal framework in Costa Rica

The Labor Code (Law No. 2 of 1943) is the foundation of Costa Rican labor law. It regulates essential aspects such as contracts, working hours, rest periods, wages, vacations, dismissals, and fundamental rights.

In addition, there are complementary laws that strengthen labor protections:

• Law No. 6949 (Christmas Bonus) regulates the mandatory annual payment of the Christmas bonus, equivalent to the average of the monthly salary received during the year.

• Law No. 9343 (Equal Opportunities) prohibits discrimination based on disability in employment and requires guaranteeing accessibility and equal treatment.

• Law No. 7983 (Occupational Risks / Worker Protection) establishes the mandatory nature of Occupational Risk Insurance and creates the Mandatory Supplementary Pension Scheme.

• Law No. 9738 (Teleworking) regulates the teleworking modality through a formal agreement, guaranteeing the same rights and obligations as face-to-face work.

The Ministry of Labor and Social Security (MTSS in Spanish) is the authority responsible for applying, supervising, and monitoring these regulations.

Employment Contracts: Types and Requirements

In Costa Rica, the employment relationship must be formalized through a written contract, except in specific cases such as agricultural, occasional, or temporary work lasting no more than 90 days (Article 18 of the Labor Code). The contract is the legal basis that defines the rights and obligations between employer and employee, so its proper drafting is essential to ensure compliance and avoid disputes.

Essential elements of the contract

Every contract must include:

• Identification of the parties: full name, identification, and address of the employer and the employee. For legal entities, the company name and legal representative.

• Job description and functions: details of tasks, responsibilities, and work area, avoiding ambiguities.
  
  Working conditions
• Day: day, night, or mixed.
  

• Salary: amount, frequency, and currency.
• Payment method: transfer, check, or other authorized means.

• Contract duration

1. Indefinite: without an end date, applicable to most employment relationships.

2. Fixed term: with an end date, justified by the nature of the work.

• For a specific project: linked to a specific project.

• Other relevant aspects: place of service provision, additional benefits (bonuses, insurance, teleworking), and reference to internal policies.

Importance of the written contract

Although there are exceptions, written formalization is highly recommended because:

• It provides legal certainty to both parties.

• It facilitates the demonstration of conditions in case of conflict.

• It allows compliance with the inspection requirements of the Ministry of Labor and Social Security (MTSS). 

Working hours and overtime

The working day is regulated by the Labor Code and the Political Constitution:

• Day shift: maximum 8 hours per day and 48 hours per week (5:00 a.m. to 7:00 p.m.). It may be extended to 10 hours if there are no risks.

• Night shift: maximum 6 hours per day and 36 hours per week (7:00 p.m. to 5:00 a.m.).

• Mixed shift: maximum 7 hours per day and 42 hours per week, extendable to 8 hours if there are no risks.

Overtime

• They are paid with a 50% surcharge on the regular salary.

• They cannot exceed 4 hours per day.

Holidays and breaks

After 50 weeks of continuous work, the worker is entitled to two weeks of paid vacation.

• This corresponds to a minimum weekly rest period of 24 consecutive hours after six days of work.

• Official holidays are paid as established in the Labor Code.

Teleworking and current regulations

Decree No. 44756-MTSS, issued in accordance with Law No. 9738, establishes the general guidelines for the implementation of teleworking in Costa Rica. Under this framework, the conditions of the modality must be defined by mutual agreement between the employer and the worker, through a contract or specific addendum.

The employer has the responsibility to guarantee equal rights with respect to in-person work and to ensure that teleworking is not used to reduce benefits or evade labor obligations. However, the delivery of equipment, the payment of services such as internet or electricity, and any other associated resources are not obligations of the employer, but elements that must be expressly agreed upon in the teleworking agreement.

Employer obligations and social security

Employers must comply with many essential obligations, including:

• Timely payment of wages.

• Registration of personnel with the Costa Rican Social Security Fund (CCSS).

• Ensuring safe working conditions.

• Grant Christmas bonus, vacations, and corresponding licenses.

Employer contributions are around 26% of gross salary and include social charges, occupational risk insurance, and contributions to the pension system.

The Christmas bonus, regulated by Law No. 6949, is equivalent to the average monthly salary for the year worked. Maternity, sick leave, breastfeeding leave, and other protections are also included.

Conclusion

Costa Rica maintains a robust labor system that seeks to adapt to new dynamics such as teleworking and guarantee fair conditions for all parties. Compliance with these regulations is not only mandatory but also contributes to more transparent and sustainable labor relations.

If your company is considering starting operations in Costa Rica, understanding these regulations is essential. Expert advice can help you get started correctly and avoid future legal liabilities.

This article is for informational purposes only and does not constitute legal advice, and the information contained herein is subject to change. We recommend consulting with a qualified legal or compliance advisor before making any employment-related decisions.