Employers must follow specific rules when putting together employment contracts or risk non-compliance with labour laws. However, these rules are different in every country — and a compliant contract in one place won’t necessarily fit the bill in another jurisdiction.
For example, employment contracts in Costa Rica must usually be concluded in writing, except in certain specific cases. They must also be signed in three copies, one of which must be sent to the Ministry of Labour and Social Security. There are also specific rules concerning probationary periods, fixed-term contracts, and remote work, among many other things.
In this section, we will walk through everything you need to know about employment contracts in Costa Rica as an employer. We’ll cover the basic terms and conditions that must be included in a valid employment contract, plus additional clauses that employers can choose to incorporate. We’ll also explore the rules surrounding fixed-term contracts and extensions. Lastly, we’ll discuss maximum working hours in Costa Rica in different scenarios, the rules surrounding overtime, and employer responsibilities in remote working arrangements.
The Costa Rican Labour Code specifies the minimum terms that must be included in an employment contract, which employers must be aware of. Read on to learn what you need to know about mandatory and optional contract terms in Costa Rica.
Employment contracts in Costa Rica must include at least the following terms:
In Costa Rica, employment contracts can specify one of two types of working days:
Employers in Costa Rica can also choose to add certain other terms to their employment contracts, even if these are not mandated by law. For example, you could include:
In Costa Rica, the standard form of employment is employment for an indefinite period. However, employers can also choose to engage workers on a fixed-term contract if they only require their services for a limited period of time. There are strict limitations on the use of fixed-term contracts in Costa Rica according to the Labour Code.
Fixed-term contracts in Costa Rica can only be agreed upon when they are merited by the nature of the work. For example, an employer may use a fixed-term contract to engage an employee to work on a specific project, or to replace a colleague who is temporarily away from work (e.g. on maternity leave). Fixed-term contracts are not permitted when the nature of the work is permanent. The maximum duration of a fixed-term contract in Costa Rica is one year.
While fixed-term contracts are intended to meet temporary needs, employers sometimes continue to require the services of the worker after the term is reached. Read on to learn what you need to know about extending or renewing a fixed-term contract in Costa Rica.
In general, fixed-term contracts in Costa Rica terminate automatically at the expiry of their term. Employers are typically not required to give notice to end a fixed-term contract or to pay severance pay to the employee.
Fixed-term contracts in Costa Rica are generally limited to a maximum period of one year. However, if special technical preparation is necessary to carry out the work, they can be extended for a maximum of five years. There is no limit on the number of successive fixed-term contracts that can be concluded with the same employee, as long as the total period does not exceed one year (or five years in special circumstances). Otherwise, if the employee is still required (and continues working) after the end of the contract, the agreement is interpreted as indefinite employment.
Each country sets its own rules on working hours, which employers must be aware of to ensure compliance. In Costa Rica, these are set by the Labour Code.
The standard working hours in Costa Rica depend on whether the employee works nights or days. Daytime hours are defined as hours between 5AM and 7PM. The maximum working hours in Costa Rica for daytime workers are eight hours per day and 48 hours per week. For non-hazardous roles, this can be extended to 10 hours per day as long as the 48-hour weekly maximum is respected.
Employees working night shifts (between 7PM and 5AM) are limited to six hours per day and 36 hours per week. Employees who work mixed shifts (both daytime and nighttime hours) can work a maximum of seven hours per day and 42 hours per week.
Special working hours in Costa Rica apply to workers who are exempt from ordinary working hours rules. These include managers, administrators, representatives, and other trusted employees.
Overtime is permitted in Costa Rica within certain limits. Specifically, employees can work up to four hours of overtime per day as long as this does not exceed 12 hours in a given week. Overtime must be compensated at a rate of 150% of the employee’s regular hourly rate. Work on public holidays must be paid at 200% of normal wages.
Employees in Costa Rica are entitled to a minimum of one 30-minute break for every continuous workday. This break is counted as part of their effective working time and must be paid. Additional breaks can be unpaid. Employees are also entitled to a period of at least 24 consecutive hours of rest per week. This is generally granted on Sundays but can be on another day based on agreement between the employee and the employer and as required by the nature of the work.
Over the past few years, remote work has greatly increased in popularity in many countries around the world — and Costa Rica is no exception. Read on to learn what you need to know about remote work in Costa Rica.
Remote work (teletrabajo) in Costa Rica is formally recognised and primarily governed under the Law on the Regulation of Teleworking (Law No. 9738). This law provides a legal definition of remote work as well as a legal framework to protect both employers and employees in remote working arrangements. The law includes the following key requirements:
Costa Rica is among the many countries to have introduced a specific visa for remote workers (sometimes referred to as digital nomad visas). Applicants for this visa must make at least USD 3,000 per month and meet certain other requirements. It does not allow applicants to work for companies based in Costa Rica.
Like all countries, Costa Rica has its own rules and regulations when it comes to employment contracts — and non-compliance could land your company in hot water.
Thankfully, our team is experienced in drawing up tailored, compliant contracts in Costa Rica (and more than 100 countries worldwide). That means that, when you work with us, you won’t need to waste time worrying about whether you’ve got it right. Instead, you can focus on what matters: your business.
With our EoR solution, you can engage workers anywhere in the world, without putting your business at risk. No more worrying about local labour laws, tax legislation or payroll customs — we’ve got you covered.
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