Nicoya, Costa Rica is one of the five “Blue Zones” which are places where people consistently live up to 100 years old or more.
Payroll and Benefits Guide - Costa Rica
Fun Facts
In Costa Rica, conventional street addresses are rarely utilized. Instead, directions are given based on recognizable landmarks.
Despite its relatively small size, the country has 5% of the world’s biodiversity.
Since it was abolished 75 years ago, Costa Rica has no military force.
As of 2021, it is the first carbon-neutral country in the world.
Costa Rica is the home to almost 2,000 species of birds.
Contributions
Employee Payroll Tax
| Medical & Maternity | 5.50% |
| Disability, Old Age & Death Benefits | 4.17% |
| Workmens Savings Banks | 1.00% |
Employer Payroll Tax
| Health and Maternity | 9.25% |
| Basic Pension Scheme | 5.42% |
| Family Assignations | 5.00% |
| Complementary Pension Fund | 2.00% |
| Labor Capitalization Fund | 1.50% |
| INA | 1.50% |
| National Insurance Institute (INS) | 1.00% |
| Social Aid (IMAS) | 0.50% |
| Banco Popular Employer Fee | 0.25% |
| Contribution from Banco Popular Employer | 0.25% |
| Solidarity Association (optional cost | 5.00% |
Payroll
Payroll Cycle
Payroll in Costa Rica typically runs on a monthly cycle.
13th Salary
The law requires employers to pay all employees a 13-month salary to be given by December 20th of every year.
Work Hours and Week
A work week may range from Monday to either Friday or Saturday. Daytime employees may only work up to 48 hours while nighttime employees’ legal limit is 36 hours.
Overtime
Any additional hours after the 48-hour cap is considered and paid as overtime with a 150% pay rate and work done on holidays have 200% pay rate. A 4-hour maximum of daily overtime is fixed.
Leave
Paid Time Off
At least fifty continuous weeks of employment grants employees 14 days of paid time off. Otherwise, an employee is granted a day of leave per month.
Public Holidays
There are 11 public holidays in Costa Rica.
Sick Days
With the requirement of a medical certificate within 48 hours, all employees are given paid sick leave at a rate of 100% for the first three days. From the fourth day onwards, an employee is paid 60.00% of his normal rate by social security.
Maternity Leave
Pregnant employees are given four months of maternity leave starting on a month before the due date and three months after birth.
Paternity Leave
Fathers working for public entities are entitled eight days of paid leave while the law does not have provisions for those in private agencies.
Parental Leave
Parental leave is also not required by law for employees in private agencies.
Other Leave(s)
Costa Rican employees are given three days of paid time off in the event of a death of an immediate relative.
Termination
Termination Process
The country follows the regular termination process, but compared to other countries, they are not required to give a written dismissal letter to an employee unless requested.
Notice Period
Depending on the length of service, the notice period could be none at all up to a month.
Severance Pay
Like notice periods, the amount of severance pay given to an employee depends on length of service. The lowest amount is 7 days worth of pay at minimum of 3 months of work and peaking at 22 days with 7-9 years of service. It then declines to 20 days from 10 years onwards of service.
Probation Period
Probation Period
It greatly depends on what type of work one is employed, but it typically lasts up to three months.
Immigration
Regardless of a foreigner’s necessity for an entry visa, they still need to get a work visa from either a Consular or the Restricted Visa Commission when they want to conduct any type of work in Costa Rica.
VAT
The commonly used standard rate of VAT in Costa Rica is 13.00%