The Republic of Costa Rica (República de Costa Rica) is situated in Central America and covers an area of 51,766 square kilometers. It shares borders with Nicaragua to the north, the Caribbean Sea along the northeastern coastline, Panama to the southeast, and the Pacific Ocean along the southwestern coastline. The country’s population is largely urban with the rural population accounting for less than 25% of the inhabitants. The services industry accounts for around 67% of the Gross National Product (GNP).
*Please note that the official currency is the currency of remuneration when employed through WorkMotion in Costa Rica.
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The Republic of Costa Rica (República de Costa Rica) is situated in Central America and covers an area of 51,766 square kilometers. It shares borders with Nicaragua to the north, the Caribbean Sea along the northeastern coastline, Panama to the southeast, and the Pacific Ocean along the southwestern coastline. The country’s population is largely urban with the rural population accounting for less than 25% of the inhabitants. The services industry accounts for around 67% of the Gross National Product (GNP).
*Please note that the official currency is the currency of remuneration when employed through WorkMotion in Costa Rica.
The national holidays mentioned below are valid for the year 2026 and are critical for hiring in Costa Rica planning:
The holidays mentioned below are valid for the year 2026.
| January 1 | New Year's Day | |
| April 2 | Maundy Thursday | Movable |
| April 3 | Good Friday | Movable |
| April 11 | Juan Santamaria Day | |
| May 1 | Labour Day | |
| July 25 | Annexation of Guanacaste Day | |
| August 2 | Lady of the Angels Day | |
| August 15 | Assumption Day / Mother's Day | Movable (Mother's Day) |
| September 6 | Day of the Black Person and Afro-Costa Rican Culture | Movable |
| September 15 | Independence Day | |
| December 1 | Abolition of the Army | |
| December 25 | Christmas Day |
The approximate time for sharing the contract with an employee in Costa Rica is 14 business days assuming no special requests or changes to our standard employment contract. Any such requests or changes would need to undergo internal and external review, directly leading to a time delay.
NOTE: This number is subject to change and is only an estimation of the Contract Sharing Time. The estimated Contract Sharing Time begins from the moment that WorkMotion has received all required information from both the client and the employee.
Social Security in Costa Rica provides medical assistance, maternity assistance, and pensions. Employers pay approximately 26.67% of wages towards statutory benefits.
An overview of the statutory benefits is presented in the table below:
| Category | Employer Contribution |
| Basic Pension (Old age, invalidity and survivors) | 5.42% (gradually increasing to 5.75% by 2035) |
| Sickness and Maternity | 9.25% of monthly covered payroll. |
| Family and Household Benefits | 5% of monthly payroll |
| National Training Institute | 1.5% |
| Social Welfare Institute (Instituto Mixto de Ayuda Social – IMAS) | 0.5% |
| Worker Owned Development Bank (Banco Popular y de Desarrollo Comunal) | 0.5% |
| Workers Pension Fund (Fondo de Capitalización Laboral-FCL) | 1.5% |
| Complementary Pension Fund | 2% |
| National Insurance Institute | 1% |
| Accidents at Work and Occupational Diseases | Premium varies according to assessed degree of risk. |
Daytime working hours are eight hours per day or up to a maximum of 48 hours per week. The working hours can be extended to nine per day provided the work and its environment do not adversely affect the health of the employee. Employees are entitled to a minimum rest period of 30 continuous minutes.
Work performed beyond the stipulated normal working hours is classified as overtime. The maximum overtime that an employee can work is four hours per day (maximum 12 working hours per day inclusive of overtime). Overtime is not permitted in unhealthy or dangerous jobs.
Overtime work is paid at plus 50% of the normal wage rate. When overtime is worked on holidays, it is paid at double the rate.
The Labor Code does not specifically provide for a probation period, but it is a customary practice to give a probation period of three months.
Each of the parties may terminate the contract without just cause, by giving prior notice to the other, in accordance with the following rules:
| Period of Continuous Work | Applicable Notice Period |
| 0 to 3 months | No notice required |
| From 3 months to 6 months | 1 week |
| Over 6 months to 1 year | 15 days |
| Over 1 year | 1 month |
Daytime working hours are eight hours per day or up to a maximum of 48 hours per week. The working hours can be extended to nine per day provided the work and its environment do not adversely affect the health of the employee. Employees are entitled to a minimum rest period of 30 continuous minutes.
Work performed beyond the stipulated normal working hours is classified as overtime. The maximum overtime that an employee can work is four hours per day (maximum 12 working hours per day inclusive of overtime). Overtime is not permitted in unhealthy or dangerous jobs.
Overtime work is paid at plus 50% of the normal wage rate. When overtime is worked on holidays, it is paid at double the rate.
The Labor Code does not specifically provide for a probation period, but it is a customary practice to give a probation period of three months.
Each of the parties may terminate the contract without just cause, by giving prior notice to the other, in accordance with the following rules:
| Period of Continuous Work | Applicable Notice Period |
| 0 to 3 months | No notice required |
| From 3 months to 6 months | 1 week |
| Over 6 months to 1 year | 15 days |
| Over 1 year | 1 month |
Social Security in Costa Rica provides medical assistance, maternity assistance, and pensions. Employers pay approximately 26.67% of wages towards statutory benefits.
An overview of the statutory benefits is presented in the table below:
| Category | Employer Contribution |
| Basic Pension (Old age, invalidity and survivors) | 5.42% (gradually increasing to 5.75% by 2035) |
| Sickness and Maternity | 9.25% of monthly covered payroll. |
| Family and Household Benefits | 5% of monthly payroll |
| National Training Institute | 1.5% |
| Social Welfare Institute (Instituto Mixto de Ayuda Social – IMAS) | 0.5% |
| Worker Owned Development Bank (Banco Popular y de Desarrollo Comunal) | 0.5% |
| Workers Pension Fund (Fondo de Capitalización Laboral-FCL) | 1.5% |
| Complementary Pension Fund | 2% |
| National Insurance Institute | 1% |
| Accidents at Work and Occupational Diseases | Premium varies according to assessed degree of risk. |
WorkMotion handles the full employment lifecycle in Costa Rica through its partner network, from contract generation to monthly payroll remittance, so your company can bring on a Costa Rican hire without registering a local entity or navigating the Código de Trabajo alone.
Every hire starts with a written employment contract in Spanish, a legal requirement under Costa Rica’s Labor Code (Código de Trabajo).
The contract must clearly define:
WorkMotion generates a locally compliant contract through its partner network, covering all mandatory clauses required by the Ministry of Labor and Social Security.
Verbal agreements are not valid for full-time employment in Costa Rica, and contracts that omit statutory terms expose the employer to labor court liability.
Before the first payroll run, the employee must be registered with the Caja Costarricense de Seguro Social (CCSS), Costa Rica’s social security administration. This registration covers healthcare, pensions, disability, and maternity benefits.
WorkMotion’s partner network handles this registration on your behalf, along with any additional declarations required by the Ministry of Labor.
Failure to register employees with the CCSS triggers significant penalties and can result in back-payment of contributions.
Costa Rica’s payroll obligations are multi-layered. Employer contributions to the CCSS run approximately 26.67% of gross salary, covering health and maternity insurance, pensions, and other statutory schemes.
Employees contribute approximately 10.67% of their gross salary, which the employer must withhold and remit.
On top of CCSS contributions, employers must obtain labor risk insurance (INS) from the National Insurance Institute, with rates that vary by occupational risk category.
WorkMotion configures payroll to account for all of these components before the first payment is processed.
To estimate the full employment cost for a Costa Rican hire, use the WorkMotion Employment Cost Calculator.
Costa Rican law mandates a specific set of employee benefits that go beyond base salary. WorkMotion administers all of the following on your behalf:
Costa Rica typically operates on bi-monthly payroll cycles, with payments on the 15th and last day of each month, though monthly cycles are also used.
WorkMotion processes payroll in Costa Rican Colón (CRC), withholds employee income tax on a progressive scale (0% to 25%), deducts employee CCSS contributions, and remits all employer-side contributions to the relevant authorities.
Income tax must be filed by the 15th of the following month; social security contributions are due by the end of the month. Late filings carry penalties of 1% per month on the outstanding balance, up to a maximum of 20%.
Costa Rica’s minimum wages are updated annually by the Ministry of Labor on an occupation-by-sector basis.
Contribution rates also change. The IVM pension regime, for example, increased its total contribution rate in January 2026.
WorkMotion monitors regulatory updates through its partner network and applies revised rates, thresholds, and statutory terms to each payroll cycle, so your employment arrangements stay current without requiring your HR team to track every change.
For most companies hiring one to ten people in Costa Rica, the EOR model removes the overhead of entity setup while delivering the same statutory compliance and CCSS coverage. Here is how the two paths compare:
| Factor | WorkMotion EOR | Setting Up a Costa Rica Entity |
| Setup cost | No entity setup cost; per-employee monthly fee | Estimated $2,000–$5,000+ in first-year incorporation, legal, and notarization fees, plus ongoing annual compliance costs |
| Time to first hire | Days to a few weeks from signed contract | Can be between 4–12 weeks for incorporation, plus additional time for CCSS registration, tax registration, and bank account setup |
| Ongoing legal exposure | WorkMotion’s partner network holds legal employer responsibility; compliance managed end to end | Your entity is the legal employer; all labor law, CCSS, INS, and tax obligations fall on your team |
| Ongoing admin burden | Payroll, CCSS filings, INS premiums, aguinaldo calculations, and statutory reporting handled by WorkMotion | Requires local legal counsel, a registered local representative, annual beneficial ownership reporting, and ongoing compliance management |
| Exit flexibility | Scale down or exit without entity dissolution costs or procedures | Dissolving a Costa Rican entity involves formal legal steps, ongoing obligations until dissolution is complete, and potential severance liabilities |
EOR fits companies that need to hire quickly in Costa Rica, are testing the market, or are building a small team without committing to a permanent local structure.
Entity setup becomes worth evaluating when you expect a long-term presence of 15 or more employees in-country, need to bid for government contracts, or require direct contractual relationships with local customers.
Costa Rica’s Labor Code is employee-protective by design.
Most compliance failures by international companies aren’t intentional. They come from applying home-country assumptions to a jurisdiction with different rules.
Here are the areas where overseas businesses most commonly run into problems.
The 13th-month bonus, the aguinaldo, is a statutory entitlement, not a discretionary year-end payment. It equals one-twelfth of all remuneration earned during the qualifying period and must be paid by December 20 each year.
Employers who miss the deadline face fines that can exceed ₡10 million.
WorkMotion accrues the aguinaldo throughout the year and processes the payment on schedule, so there are no year-end surprises.
Companies new to the Costa Rican market frequently underestimate the true cost of employment.
Employer contributions to the CCSS run approximately 26.67% of gross salary, covering health and maternity insurance, pensions, and other statutory schemes.
Add labor risk insurance through the INS (rates vary by industry), and total employer costs can reach approximately 27–28% of gross salary before the aguinaldo accrual.
WorkMotion provides a full cost breakdown before you commit to a hire.
A written employment contract in Spanish is legally required for all full-time employees in Costa Rica.
Contracts in English only, or contracts that omit mandatory clauses on working hours, benefits, and termination terms, do not satisfy the Código de Trabajo.
WorkMotion generates Spanish-language contracts aligned with local labor law requirements through its partner network.
Paid vacation in Costa Rica accrues at a rate of two weeks for every 50 consecutive weeks of service, not on a calendar-year basis as in many European jurisdictions.
The employer must grant this vacation within 15 weeks of it becoming due. Employees are also entitled to a vacation bonus of 50% of their vacation pay.
Businesses that apply their home-country vacation policies to Costa Rican hires risk non-compliance.
Costa Rica allows termination without just cause, but it triggers a severance obligation (cesantía) calculated based on the employee’s length of service and salary. Notice periods also apply, varying by tenure.
Employers who skip the severance calculation or serve notice incorrectly face labor court proceedings, and Costa Rican labor courts are known for backlogs that can extend two years or more.
WorkMotion guides compliant termination processes through its partner network to reduce this exposure.
Income tax must be remitted to the Dirección General de Tributación by the 15th of the following month. CCSS contributions are due by the end of the month.
Late or incorrect filings carry penalties of 1% per month on the outstanding balance, up to 20%, and in cases of omission or fraud, penalties can reach 50–150% of the tax due.
WorkMotion manages all filing deadlines as part of the monthly payroll cycle.
Costa Rica’s bilingual, technically educated workforce and time zone alignment with US Central Time make it an increasingly attractive nearshore destination for European and US-based tech companies.
A B2B SaaS company headquartered in Germany or the Netherlands that needs to expand its engineering capacity, without the cost and timeline of setting up a local subsidiary, uses WorkMotion’s employer of record in Costa Rica to hire developers and product specialists directly.
The hire is onboarded compliantly, paid in CRC, and covered by all statutory benefits from day one.
US companies that want a foothold in Central America often start with a single market-entry hire in Costa Rica: a sales lead, a customer success manager, or a regional operations role.
Rather than incorporating a local entity for one or two people, they use an employer of record in Costa Rica to move quickly. WorkMotion’s partner network handles the CCSS registration, Spanish-language contract, and monthly payroll, while the company retains full day-to-day control of the employee’s work.
Many of these businesses later expand south, adding hires in markets like Colombia as the regional team grows.
Costa Rica’s reputation as a leader in renewable energy and environmental policy makes it a natural base for green tech companies and NGOs operating in Latin America.
Organizations in this space, often with lean HR teams and no appetite for multi-country entity management, use WorkMotion’s EOR to employ regional program managers, field coordinators, and technical specialists compliantly, with all statutory benefits and CCSS obligations handled through the partner network.
Not sure which markets to prioritise alongside Costa Rica? WorkMotion’s Country Explorer helps you compare hiring conditions across 160+ countries to find the best fit for your team.
You’ve found the right person in Costa Rica.
The next step shouldn’t be a six-week entity setup, a CCSS registration project, or a search for a local labor lawyer who can draft a compliant Spanish-language contract.
WorkMotion handles all of it through its partner network:
Your new hire is onboarded compliantly, and your team stays focused on the work that matters.
Whether you’re hiring your first employee in Costa Rica or adding to an existing team, the EOR model removes the legal and administrative friction that typically slows international hiring down. Book a Demo to see how WorkMotion can get your next Costa Rica hire started.
WorkMotion provides employer of record services in Costa Rica through a vetted partner network rather than a wholly owned local entity. This means WorkMotion’s in-country partners hold legal employer responsibility and manage CCSS registration, payroll remittance, and statutory compliance on your behalf, while you retain full day-to-day control of the employee’s work. The partner network model is standard practice for EOR in Costa Rica and does not affect the compliance coverage your hire receives.
Costa Rica’s Labor Code permits a probationary period of up to three months for new employees. During this window, either party can terminate the employment relationship without triggering the full severance (cesantía) calculation, but the termination must still be handled correctly, and any wages, accrued vacation, and proportional aguinaldo owed up to the termination date must be paid. Companies that treat the probationary period as a no-obligation trial period and skip these final payments expose themselves to labor court claims.
Severance in Costa Rica is directionally tied to the reason for separation. If an employee resigns voluntarily without just cause, the employer is generally not obligated to pay cesantía. However, if the employee resigns due to a serious breach by the employer, a concept known as indirect dismissal (despido indirecto), the full severance entitlement applies as if the employer had terminated without cause. This distinction matters: companies that make unilateral changes to salary, role, or working conditions without following proper procedures can inadvertently trigger an indirect dismissal claim.
Beyond the aguinaldo and CCSS contributions, Costa Rican law requires employers to contribute to the National Learning Institute (INA) at 1.5% of gross payroll and to the Mixed Institute of Social Aid (IMAS) at 0.5%, both of which are separate from the main CCSS contribution rate. Employers must also obtain labor risk insurance (seguro de riesgos del trabajo) through the National Insurance Institute (INS), with premiums that vary by occupational risk category. These additional obligations are factored into WorkMotion’s payroll configuration from the first pay cycle, so the total employer cost is accurate before you commit to a hire.
Costa Rica’s Labor Code sets the standard working week at 48 hours for daytime work (up to 8 hours per day) and 36 hours for nighttime work (up to 6 hours per day). A mixed shift, combining day and night hours, is capped at 42 hours per week. Hours worked beyond these limits must be compensated at a 50% premium over the regular hourly rate for daytime overtime and at the regular rate for nighttime work up to the legal limit. For salaried employees in roles that involve variable hours, this means the employment contract needs to clearly define the applicable shift type to avoid ambiguity in overtime calculations.
Costa Rica does not use a single national minimum wage. Instead, the Ministry of Labor publishes a wage schedule updated twice per year, in January and July, that sets minimum rates by occupation and sector. Employers who set salaries without checking the applicable occupational category risk paying below the legal floor, which exposes them to Ministry of Labor inspections and back-payment obligations. WorkMotion monitors wage schedule updates through its partner network and applies revised minimums to payroll as they take effect.
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