The new ways in which the global market is gradually opening up, it has presented opportunities for employers to connect with the right candidates in Costa Rica However, it is a task that requires a Costa Rica Employer of Record to take care of all the legalities and compliances.
We at Globalization Solutions offer an extensive range of corporate and employment solutions to help your business with global expansion. In addition to assisting you in streamlining your business expansion, we also help you with end-to-end recruitment solutions to deploy strategic sources for hiring and onboarding skilled and fresh professionals!
Hiring in Costa Rica
The hiring process in Costa Rica consists of certain common steps and selection processes. These sectors depend on the company and the methods it uses to find applicants for employment. However, most employers go for a typical process that includes recruitment and hiring of new people consisting of several steps to align with local laws.
Costa Rica implies very strict rules and regulations to protect the citizens from fraud and unnecessary dismissals. It ensures workers' salaries and benefits effectively by enforcing strict laws in the country. It has also a set of laws to prevent discrimination such as employers are not allowed to hire employees based on age, race, color, religion, gender, disability, health, National origin, or any political opinion. At the same time, they are not meant to impose anything unreasonable on the employers too. If you are seeking to Employer of Record Costa Rica for handling down all these responsibilities of taking overall care, Globalization Solutions can assist you.
The best part of hiring in Costa Rica is that it has a large full of bilingual and professional employees. Employers can select them by aligning efficiently with the requirements even at lower rates. They in most cases need to understand the local culture to interact with job candidates comprehensively. Mostly Costa Ricans are casual talkers so you can wait for some time to start the conversation. This onboarding process can also be carried through the best Costa Rica Employer of Record who would evaluate the entire set of information about the pool of applicants that is accessed during the recruitment process. They would handle the onboarding process in specific ways like employment contracts. Once the assessment is completed, the employer can decide which applicant will be offered the position. Thus, the process becomes very easy, time-saving, and effective, at the time it is handled by experts.
When it comes to wages, a Costa Rican worker expects between $500 and 800 monthly. So, as these are the lower rates, the local government provides rights to the employees to get special benefits.
Some laws under the Label Procedure Reform define most of the country's Labour and Employment laws which declares that if there come any employment disputes throughout the period, they can be litigated orally in two hearings instead of written formalities. Also, it states that, in the case of termination, employees should be entitled to a personal dismissal letter stating the reasons.
Employment Contracts in Costa Rica
The hiring should not only be supportive to the employer but employees as well. While creating employment contracts, you need to be aware of all the local laws of Costa Rica regarding employees' protection. Though it is not challenging to learn, It becomes vital to understand all the compensation details and termination requirements for a full-fledged contract. However, Employer of Record Costa Rica can play your role and unwind your all stress.
Type of Contracts in Costa Rica - An employment contract can be verbal as well as a written agreement, and for a limited period or permanent. Contracts also get different types according to the structure of a working day. The structure can be of normal working days (Jornadas Ordinarias Normales) of 8 to 10 hours per day or special working days (Jornadas Especiales o de Excepcion) with work of 6 hours a day. The exception is for domestic servants who can work for 12 hours a day.
Working Hours in the U.S. - The normal weekly working hours in Costa Rica are 48, subdivided into day and night. It goes from Monday to Friday from 5 a.m. to 7 p.m. for the day shift and from 7 p.m. to 5 a.m. for the night shift including 15 minutes a coffee break and 30 minutes lunch break.
Employees can also get 4 hours of overtime from employees with 12 working hours a day or on Saturdays and Sundays at the rate of 150% of the typical salary.
Public holidays in the U.S. - Costa Rica follows a schedule of 9 public holidays. If the employer can't afford the holiday due to some urgent work, the employee can work on the mutual consent provided he/she is getting the time off on some other day within 15 days of the holiday.
There are 9 holidays in Costa Rica
• New Year’s Day
• Juan Santamaria Day
• Maundy Thursday
• Good Friday
• Labor Day
• Anexion del Partido de Nicoya
• Mother's Day
• Independence Day
• Christmas Day
Bonuses - In Costa Rica, employers are legally responsible for disbursing bonuses to employees as special incentives apart from the minimum wage. Guaranteed, employees in Costa Rica are entitled to Aguinaldo, the 13th-month salary paid within the first 2 days of the last month.
Probationary Period - According to the provisions of the labor code, the probation period in Costa Rica has a limit of 3 months during which an indefinite term contract can be terminated anytime without any notice.
Termination and Severance - Costa Rican government mandates to terminate an employee only for solid cause that should also be in Article 81 of the labor code. The employer may be liable only for the wages and bonuses without any legal nuances. However, employees terminated without any reason are entitled to severance pay, locally referred to as "Prestaciones Laborales”. It is paid on the last day of employment. Employees should get the advance notice of 30 days with the amount of severance pay depending on the period for which the employee has worked with the employer.
• If the employee has worked for between 4 to 6 months, he gets 7 days salary.
• If the employee has 1-year of working experience, he is paid 19.50 days.
• If the employee has 2 years or 3 years of working experience, he is paid for 20 days.
• If the employee has worked for 4, 5, 6, or 7 years, is a bed for 21, 21.24, 21.50, or 22 days respectively.
Costa Rica compensations & benefits
While expansion to new hiring, compensation, and benefits are an integral part for both employers and employees. The assistance of the best Costa Rica Employer of Record for the course of action can be a great decision. In the compensation guide, you need not only consider the minimum wages but also benefits and bonuses- both guaranteed and at-will. All details should be included in the agreement along with complying with the country's laws.
Costa Rica Compensation Law - The Costa Rica compensation law covers different areas such as salary, working hours, and overtime rules and amounts. The weekly working hours in Costa Rica are set to be 48 and the overtime pay should be 150% of the worker's regular salary. The minimum wage is determined by the National Wage Council, but you will find revisions every 6 months in the range. Apart from this, employers must offer employees 2 bonuses each year- Aguinaldo bonus that must be paid in two installments, once in June and other in December, and the Christmas bonus should be paid off between 1 and 20 December. According to Costa Rica's compensation laws, both bonuses should be equal to a month's salary. In most cases, it is recommended to get into the contact of an experienced Employer of Record Costa Rica to deal with such legalities. For more information, you can get in touch with us.
Guaranteed benefits - Guaranteed benefit management in Costa Rica includes 2 weeks of vacation after 50 weeks of work. It also consists of 9 paid public holidays. Depending on the job position, the paid employees are also entitled to holiday on Cultural day and Virgin of Los Angeles day. Additionally, they are especially entitled to a bonus of Aguinaldo as a 13th-month salary. Other than these, employers also offer sickness benefits and paid maternity leave. Such complicated legal procedures would certainly require assistance from the experienced Employer of Record for the purpose.
Maternity Leave - Pregnant employees receive the paid maternity leave of 1 month before the birth of the child and three months after it. Regardless of the delivery case, the employee will be entitled to the same rights of 4 months leave. The remuneration of 100% of the regular salary is paid 50% by RSS (Social Security Administration) and 50% by the employer. Also bear in mind that a female employee cannot be terminated during the pregnancy period, otherwise, it can be a serious issue.
Paternity Leave - As for paternity leave, the fathers are entitled to paid time off for 8 days. According to the country's constitutional court, it is mandatory for the fathers in the public sector. There must be no discrimination regarding the child's birth or the circumstances in which the child took birth.
Annual Leaves - In Costa Rica, workers are legally entitled to two weeks of paid vacation after 50 weeks of employment each year. It counts for at least 1 holiday every month. Costa Rica Labor code set this statutory benefit to entitle employees with sufficient incentive. The vacation period is paid by the employer according to the average earning during the previous 50 working weeks. Keeping account of all these seems complex but an employer of record can undoubtedly make the process simple with their strategic functioning.
Sick Leave - As for sick leaves, currently, there is the rule for employers to pay half of the employee's regular salary for the first 3 days of sick leave and the other half is paid by Social Security Administration. It is mandatory to submit the medical certificate to the administration to receive the benefits. If the sickness extends to more than 3 days, employers need not pay anything, but Social Security is liable to 60% of the regular salary of each day.
Besides, RSS also offers sickness insurance to the registered employees for their complete protection during working hours. In Costa Rica, the focus always remains on employees' overall well-being. So, it's time to connect with Employer of Record in Costa Rica to ensure nothing is missing and the business is on the right track.
As your employer of record in Costa Rica, we make sure to abide by all legal obligations and provides you with all insights about employee compensation to help you to make a competitive employment offer.
Taxes in Costa Rica
Depending on the expansion plans of business operations, there are several rules and regulations for taxation. If you hire Employer of Record Services in Costa Rica, the top professionals can assist you by helping you comply with all the taxes with no delays ever.
Both employers and employees must contribute 34.5% and 9.4% respectively from their salaries/savings to Costa Rica's social security system. Since Costa Rica follows a progressive tax system, the rate ranges between 0 and 25% of the salary. As per the corporate tax, it is generally 50%.
Payroll Deductions and Contributions
Setting up business in Costa Rica is as complex as it seems. Managing the payroll becomes hectic when it comes to remembering the required deductions and contributions demanded by institutes and government laws of Costa Rica. However, you can take the responsibility off your shoulders to Globalization solutions who would act as a Costa Rica employer of record for you to handle and keep your payroll system.
Remember, employers must pay the required withholding and taxes to the Caja, social security system for efficient compliance. Apart from the income tax, some other social security taxes include
• Health and Maternity at 9.25% rate
• Basic pension scheme at 5.25%
• Family Assignations at 5.0% rate
• Labour Capitalisation Fund at 3.00%
• National Insurance institute at 1.0%
• Social Aid (IMAS) at 0.5%
• Complementary Pension Fund at 0.5%
• Banco Popular Employer Fee at 0.25%
Rates for social security and Medicare withholding
In Costa Rica, the current Medical and Maternity tax rate is 5.50%. Disability, Old Age, and Death Benefits is 4.0 % and Workmen Savings Banks is 1% only. For social security, employers contribute 34.5% and employees do 9.4% of their salary to social security to ensure its benefits. Another option than getting into the complexities of handling all these taxes rates and installments is contacting a credible employer of record.
Why Globalization Solutions?
If you're a business owner looking forward to expanding your business to Costa Rica, undergoing all the processes and expenses to solidify the whole setup is not the only option! We at Globalization Solutions are here to help you in getting started with your business operations in Costa Rica with our comprehensive employment solutions.
We are a team of proficient expansion and proliferation experts, and so we can efficiently accelerate the expansion of your business into the Costa Rica market. Be it your requirement for dealing with employee taxes, visa application benefits, insurance sponsorship applications for other transactions, we are here as your Costa Rica Employer of Record at your service
Contact us today to expand the horizons of your business's successful reach across the Central American markets