Employment in Costa Rica is governed by the Labour Code (Código de Trabajo), with minimum wages set by decree each year and social security administered by the CCSS. Here is what employers need to know about leave, pay, tax, payroll contributions and ending employment.
The Labour Code sets the minimum leave for all employees, including those who do not work a full day or a full week. Collective agreements and employment contracts can offer more, never less.
For every 50 weeks of continuous service with the same employer. Employees who leave earlier are paid at least 1 day for each month worked.
1 month before and 3 months after the birth, paid at full salary and funded equally by the CCSS and the employer.
2 days a week during the first 4 weeks after the birth, for biological fathers.
Paid leave for an individual adopter, or shared between two adopting parents as they agree.
Employees insured with the Caja Costarricense de Seguro Social (CCSS) receive sickness benefits under CCSS rules. Where an illness is not covered by social insurance, the Labour Code requires the employer to pay half salary for 1, 2 or 3 months depending on length of service, and the employment contract is suspended rather than ended for up to 3 months.
Set up each Costa Rican leave type in IceHrm with its own accrual, carry forward and approval rules, including pro-rata entitlements for employees who leave before completing 50 weeks. Employees see their live balance before they apply, and managers see who is away on a shared calendar. Leave management →
Minimum wages are set by executive decree on the recommendation of the National Wage Council and are reviewed every year, normally taking effect on 1 January. There is no single national figure: the decree lists minimums by occupation and skill level, so check the current list published by the Ministry of Labour (MTSS) for each role.
Night shifts are limited to 6 hours a day (36 a week) and mixed shifts to 7 hours a day. A day shift of up to 10 hours can be agreed for non-hazardous work, within 48 hours a week.
Hours beyond the ordinary shift are paid at time and a half. Ordinary and overtime hours together can’t exceed 12 a day.
Paid in December, equal to one-twelfth of the salary earned over the previous 12 months, or pro rata for a shorter period.
Capture attendance and overtime in IceHrm and feed the hours straight into payroll, so day, night and mixed shifts and holiday work are paid for the hours actually worked. Time & attendance →
Costa Rica taxes only Costa Rican-source income. Employers withhold tax on salaries every month using a progressive table set by the Ministry of Finance (Hacienda), and this withholding is the employee’s final tax on their salary.
| Monthly salary | Rate |
|---|---|
| Up to CRC 918,000 | 0% |
| CRC 918,000 – CRC 1,347,000 | 10% |
| CRC 1,347,000 – CRC 2,364,000 | 15% |
| CRC 2,364,000 – CRC 4,727,000 | 20% |
| Over CRC 4,727,000 | 25% |
Self-employed income is taxed on an annual table with its own bands. Payments for personal services to non-residents are subject to a 25% withholding tax.
Employers register with the CCSS, deduct the employee’s share from each salary payment and pay it together with their own contribution every month. Contributions are calculated on total monthly pay.
In 2026, covering health and maternity, pensions (IVM), Banco Popular, family allowances, the employee capitalisation fund, the INA training institute and other institutions.
Deducted from salary: 5.50% health and maternity, 4.33% pensions (IVM) and 1% Banco Popular.
Every employer must insure its workers against work accidents and illness with the Instituto Nacional de Seguros (INS). Premiums depend on the activity.
| Contribution | Employer | Employee |
|---|---|---|
| Health and maternity (SEM) | 9.25% | 5.50% |
| Disability, old age and death pensions (IVM) | 5.58% | 4.33% |
| Banco Popular | 0.50% | 1.00% |
| Family allowances fund | 5.00% | – |
| Employee capitalisation fund | 3.00% | – |
| National Learning Institute (INA) | 1.50% | – |
| Other institutions | 2.00% | – |
| Total | 26.83% | 10.83% |
Build Costa Rican pay the way you already structure it, with your own salary components, deductions and formula columns, such as a CCSS contribution or aguinaldo accrual column. Want to know how well IceHrm handles payroll calculations for Costa Rica? Contact us or see Payroll →
Either party can end an indefinite contract without cause by giving written notice. When the employer dismisses without just cause, it must also pay severance (auxilio de cesantía). Dismissal for a just cause listed in the Labour Code, such as serious misconduct, requires neither notice nor severance.
| Continuous service | Notice |
|---|---|
| Less than 3 months | None |
| 3 to 6 months | 1 week |
| More than 6 months, up to 1 year | 15 days |
| More than 1 year | 1 month |
Severance is due on dismissal without just cause and in other cases where employment ends for reasons outside the employee’s control. It is paid even if the employee immediately starts another job, and is calculated on the average salary of the last 6 months.
| Continuous service | Severance |
|---|---|
| 3 to 6 months | 7 days’ salary |
| More than 6 months, less than 1 year | 14 days’ salary |
| 1 year | 19.5 days per year |
| 2 years | 20 days per year |
| 3 years | 20.5 days per year |
| 4 years | 21 days per year |
| 5 years | 21.24 days per year |
| 6 years | 21.5 days per year |
| 7 to 9 years | 22 days per year |
| 10 years | 21.5 days per year |
| 11 years | 21 days per year |
| 12 years | 20.5 days per year |
| 13 years or more | 20 days per year |
Final pay also includes unused annual leave and the proportional aguinaldo, whatever the reason for leaving.
Costa Rica has 12 public holidays. Nine are paid holidays in all cases. The other three (2 August, 31 August and 1 December) only have to be paid by employers that pay monthly or fortnightly, or weekly in commercial activities.
No employee can be required to work on a public holiday, and refusing can’t be sanctioned. Any agreement to give up a public holiday is void. Some businesses, such as those that must operate continuously, are exempt from the ban on holiday work.
Leave groups give each office its own holiday calendar, so your Costa Rica team gets the right days off automatically alongside colleagues in other countries. Holiday calendars →
Employment contracts should be in writing. If there is no written contract, the missing document counts against the employer in any dispute. Contracts are indefinite by default.
The first 3 months of employment act as a trial period: neither notice nor severance is due if the contract ends within that time. Fixed-term contracts are only allowed where the nature of the work requires them and can’t exceed 1 year, or 5 years for work that needs special technical training. If a fixed-term contract ends but the work continues, it is treated as indefinite.
Send contracts for e-signing, store them on the employee’s record, and track onboarding with task lists so registrations and paperwork aren’t missed on day one. Documents & e-signing →
This guide is general information to help you plan HR processes, not legal, tax or financial advice. Employment law and rates change regularly and awards, enterprise agreements and state rules may give employees more than the minimums shown here. Always confirm current requirements with the official sources or a qualified adviser.
Configure leave types, accrual rules and public holidays for Costa Rica, keep employee records and contracts in one place, and run payroll with your own salary components. Want to know how IceHrm handles payroll calculations for Costa Rica? Talk to us.
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