Helpful reminders when living in Costa Rica: Regarding Labor Laws

Christmas Bonus (Aguinaldo):

Christmas bonus should be paid by the 2nd week of December of each year. Public institutions may pay it earlier and it is determined each year. The calculation of the amount to pay for Christmas bonus for your employee is basically adding up all the amounts earned from December 1st of the present year to November 30th of the present year. Then that amount should be divided by 12. If you pay the worker monthly, and the worker has worked an entire year, it is like paying a “13th” month. If not, then you add up what has been worked and divide it by 12, if the worker has worked less than a year, then it will basically be worked on to one day of pay for each month worked. Here is a link that may be helpful for you to calculate such amounts.

Always remember to document any payments like Christmas Bonus and preferably have the Money transferred to their bank account or given to them by check, as proof of payment along with a signed receipt.

Vacation:

You are obligated to give your workers paid vacation time, once they have completed 50 weeks of work each year. If the timing is bad for you, you can grant vacation time any time during the 3 months following the year mark (50 weeks) to provide the time for them to take vacation. Depending on what type of labor they perform and how they are paid, the vacation time runs from 12 to 15 days per work year. These days do not include paid holidays, since that should be given to them anyway. For example, if their vacation time includes Christmas Day, you would need to add on an additional day to substitute the Holiday day that would have been received anyway. I suggest that you consult with a legal counselor. It is important that the vacation actually be taken-therefore they should not come to work- and they should be paid as normal days. You cannot pay them their vacation and have them come to work, which was done in the past. They should also be consecutive vacation days. The idea is that everyone needs a good 2-week rest each year to avoid stress in general. Always document such payments by having them sign when receiving the vacation pay and vacation days.

Holidays:

Some holidays are optional, some are not. Here is the list of Holidays that require double pay in Costa Rica. This means, that if they come to work on these days, they would be paid double what they would make in a normal day. If they do not come to work, they will still receive normal pay, but not double.

Liquidation/Severance:

If you are going to fire a worker, no matter how long they have worked or what they were fired for, they accumulate vacation and Christmas bonus benefits. They only have the right to severance and notice payments (plus the others) upon working 3 months or more. Christmas Bonus, for workers that have not worked the full year and are fired or quit, should be calculated as follows: 1 day of pay per month worked. Same goes for vacation pay. Severance and notification (preaviso), in cases where they have worked more than 3 months, should be calculated by your legal advisor or directly in the Ministerio de Trabajo, (Labor Department), with a translator and jointly with the employee. Any payments related to this issue should be documented and this should all be done with legal counsel.

All items related to Employees should be documented.

What Employees Should Have in Addition to Such Benefits:

• Labor risk policy and Social security plan- (INS and CCSS)

• Copy of their Social security card in their wallet or on them at all times

• Copy of their payment slip on them or in their wallet or purse at all times

• We highly recommend a labor contract as well upon hiring an employee.

• We highly recommend that the employee open their own bank account and that employer do online deposits or deposits into their account for payments of salary, vacation and other benefits, as record of payment versus cash.

About Residency in Costa Rica:  

Residency in Costa Rica is important if you plan to be here for terms that are longer than 90 days at a time or if you are coming to live here permanently. If you are not a resident, you are required to leave the country every 90 days. Once you have begun the residency process, that requirement may be waived. Residency should take 8 months to one year upon application and you can apply with different statuses. You need to obtain several documents such as your birth certificate and police report among others. It has always been my recommendation to use a residency attorney that is located close to the central immigration offices.

Helpful Reminders When Living in Costa Rica

• Regarding Properties
• Regarding Vehicles
• Regarding your Corporation
• When Deciding to Build on Your Property

By Kristi Penland
Attorney at Law / Abogada
Uvita, Osa, Puntarenas
www.UvitaLawFirm.com

* These are helpful reminders made intended to assist with yearly items. Such items, laws, amounts and contact links and numbers are based on current information at the time of writing this document and therefore all items are subject to change. Any links or professional services referenced in this document are entirely separate from our offices and are intended to help, but is left up to the receiving Party to decide to use such services or not. Furthermore, this may not be the entire realm of information on any given subject;