Costa Rica is a country in Central America bordered by Nicaragua, the Caribbean Sea, Panama, and the Pacific Ocean. It has a long-standing democracy with a highly educated workforce and has been rated as one of the world’s top 15 happiest countries for several years.

Many companies based in other countries operate in Costa Rica's Free Trade Zones (FTZ) where they are able to benefit from tax incentives.

In Costa Rica, standard working hours range from 40 to 48 per week, Monday through Saturday (reduced to 36 hours for night shifts). Any hours worked beyond this limit are considered overtime, which is capped at a maximum of 4 hours per day. Overtime is compensated at 150% of the regular hourly rate, while work performed on public holidays is paid at 200%. As of 2025, the statutory minimum wage is set at CRC 13,713.20 per day.

Parental Leave

In Costa Rica, pregnant employees are entitled to four months of paid maternity leave, typically starting one month prior to the expected due date and continuing for three months post-birth. The cost of this leave is shared equally between the employer and the Social Security Administration (CCSS). While there is currently no statutory paternity leave for private-sector employees, fathers in the public sector are entitled to eight days of paid paternity leave to be taken within the first four weeks following the birth of a child.

Sick Leave

In Costa Rica, employees who are registered with and contribute to the Social Security Administration (CCSS) are entitled to sick leave, granted as needed provided they meet eligibility requirements and comply with reporting procedures. A medical certificate (incapacidad) is mandatory to qualify. During the first three days of sick leave, employees receive 100% of their wages, funded equally by the employer and the CCSS. From the fourth day onward, the CCSS covers 60% of the employee’s wages, and the employer has no payment obligation.

Paid Leave

There are 15 public holidays in Costa Rica. Employees are also entitled to a minimum of 2 weeks of paid time off each year after completing 1 year of service with their employer.

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Process

Employment contracts can be terminated with just cause, such as misconduct, negligence, fraud, redundancy, or other tangible reasons, as long as is notice provided in advance.

Notice Period

Notice periods in Costa Rica depend on the employee’s length of time at the company:

• 0 – 3 months = No notice period
• 3 – 6 months = 1 week
• 6 – 12 months = 15 days
• 1+ year = 1 month

Severance Pay

In Costa Rica, severance pay (cesantía) is required when an employer terminates employment without just cause. The amount is based on the employee’s length of service, ranging from 7 to 14 days of pay for less than one year of service, and from 20 to 22 days of pay per year for employees with more than one year of service, depending on tenure.

A 13th month salary payment is mandated by law in Costa Rica. This “aguinaldo” is a bonus equal to one month’s pay and must be paid in December.