10 Things You Need to Know About Costa Rican Employment and Labor Laws [2025]

Costa Rica's labor and employment laws can be complicated, navigating cultural differences, a different language, and changing labor code regulations. As a company with a global workforce, you must stay on top of local labor laws. In Costa Rica, this means staying compliant with labor standards by the Employment Bureau of the Ministry of Labor and Social Security.

It is important for your company's success to prioritize the employment relationship and confirm compliance with all regulations in Costa Rica, including employee benefits and lawful termination procedures. This guide will help you understand how to navigate it all so you can easily hire and onboard Costa Rican talent.

1. Don’t skip the employment contract

Verbal offers are only allowed for short-term agricultural jobs and temporary work in Costa Rica. You must accompany your job offer for full-time employees with a legally compliant, written employment contract that closely follows the Employment Bureau of the Ministry of Labor and Social Security’s regulations. You’ll need to send a copy to the ministry and the employee. Check out our Costa Rica job offer letter checklist to make sure your contract includes all requirements.

2. Misclassifying employees leads to expensive penalties

Misclassification of workers in Costa Rica can lead to expensive lawsuits and harsh penalties, as Uber found out in 2020 when it misclassified employees as contractors. The court in San José ruled in March 2023 that Uber needed to pay retroactively for labor benefits.

Getting the correct classification starts the employment relationship in a good place. The employees have agreed to an employment contract establishing their subordination and guaranteeing their entitled benefits and salary. A contractor provides services to a company for a limited period of time, completed on their own time.

3. Work permit processes are notoriously slow

If you are considering hiring a foreign national or transferring an employee within your organization to Costa Rica, understand their visa and work permit needs so they can live and work there legally. The work permit process is extremely slow, taking up to eight months, sometimes longer, so be ready for a longer timeline than usual. Be transparent with the employee that their offer letter is contingent on them receiving their paperwork to work and live in the country legally.

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4. Costa Rica has mandatory employee benefits you can’t skip

Under Costa Rican law, an employer must provide certain mandatory benefits to their employees. Employers are required to contribute to social security and labor risk insurance and offer parental leave, vacation leave, Christmas bonuses, sick leave, overtime pay, and public holidays. Failure to do so will result in government penalties and hefty fines.

5. There’s no at-will employment

In Costa Rica, you can terminate an employee without just cause as long as you pay them severance pay per their employment agreement. Don’t forget to add the Aguinaldo to the severance package. There are also pre-determined notice periods based on how long an employee has been in the company. If the employee takes you to court, be ready for a lengthy process of two years or more as the courts continue to be backlogged.

6. Costa Rica has one of the most robust data privacy laws

Following the hiring and onboarding of an employee, the employer must prioritize protecting their personal information and use the information gathered in the background check only for legitimate purposes. Informed consent, in writing, is required before personal data can be collected, including background checks under Costa Rican law.

7. Discrimination is illegal under the Equal Opportunities Law

Under the Costa Rica Equal Opportunities Law for People with Disabilities, no person can be discriminated against because they have a disability if they have the same qualifications as another person. You also cannot discriminate against a person with disabilities and not offer them a job based on their medical history. The employer must provide reasonable accommodations as well.

8. Non-disclosure agreements are enforceable in Costa Rica

Non-disclosure agreements are enforceable in Costa Rica, but to be valid, they must be in writing and clearly state the confidential information in question. The NDA will need to be signed by all parties involved—usually the employee and employer—without coercion, per the Costa Rican labor code.

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Frequently asked questions about Costa Rican labor laws

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