Costa Rica PEO Services

Costa Rica has had a stable economy for many years, and the nation’s GDP was around 61.52 billion USD in 2020. Costa Rica’s largest exports are medical instruments, which bring around $3bn into the economy each year.

Working Hours

In Costa Rica, the working hours are normally 48 hours per week. Employees can generally work a schedule of Monday through to Sunday or work longer hours from Monday to Friday to accomplish the 48-hour work week. This is not a requirement, and the employer can have fewer weekly hours as per an employment contract’s specification. In the services industry, it is common business practice to have a 40-hour working week.

Holidays and Sickness Allowances

Costa Rica has a variety of public holidays in which employees are generally not permitted to work. These public holidays (as of 2019) are as follows:

• Jan 1 – New Year’s Day
• The Thursday before Easter Sunday – Maundy Thursday
• The Friday before Easter Sunday – Good Friday
• April 11 – Juan Santamaría Day
• May 1 – Labor Day
• July 25 – Annexation of the Party of Nicoya to Costa Rica
• August 2 – Feast of Our Lady of the Angels
• August 15 – Mother’s Day
• September 15 – Independence Day
• December 1 – Army Abolition Day
• December 25 - Christmas

Sickness allowances in Costa Rica are covered by the CCSS (Caja Costarricense de Seguro Social). This sets out that the third day of sick leave (or if an employee has 3 sickness leaves in the same month) the CCSS will cover the employee’s portion of the payment. The first three days of leave are covered by the employer, and after the 3^rd day, the CCSS will pay 60% of the salary already reported to the employee. It is at the employer’s discretion whether to pay the remaining 40%, however this is not mandatory.

Parental Leaves

Maternity leave in Costa Rica is 4 months (approximately 120 days) and expecting mothers can initiate their leave one month before the expected birthdate, returning to work 3 months after the birthdate. A doctor must provide a report to the employee and these dates will be issued because of this. This report must be provided by a doctor and via the CCSS system. Costa Rica’s paternity leave is currently only for 3 days, however there are existing plans to extend this to a month. The salary for the mother will be covered 50% the employer and 50% by the CCSS, starting on the first day of maternity leave.

Taxation

Withholding salary taxes are progressive and have various tax rates scales (0%, 10%, 15% and 20%). These are dependent on the salary amount and the employer is required to withhold this amount and pay it to the Tax Administration.

The CCSS contribution for the employee is 10.5% and 26.5% for the employer.

Cultural Information

In Costa Rica, the official language is Spanish, but there are many people who also speak English fluently. According to the Constitution, Costa Rica permits the freedom of worship, but most of the population is Catholic and there are many other religions practiced here.

Impacts from COVID-19

As a result of the COVID-19 pandemic, it is highly recommended to work from home as much as possible. A hybrid schedule is permitted, and most companies have implemented this practice. Most Costa Rican businesses believe strongly that the hybrid work schedule is likely to be new normality.