Costa Rica Labor Code: Wages, Leave, and Severance

The Costa Rica Labor Code, known locally as the Código de Trabajo, governs private employment across the country and is among the most worker-protective frameworks in Latin America.¹ It sets minimum pay, working hours, paid leave, social security enrollment, anti-discrimination rules, and termination benefits, and it applies to everyone performing work inside Costa Rica, including foreign nationals. Courts read ambiguous provisions under the “pro-operario” principle, meaning the interpretation that favors the worker generally wins.²

Who the Code Covers

Articles 18 through 28 lay out how a valid employment relationship forms.³ Written contracts are the legal standard for most jobs, though oral agreements are permitted for certain agricultural or short-term work. The contract should identify the duties, workplace, and expected duration.

What actually decides whether someone is an employee or a contractor is subordination: does the employer control how, when, and where the work is done? If yes, it is an employment relationship no matter what the paperwork calls it, and every obligation in the code attaches.

A three-month trial period at the start of a job is well-established through judicial interpretation and common practice. During those first three months, either side can walk away without notice or severance. After that, full termination rules apply.

Foreign nationals who want to work locally need authorization before they start. The Dirección General de Migración y Extranjería issues work permits based on a Ministry of Labor recommendation, which considers whether qualified Costa Ricans are available for the role. The employer handles the paperwork, which includes a criminal background check, a formal job offer with duties and salary, and proof that the company is current on taxes and insurance.

Remote workers employed by a company outside Costa Rica sit outside this system. The Digital Nomad program stretches the standard 90-day tourist visa to a full year, renewable once, but it is not local employment. Applicants must show stable net income of at least $3,000 per month (or $5,000 for a family), carry medical coverage of at least $50,000, and pay a one-time $100 fee.⁴

Wages and the Aguinaldo

No employer may pay below the thresholds set by the Consejo Nacional de Salarios, which revises minimum wages twice a year for inflation. Minimum wages rose by roughly 1.63% as of January 2026. Pay must be in legal currency, and electronic bank transfer is now the standard.

In-kind benefits like food or lodging are allowed as part of compensation, but their value cannot exceed 50% of the worker’s cash salary. That cap keeps employers from substituting benefits for real wages.

Every worker with at least one month of service is entitled to the Aguinaldo, a mandatory year-end bonus often called a thirteenth salary. Add up gross earnings from December 1 of the prior year through November 30 of the current year, divide by twelve, and pay that amount no later than the first days of December. Missing the deadline invites penalties from the Ministry of Labor.

Working Hours, Overtime, and Breaks

Articles 135 through 140 cap working time by shift type.²

Day shift (Jornada Diurna), 5:00 AM to 7:00 PM: up to 8 hours per day and 48 per week.
Night shift (Jornada Nocturna), 7:00 PM to 5:00 AM: up to 6 hours per day and 36 per week.
Mixed shift (Jornada Mixta), spanning both windows: up to 7 hours per day and 42 per week.

Any work beyond these limits is overtime, paid at 150% of the normal hourly rate. No one may work more than 12 hours in a single day, even counting overtime.

A continuous eight-hour shift gets at least a 30-minute break, and it counts as paid time because the employee stays on-site under the employer’s direction. A split shift, where the worker leaves and returns, requires a break of at least one continuous hour, unpaid. Shorter shifts get breaks proportional to their length.

Vacation and Holidays

Articles 153 through 161 give every employee two weeks of paid vacation for every 50 weeks of continuous service. The employer generally chooses when it is taken, but it must be granted within 15 weeks of the 50-week mark. Part-time and full-time workers accrue the same right.

Holidays come in two categories. Mandatory holidays, including Independence Day, Christmas, and Holy Thursday and Good Friday, must be paid at the daily wage whether or not the worker shows up. Anyone called in on a mandatory holiday earns double pay.⁵ Non-mandatory holidays are only paid if the worker actually works, with one exception: employees on monthly or biweekly salary get every holiday paid, because it is already built into the base pay.

Maternity, Paternity, and Sick Leave

Pregnant workers get four months of maternity leave: one month before the due date and three after birth. The employer pays 50% of salary and the Caja Costarricense de Seguro Social (CCSS) pays the other 50% throughout.⁶ Firing a pregnant or nursing worker is effectively barred unless the employer proves a valid termination reason and gets prior authorization from the Ministry of Labor. Unlawful dismissal exposes the employer to full wages through at least the eighth month of pregnancy, and courts often award more.

A 2026 reform strengthened nursing protections. Nursing mothers now get 25 minutes of paid time every three hours during the workday for breastfeeding or expressing milk, and employers must provide a private space.

Biological fathers get paternity leave of two days per week during the first four weeks after birth, a right established by bill number 21,149.

Sick leave splits between the employer and CCSS. The employer pays at least 50% of salary for the first three days and CCSS pays the other 50%. From the fourth day forward, CCSS pays 60% of salary and the employer owes nothing further on wages. The worker must submit a medical certificate from a CCSS-accredited doctor. No certificate, no reimbursement.

Social Security and Workers’ Compensation

Article 193 requires every employer to register workers with the CCSS, which runs public healthcare and feeds the national pension system. As of 2026, the employer contributes roughly 26.83% of gross salary across health insurance, pensions, a labor capitalization fund, and smaller statutory charges. The employee contributes about 10.83%, split between health, pensions, and a mandatory savings deposit at Banco Popular. Rates change periodically, so verify current figures with the CCSS each year.

Every employer must also carry a Riesgos del Trabajo policy through the Instituto Nacional de Seguros.⁷ This workers’ compensation coverage handles medical care and lost income from workplace accidents and occupational illness. Neither side can waive it by private agreement. An employer operating without the policy is directly liable for every peso of workplace injury costs.

Discrimination and Harassment

The 2017 Labor Procedure Reform (Law 9343) expanded protected categories to 14, including race, sex, age, religion, ethnicity, sexual orientation, marital status, political opinion, national ancestry, disability, health condition, and union membership, with a catch-all provision for any workplace discrimination not specifically listed.⁶ The reform also removed the cap on discrimination damages and created a fast-track process letting claims be decided within a month of filing. A successful worker can win reinstatement with back pay and full damages. An employee who discriminates against a coworker faces termination for cause.

Sexual harassment is governed by a separate 1995 law covering workplaces and schools. It reaches repeated unwanted sexual attention or a single serious sexual act that harms the victim’s working conditions or well-being. Remedies include termination of the harasser and moral damages, and wrongful dismissal in retaliation can result in reinstatement and lost-wage compensation.

Remote Work (Teletrabajo)

Law 9738 sets the rules for remote work. The arrangement has to be voluntary for the employee and put in writing by both sides. The employer supplies and maintains the equipment, technology, and software needed to do the job from home.

When the employee works from another country, the employer must add extraterritoriality coverage to its workers’ compensation policy so protection follows the worker abroad. Every core labor right still applies: the same hour limits, the same overtime multiplier, the same right to disconnect after hours. Going remote does not shrink any statutory benefit.

Termination and Severance

For Just Cause

Article 81 sets out the grounds for firing without severance: theft, workplace violence, intentional property damage, repeated unexcused absences, and similar serious misconduct.⁵ Even a for-cause dismissal still owes accrued vacation and the proportional Aguinaldo through the termination date. If the worker refuses to sign the dismissal letter, the employer has 10 days under the 2017 reform to file it with the Ministry of Labor.

Without Cause

Article 85 governs dismissal without cause, which triggers the full liquidación. The first piece is preaviso (notice pay), scaled to tenure:

3 to 6 months of service: one week.
6 months to 1 year: 15 days.
Over 1 year: one full month.

The second piece is auxilio de cesantía (statutory severance), measured in days of pay per year of service:

3 to 6 months: 7 days.
6 months to 1 year: 14 days.
1 year: 19.5 days.
2 years: 20 days.
3 years: 20.5 days.
4 years: 21 days.
5 years: 21.24 days.
6 years: 21.5 days.
7 to 13 years: 22 days per year.

Severance is capped at eight years of service. A worker with 15 years of tenure collects the same amount as one with 8. The liquidación also includes proportional vacation and proportional Aguinaldo. An employer that fails to pay the full amount within a reasonable time after termination is exposed to a labor court suit for interest and legal fees.

Deadline to File a Claim

A terminated employee has one year from the end of the employment relationship to bring a claim for unpaid severance or other violations under Article 602. This is a hard deadline. After a year the right to sue is gone, however strong the underlying case. The 2017 reform moved most labor disputes to oral hearings, and workers below a set income threshold qualify for free legal representation.

1
International Labour Organization. Costa Rica – 2019 – Country
2
Ministerio de Trabajo y Seguridad Social. Costa Rica Labor Code
3
Sistema Costarricense de Información Jurídica. Costa Rica Code – Labor Code
4
Visit Costa Rica. Digital Nomads
5
Sistema Costarricense de Información Jurídica. Costa Rica Code of Labor – Ley 2
6
U.S. Department of Labor. Labor Rights Report – Costa Rica
7
Instituto Nacional de Seguros. Seguro de Riesgos del Trabajo