Employer of Record in Costa Rica

Using an Employer of Record in Costa Rica

In order to benefit from Costa Rica’s status as a nearshore destination, many foreign companies have considered setting up a legal entity in the country. However, the company registration process can be both time-consuming and costly and often comes with an additional opportunity cost of losing new talent during the time it takes to set up an entity.

For foreign businesses considering testing the market or employing a single employee or a small team, a better alternative may be to partner with an Employer of Record (EOR) provider. An EOR provider, like Rivermate, uses its existing entity to hire employees in Costa Rica on clients’ behalf. The EOR handles the full employment compliance spectrum and ensures adherence to local labor laws while the foreign business manages the employee and evaluates their performance.

Costa Rica labor market: an overview

The hiring market
Greatest hiring activity:	Driven by direct investments in Free Trade Zones and a nearshoring ecosystem, mostly concentrated in larger hubs.
Hiring timelines:	Locals: up to 1 week Foreign nationals: 6-12 months
In-demand sectors:	Sales representatives and managers, marketing managers, software engineers, developers, technical assistants.
Sectors with skills shortages:	Advanced tech, digital engineering, cybersecurity, life sciences.

The salary market
Employer tax contributions:	~26.83% on top of gross salary
Monthly minimum wage:	Depends on occupational category; in 2026 ranges from CRC 373,092 (unskilled work) to CRC 796,921 (degree holders)
Average gross monthly salary:	CRC 797,045 per month (July 2026)
Personal income tax rates:	Progressive rates, brackets ranging from 0% to 25%. Brackets are updated annually but not always in January.

What will it cost to hire in Costa Rica?

Currency

Rivermate requires clients hiring in Costa Rica to define all salaries in the local Costa Rican Colón currency (CRC); even though it is legally allowed to specify salaries in foreign currencies, it complicates payroll as all employer and employee contributions and taxes must be paid in the local currency. Payroll is run biweekly or monthly.

Minimum wage

There is no single minimum wage in Costa Rica. Minimum wages are defined by the Consejo Nacional de Salarios on the basis of occupational categories and updated every year; therefore, confirming the correct occupational category for each new hire is the first step in ensuring a compliantly structured salary. Misclassification is considered a compliance issue.

Occupational Category	Minimum monthly wage amount (2026)
Unskilled Worker	CRC 373,092.30
Semi-Skilled Worker	CRC 405,710.70
Skilled Worker	CRC 419,755.80
Specialized Worker	CRC 487,335.00
Medium Technician in Diversified Education	CRC 496,838.17
Higher Education Technician	CRC 542,096.58
Higher Education Diploma Holder	CRC 585,484.58
University Bachelor's Degree	CRC 664,078.07
University Licentiate / Degree Holder	CRC 796,921.00

Average salaries

According to TradingEconomics, which bases its data on the Central Bank of Costa Rica's information, the average monthly wage sits at CRC 797,045.40 per month. However, the average varies greatly across economic sectors; some sector gross monthly income averages are listed below:

• Public Administration: CRC 952,506
• Financial services and Insurance: CRC 874,901
• Professional Activities and Administrative Support: CRC 563,202
• Manufacturing: CRC 526,373
• Communication and Other Services: CRC 471,378
• Hotels and Restaurants: CRC 380,714

Statutory premiums and protections

Costa Rica’s regular working hours are set at eight hours a day and 48 hours a week for work performed during the daytime. Workers working in a night shift can only work for 6 hours per night (36 total per week). Mixed shifts are subject to a daily limit of 7 hours (42 per week).

Overtime: 150% of regular rate, capped at 4 hours per day.
Sick leave: For the first three days of a sick leave, the employer pays at a rate of 50% of the salary. From the fourth day onwards, the employer has no further payment obligation but may decide to top up the 60% rate paid by the CCSS.
Maternity leave: 4 months (1 month before the birth and 3 months after). The employer and the CCSS share the liability for payment of the maternity leave benefit.
Paternity leave: 2 days per week during the first 4 weeks after birth; also split halfway between CCSS and employer.
Annual leave: the statutory legal minimum is two weeks of paid vacation for every 50 weeks of continuous service with an employer. Should the employment end before 50 weeks, a financial amount equivalent to one day per month worked is due. EOR employees in tech and professional roles are often granted 15-20 days.
Public holidays: 12 official paid holidays are generally observed in Costa Rica; when working on a public holiday is required, it attracts premium pay.

Employer cost on top of gross salary

Employer contributions in Costa Rica are somewhat lower than in other countries in the region, which adds to the attractiveness of the country for foreign employers. As of 1 January 2026, the total mandatory employer contribution rate is about 26.83% with the following breakdown:

• CCSS (Health & Pension) contribution: 14.83%
• Other Social Funds (FODESAF, IMAS, INA, etc.): 7.25%
• Labor Protection Law (LPT): 3.75%
• Occupational Risk (INS): ~1.00% (varies depending on risk category)

The CCSS pension contribution was increased in January 2026 as part of a multi-year phased planned adjustment. The current rates will be applicable until 31 December 2028, with new rates implemented as of 2029. No caps are applicable

Employers should also budget for accruals of mandatory benefits (13th-month salary and vacation provision) when forecasting annual payroll costs.

Mandatory benefits

The main mandatory benefit in Costa Rica is the statutory thirteenth-month salary (Aguinaldo). Not a discretionary bonus, the Aguinaldo is calculated on total earnings for the period between 1 December of the previous year until 30 November of the current year. It is mandated to pay it out in the first 20 days of December. Most employers accrue 1/12th of the salary each month to account for the year-end payment. Aguinaldo cannot be waived. Rivermate’s practice is to accrue it throughout the year.

Additionally - and relevant to employers hiring remote workers - under the Telework Law 9738, employers are required to provide and maintain equipment and reimburse costs related to energy and connectivity. The most common setup is to provide a monthly “telework stipend” which, if structured correctly, may be treated as a non-taxable reimbursement.

Voluntary benefits

Meal allowances are not mandatory but are a popular benefit in multinationals. They are provided as a fixed-amount allowance and are subject to social security and taxes. A more favorable treatment may be applicable if provided as restricted-use vouchers.
Transportation allowances are also not mandatory and generally have the same treatment as regular salary in terms of contributions and taxes. However, reimbursements for business trips (supported by documentation) are not taxable.
Other additional benefits include private medical and life insurance.

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What hiring in Costa Rica really looks like

Market Condition	Current Reality	Comments
Hiring momentum	🟢 Active	Driven by FTZ investments and active nearshoring system; mostly concentrated in urban hubs
Talent availability	🟡 Moderate	Smaller country population leads to a smaller talent pool compared to other regional countries
Salary pressure	🟢 Stable	Inflation in check and exchange rates with minimum variation
Candidate expectations	🟡 Moderate	Standard statutory protections expected, private medical or life insurance add-ons common.
Employer cost	🟡 Moderate	About 26.83% on top of gross, somewhat lower than other regional countries.
Bureaucratic complexity	🔴 Significant	Sponsoring foreign nationals takes 6-12 months with no fast-track option.

Practical realities to consider when hiring foreigners in Costa Rica

Foreigners typically require an employer-sponsored work permit or a temporary residence permit authorizing them to work in order to be legally employed in Costa Rica, unless they already hold another qualifying status. Although no quota limitations for employer-sponsored procedures are in place, the process is lengthier than what can be observed in other countries in the region and around the world; anywhere from 6 to 12 months should be expected. Recent cases have proven that the timeline is closer to a full year, with no possibility for a fast-track application as cases are handled on a first-come, first-served basis and backlogs are significant. It has been observed that the length of the procedure also greatly depends on the timing of the filing of the application, with cases submitted towards the end of the year (before or during the holiday season where authorities are understaffed) taking longer to process. Once the procedure is complete and foreigners receive their residence permit, the same registration process applicable to Costa Rican nationals should be followed.

Compliance risks that employers must know about

Employment contracts and onboarding details

Before a contract is drafted, the employee must supply a number of details, including their address, which is a frequent source of confusion in Costa Rica. Addresses in Costa Rica are traditionally descriptive and use physical landmark references as opposed to standard street and number addresses. Even though postal codes are in place, locals still predominantly use descriptive landmark references when providing their address, a practice that should be avoided in legal documents such as employment contracts. A valid address should include the province, canton and district as well as the exact street details if available.

With all details available, employment agreements are concluded in Spanish.

Once the contract is signed, the employee is also required to send the ID card (Cédula de Identidad, DIMEX) and their bank details. The ID is a requirement for the employee’s mandatory enrollment in the CCSS and Hacienda (Ministry of Finance) system.

Probationary periods

Probationary periods in Costa Rica are not legally defined but can be used. As the initial three-month period is important for certain notice and severance rules, it is generally the probationary period recommended. Both parties may terminate without notice or severance in that period. If an employer chooses to do so, a probationary period may be omitted.

Payroll reporting obligations (planilla mensual)

Payroll in Costa Rica is processed biweekly or monthly. A concept employers should be aware of is “planilla mensual” - the official monthly payroll data exchanged through the SICERE (Sistema Centralizado de Recaudación) digital platform. The planilla is used to report hours worked, employee earnings and mandatory contributions. Tax withholdings must also be reported separately. Active health insurance and pension service accumulation only functions on the basis of the submitted planilla. The legal window during which it is submitted is from the 26th of the current month to the 4th working day of the following month. Costa Rica imposes significant penalties for late or incorrect filings.

Notice periods (preaviso)

Outside the probationary period window (during which there is no requirement for a notice), indefinite contract terminations are subject to a notice period requirement or preaviso. The mandatory notice period depends on the length of service and ranges from one week (for employment lasting between 3 and 6 months), 15 days (service between 6 and 12 months) and up to 1 month (service longer than a year). Payment in lieu of notice is allowed. Severance as well as prorated amounts of statutory benefits such as the Aguinaldo should also be paid out during separation, if applicable.

Benefits of hiring employees through an EOR in Costa Rica

For companies thinking about expanding into Costa Rica, setting up a local legal entity may be a real consideration. But the process will require significant administrative procedures, both during setup and for ongoing payroll processing, including monthly filings across five institutions (CCSS, INS, INA, IMAS and PANI) through the SICERE platform. Add to this the mandatory CCSS registration before commencement of employment and the INS occupation risk policy which must be valid from the first day, and the complexities keep expanding.
Using an EOR allows companies to eliminate the need to worry about all the administrative and compliance practicalities of hiring in Costa Rica and to focus on scaling their business instead.

Ready to hire in Costa Rica?

Hiring in Costa Rica involves much more than simply finding the candidate that fits your needs. Mandatory registrations, payroll management, tax withholding and compliant benefits administration all add to the complexities of hiring under Costa Rican labor law, something an EOR like Rivermate can handle while you focus on your business. Talk to a Costa Rica Hiring Expert today to take the first step in scaling your business.

Sources:
Ministry of Labor: Minimum Salaries
Trading Economics: Costa Rica Wages
The Costa Rica Hub: Salaries by profession in Costa Rica
Ministry of Labor: Labor issues
Código de Trabajo (Labor Code)