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How to hire remote employees in
So you want to hire in Costa Rica. That’s great. But you should know that hiring in Costa Rica is different from hiring in your home country. There’s a whole laundry list of labor laws to catch up on, lawyers to contract, compliance issues to navigate… And it can get complex. So we’ll break it down in simple terms.
If you want to successfully hire in
Costa Rica
, you have two options:
Laws about hiring contractors are significantly more simple in
Costa Rica
. Onboarding talent takes days, not weeks or months. Both you, the company, and your talent have more flexibility. And in many cases, since you’re remote, the talent you’re hiring is better classified as a contractor, anyway. Of course, it’s not possible in every case, but it’s what we built Thera for.
This is the long route. You can either establish a physical presence with an entity and register as an employer, or you can use an Employer-of-Record (EOR) solution. Odds are, you’ll find using an EOR to be the easier route. Still, using an EOR in
Costa Rica
is expensive—it can often be $500 per month per employee—and sometimes prone to lengthy onboarding times.
Hiring contractors is normally the easier, faster, more flexible choice—but don’t just take it from us. Below are the specific benefits and drawbacks to hiring contractors in
Costa Rica
.
Hiring employees takes months, at the minimum. When you hire with Thera's locally-generated contracts, it’s a matter of days or weeks. This means you can hire the best talent, fast, without losing them to a hellish procession of paperwork.
It costs just $0 to sign up for Thera, then $25 per month to hire your contractors with Thera. If you hired employees manually (or did contracting on your own), you’d likely be on the hook for thousands of dollars each month. Setting up an entity alone can cost tens of thousands of dollars.
Hiring contractors in
Costa Rica
means you’re generally not on the hook for things like health insurance and paid time off. This makes hiring flexible for you, and it gives your talent more options.
Hiring employees is a bigger commitment, and can open you up to increased liabilities and regulations. When you hire contractors overseas, your biggest risk is misclassification—but laws surrounding contractor classification are often significantly more straightforward.
The contractor life isn’t for everyone—some people want the security that being an employee often appears to provide. Though it’s rare, this does happen, and it’s one disadvantage of manage an all-contractor team.
Most countries’ contractor-employer relationship laws stipulate that the employer can’t set fixed working hours, among other things. These laws give contractors more freedom over how and when they do their work than an employee would have. In reality, however, most contractors are willing & able to work on the company’s schedule—it’s a matter of setting expectations beforehand.
If you’re hiring contractors in
Costa Rica
, you can pay them with Thera in a single click. You won’t need to worry about complicated wire transfers, fees, or currency conversions. We’ll take care of it all. Just make a click and your contractor will get paid in their currency of choice. This is a valuable bonus for talent in countries where the local currency is particularly weak—most people appreciate the ability to receive their payment in stronger currencies.
If you’ve read up until this point, you’ll know that it’s easier, cheaper, and more flexible to hire contractors in Costa Rica than employees. Still, there are valid reasons why you might want to hire employees instead. The content below is for you—we’ll cover employer taxes and obligations in Costa Rica.
PTO is calculated by the:
There are 11 public holidays.
The duration of sick leave entitlement provided to workers is dependent on how long they have been employed by their employer:
Pregnant employees receive 4 months of paid maternity leave; 1 month of prenatal leave and 3 months of postpartum leave. 50% of the payments are paid by the employer and the other 50% is paid by the CCSS (Costa Rican Social Security Fund).
Private sector employees are not entitled to receive paternity leave.
Private sector employees are not entitled to receive parental leave.
None.
None.
None.
In order to terminate an employee just cause must be given.
If the employer requests a dismissal letter, the employer is obligated to present one, whatever the cause of termination was.
The notice period in Costa Rica is:
0 – 3 months: No notice required
3 – 6 months: 1 week
6 months – 1 year:15 days
More than 1 year: 1 month
The Severance Pay in Costa Rica depends on the Duration of Employment:
3 – Less than 6 months: 7 days
More than 6 months – Less than 1 year: 14 days
1 year: 19.5 days
2 year: 20 days
3 years: 20.5 days
4 years: 21 days
5 years: 21.24 days
6 years: 21.5 days
7-9 years: 22 days
10 years: 21.5 days
11 years: 21 days
12 days: 20.5 days
13 years and on: 20 days
Probation period is 3 months.
The maximum number of hours an employee can work is 48 hours per week.
Nighttime workers, 7p.m.-5a.m., may only work a maximum of 36 weekly hours.
Over 48 hours in a week is considered overtime and is paid at 150% regular wages.
Pay for work on holidays is at 200%.
The maximum overtime allowed to perform daily is 4 hours.
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