How to hire remote employees in

Costa Rica

Costa Rica is one of many Latin American countries filled with great remote talent. If you’ve found someone you want to hire in Costa Rica—or if you’re just curious—you’re in the right place. We’ll teach you about the legal obligations and risks of hiring in Costa Rica: As well as the easiest way to hire the remote talent you find.

Country snapshot

CURRENCY
Costa Rican Colón (CRC)
EMPLOYER TAXES
26.5%
PAYROLL FREQUENCY
Monthly
OFFICIAL LANGUAGE
Spanish

What to know before you hire in 

Costa Rica

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:

Hire talent as contractors

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 Panther for.

Hire talent as employees

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.

Why hire independent contractors in 

Costa Rica

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

.

It’s the fastest way to hire globally

Hiring employees takes months, at the minimum. When you hire with Panther’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’s a lot cheaper

It costs just $0 to sign up for Panther, then $49 per month to hire your contractors with Panther. 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.

It’s more flexible for you & your team

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.

It’s less risky than hiring employees

Hiring employees is a bigger commitment, and generally puts you at a bigger risk for legal fees. When you hire contractors overseas, your biggest risk is misclassification—but even then, misclassification penalties are often minimal and just require you to pay off any compensation that the person would have been owed as an employee.

Some people want to be employees

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.

You might not have as much control over your talent

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.

How can I pay people in 

Costa Rica

?

If you’re hiring contractors in 

Costa Rica

, you can pay them with Panther 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.

Hiring and paying your team in 

Costa Rica

Hire and pay with Panther

Pay everyone with a single click
Get great currency conversion rates
Pay $0 in platform fees
Run payroll in seconds
Let Panther automatically create & store invoices
Let Panther automatically write locally-compliant contracts
Let Panther automatically file local tax documents

Hire and pay without Panther

Pay all your contractors individually
Do all currency conversions yourself
Shoulder the burden of platform fees
Spend hours each month making payments
Manually track & store invoices
Manually write & sign contracts
Manually file relevant tax documents

Let Panther save you from hiring headaches.

Sign up today for $0

If you want to hire employees in 

Costa Rica

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.

Taxes in 

Costa Rica

Employer tax

Health and Maternity

Basic Pension Scheme

Banco Popular Employer Fee

Family Assignations

Social Aid (IMAS)

INA

Contribution from Banco Popular Employer

Labor Capitalization Fund

Complementary Pension Fund

National Insurance Institute (INS)

Individual tax

Leave

Paid Time Off (PTO)

PTO is calculated by the:

  • All employees who have 50 weeks of continuous employment have the right to 2 weeks’ vacation (12 days) plus 2 days of rest.

Public Holidays

There are 11 public holidays.

Sick Days

The duration of sick leave entitlement provided to workers is dependent on how long they have been employed by their employer:

  • The employer and social security each must pay the employee 50% of their salary for the first 3 days of sick leave.  
  • From the 4th day on, social security pays the employee 60% of their salary, and the employer is no longer obligated to pay.

Maternity Leave

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).

Paternity Leave

Private sector employees are not entitled to receive paternity leave. 

Parental Leave

Private sector employees are not entitled to receive parental leave.

Other Leave

None.

Marriage Leave

None.

Bereavement Leave

None.

Termination

Termination Process

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. 

Notice Period

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

Severance Pay

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

Probation period is 3 months.

Employee requirements in 

Costa Rica

Working Hours

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.

Overtime

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.

Want to hire contractors, anywhere? Start with Panther today for $0.

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