Payroll and Benefits Guide Costa Rica
Last updated: Mar 03, 2026
Contribution
| Employer Payroll Contributions | |
|
9.25%
|
Healthcare & Maternity (SEM)
|
|
5.42%
|
Basic Pension Scheme (IBM)
|
|
0.25%
|
Banco Popular Employer Fee
|
|
5.00%
|
Family Assignations
|
|
0.50%
|
Social Aid (IMAS) |
|
1.50%
|
Training Fund (INA) |
|
0.25%
|
Contribution from Banco Popular
|
|
1.50%
|
Labor Capitalization Fund
|
|
2.00%
|
Complementary Pension Fund
|
|
1.00%
|
National Insurance Institute (INS)
|
|
*5.00%
|
Solidarity Association (optional, not included in total cost)
|
| 26.67% |
Total Employment Cost |
| Employee Payroll Contributions | |
|
5.50%
|
Healthcare & Maternity (SEM)
|
|
4.17%
|
Disability, Old Age & Death Benefits (IVM)
|
|
1.00%
|
Contribution from Banco Popular |
| 10.67% | Total Employee Cost |
| Employee Income Tax | |
|
0.00%
|
0 – 922,000 CRC Monthly
|
|
10.00%
|
922,001 – 1,363,000 CRC Monthly
|
|
15.00%
|
1,363,001– 2,392,000 CRC Monthly
|
|
20.00%
|
2,392,001 – 4,783,000 CRC Monthly
|
|
25.00%
|
4,783,001 CRC Monthly and above
|
Employer taxes
Employee taxes
Minimum Wage
General
The daily minimum wage is:
Unskilled workers = CRC 12,236.95
Semi-skilled workers = CRC 13,306.79
Skilled workers = CRC 13,713.20
Specialized workers = CRC 15,983.95
MINIMUM WAGE (PER MONTH)
Payroll
Payroll Cycle
The payroll cycle in Costa Rica is generally monthly and payments are to be made once each month.
13th Salary
In Costa Rica, it is mandatory to pay a 13th-month salary payment (Christmas bonus-Aguinaldo); the employer must make the payment by 20th December each year.
Working Hours
General
The standard workweek in Costa Rica is 8 hours per day, 48 hours per week. Nighttime workers, 7 p.m.-5 a.m. may only work a maximum of 36 weekly hours.
Overtime
The maximum legal working hours depend on the shift classification:
| Shift Type | Hours Defined As | Maximum Daily Limit | Maximum Weekly Limit |
| Day Shift (Jornada Diurna) | 5:00 AM to 7:00 PM | 8 hours (can be extended up to 9 hours by agreement, provided the weekly max is met) | 48 hours |
| Night Shift (Jornada Nocturna) | 7:00 PM to 5:00 AM | 6 hours | 36 hours |
| Mixed Shift (Jornada Mixta) | Combines day and night work | 7 hours | 42 hours |
Overtime Limits and Exemptions
-
Overtime Threshold: Overtime (horas extraordinarias) is defined as any hour worked beyond the maximum daily or weekly limits for the respective shift type.
-
Daily Overtime Cap: Overtime is strictly limited to a maximum of 4 hours per day.
-
Absolute Daily Cap: Total working hours, including overtime, must not exceed 12 hours in a single day.
-
Exemptions: Employees in certain management, administrative, or confidential positions (e.g., managers, administrators, trustees) are not eligible for statutory overtime pay. These roles are typically compensated with a higher base salary that covers any additional hours worked, provided the total daily work does not exceed 12 hours.
Mandatory Overtime Pay Rates
Overtime compensation is mandatory and is calculated as a minimum premium percentage of the employee’s regular hourly wage.
| Day/Condition | Minimum Premium Rate (Statutory) | Total Pay Rate | Notes |
| Standard Overtime (Working Days) | +50% of the regular hourly wage. | 150% | Applies to hours worked beyond the daily or weekly limit. |
| Weekly Rest Day / Public Holiday | +100% of the regular hourly wage. | 200% | Applies to work performed on a mandatory rest day (usually Sunday) or a statutory public holiday. This is paid in addition to the employee’s regular daily pay for the holiday. |
Important Note on Holiday Pay: When an employee works on a public holiday, they are entitled to the full day’s holiday pay (100%) plus double the hourly rate (200%) for the hours actually worked.
Leave
Annual Leave (vacation)
In Costa Rica, the paid annual leave entitlement is dependent on the years of service that the employee has served. The standard paid leave entitlement is 14 days per year for employees with 50 weeks of continuous employment. If the employee has fewer than 50 weeks of employment, they are entitled to one day of leave per month.
Employees are not entitled to accumulate or carry over any leave unless it is agreed upon by the employer and the employee in a written agreement.
PTO carryover
- For Papaya Direct, can carry over for 1 Period (50 weeks). All unused PTO should be carried over.
- For SGF Global, there is no carryover
Public Holidays
Depending on the holiday, each year the Government will decide if public holidays falling on weekends will be moved to a weekday or will be lost.
| Date | Day | Holiday | Notes |
|---|---|---|---|
| 1 January 2026 | Thursday | New Year’s Day | Standard holiday |
| 2 April 2026 | Thursday | Maundy Thursday | Standard holiday |
| 3 April 2026 | Friday | Good Friday | Standard holiday |
| 11 April 2026 | Saturday | Juan Santamaría Day | Standard holiday |
| 1 May 2026 | Friday | Labor Day | Standard holiday |
| 25 July 2026 | Saturday | Annexation of Guanacaste | Standard holiday |
| 2 August 2026 | Sunday | Our Lady of the Angels Day | Standard holiday |
| 15 August 2026 | Saturday | Mother’s Day / Assumption | Standard holiday |
| 15 September 2026 | Tuesday | Independence Day | Standard holiday |
| 1 December 2026 | Tuesday | Army Abolition Day | Standard holiday |
| 25 December 2026 | Friday | Christmas Day | Standard holiday |
Sick Days
During the first 3 days of sickness, the employer must pay the worker 50% of their regular salary. From day 4 of sickness onwards (up to a period of 26 weeks) the Social Security (CCSS) pays 60% of the normal daily wage and the employer is not obligated to pay anything additional.
The employee must submit a medical certificate to the Social Security administration to receive payment within 48 hours of the start of the sick leave.
Maternity Leave
Pregnant employees are entitled to receive four months of paid maternity leave; 1 month before the due date and three months after the due date.
The maternity payment responsibility is shared equally between the employer and the CCSS (Costa Rican Social Security Fund) for the full four months.
Paternity Leave
Fathers are entitled to two days of paternity leave each week for the first four weeks following the birth of their child, the cost is shared evenly between employers and social security.
Parental Leave
Private sector employees are not entitled to receive parental leave.
Other Leave
- Marriage Leave – employees are entitled to 1 day of paid leave for their own wedding.
- Bereavement Leave – in the event of the death of an immediate family member, an employee is entitled to 3 days of paid leave.
PAID MATERNITY LEAVE (DAYS)
Termination
Termination Process
The termination process varies according to the employment agreement or collective agreement in place and is based on the type of contract and reason for termination.
Individual employment contracts can be terminated:
- By law
- By mutual consent of the parties
- By either party of the employment contract within the terms and conditions provided by the law
Employers may terminate employment contracts by dismissal for reasons related to the employee (e.g. professional inadequacy, as a disciplinary sanction) or not associated with the employee (e.g. job cancellation).
If the employer requests a dismissal letter, the employer is obligated to present one whatever the cause of termination was.
| Salary payment interval / date | Final payment on termination | Bank account payment requirement |
|---|---|---|
| Pay cycle is generally monthly, with payments made once per month. | When employment ends, employers must pay all wages owed, unused vacation pay, holiday bonuses (aguinaldo) and severance (cesantía) if applicable. | No statutory requirement that payment must be made into a bank account for all employees in Costa Rica. Payment methods besides bank transfer are permitted. |
Notice Period
In Costa Rica, the notice period for a temporary or permanent employee is dependent on the employee’s length of service as below:
- 0-3 months: No notice required
- 3-6 months: 1 week
- 6 months-1 year: 15 days
- 1 year+: 1 month
Severance Pay
In Costa Rica, the severance pay is dependent on the employee’s length of service as below:
- 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 – 9 years: 22 days
- 10 years: 21.5 days
- 11 years: 21 days
- 12 years: 20.5 days
- 13 years+ 21
Probation Period
The probationary period in Costa Rica is dependent on the type of role and is stipulated within the employment agreement. In general, probation periods are three months in which it is possible to end the contract without any justification or compensation being paid. It is not permitted to include a probation period in a fixed term contract.
Minimal Statutory Termination Costs
Before 3 months of employment, no obligation to give notice, it is considered a probationary period
If the employee has worked:
More than 3 months but less than 6 months: 1 week notice must be given
More than 6 months but less than 1 year: 15 days of notice must be given
After 1 year of employment: 1 month of notice must be given
Severance
Indefinite contract
After continuous work of no less than 3 months and no more than 6 months, an amount equal to 7 days of salary
After continuous work of more than 6 months but less than 1 year, an amount equal to 14 days of salary
After continuous work of more than 1 year, the amount of days’ salary of 19.5 days per year worked
After 1 year worked, if the employee has completed more than 6 months in that year, the days listed below apply:
Year 2 -20 days
Year 3- 20.5 days
Year 4- 21 days
Immigration
Costa Rica’s immigration system provides several options for employers of foreign nationals, including mechanisms for business visits, short-term assignments or employment, long-term temporary employment, and adjustment of status to permanent residence.
A business entry authorization allows foreign nationals to perform a wide range of business and professional activities in Costa Rica for up to 30 or 90 days (depending on nationality), provided they do not receive remuneration locally. Visa-exempt nationals may receive the business entry authorization upon arrival, while visa nationals require either a Consular or a Restricted Entry Visa, depending on their nationality. The Restricted Visa Commission must approve a Restricted Entry Visa in Costa Rica before a consulate may issue it.
Foreign nationals seeking to conduct business or work activities for more than 30 or 90 days (depending on nationality) or seeking to conduct any locally remunerated activity in Costa Rica require work authorization. The Short-Stay Visa is used by skilled foreign nationals seeking to conduct business or professional activities for more than 30 or 90 days (depending on nationality) or short-term remunerated work in Costa Rica. It permits work initially from six months to one year.
The primary category of work authorization is the Temporary Residence (either for accredited or non-accredited companies), which is typically granted for two years. Companies accredited by immigration authorities in Costa Rica receive benefits such as a special processing desk for immigration applications with shorter processing times and the ability to work during the processing of their immigration applications.
Companies can register with the General Directorate of Migration and Foreigners and by so doing, receive special treatment that can see reduced deadlines for the processing of residence applications.
VAT
General
The standard rate of VAT in Costa Rica is 13.00%.
Stay up to date on payroll & employment law changes
Version History
Questions & Answers
See how Papaya can help you automate your global payroll or EoR whilst staying 100% compliant with local labor laws
Payroll and Benefits Guide
in Costa Rica
What’s covered in this guide:
- Employer/employee contributions
- Minimum wage
- Working hours
- Visa requirements
And more...
Public Holidays Calendar
| Date | Day | Holiday | Notes |
|---|---|---|---|
| 1 January 2026 | Thursday | New Year’s Day | Standard holiday |
| 2 April 2026 | Thursday | Maundy Thursday | Standard holiday |
| 3 April 2026 | Friday | Good Friday | Standard holiday |
| 11 April 2026 | Saturday | Juan Santamaría Day | Standard holiday |
| 1 May 2026 | Friday | Labor Day | Standard holiday |
| 25 July 2026 | Saturday | Annexation of Guanacaste | Standard holiday |
| 2 August 2026 | Sunday | Our Lady of the Angels Day | Standard holiday |
| 15 August 2026 | Saturday | Mother’s Day / Assumption | Standard holiday |
| 15 September 2026 | Tuesday | Independence Day | Standard holiday |
| 1 December 2026 | Tuesday | Army Abolition Day | Standard holiday |
| 25 December 2026 | Friday | Christmas Day | Standard holiday |
Hi, is it possible to receive payment for unused vacation days?
Hi Tara, remuneration in lieu of annual vacations is prohibited unless termination happened prior to having been able to take all the vacation days.
When an employee is terminated because od the closing of a business what reporting is required to CCSS or other agencies
Hi David, thank you for your question. Regardless of the reason for termination, the only place you would need to notify of said terination is Social Security.
Hi David, thank you for your question. Regardless of reason for termination, the only place you need to notify of said termination is social security.
Is it necessary to pay vat on employee salaries?
Hi, thank you for your question. There is no need to paid regular salaried employees VAT on their wages. Are you referring to paying VAT for non-salaried employees or employees under EOR?
Is retroactive pay allowed in Costa Rica? For ex: Giving my employee a raise in August, but making it effective as of June?
Yes, it is allowed.
Can the USA based employer give the USA holidays for its costarican employee since the office is closed ? And can the employee and employer agreed to take only USA holidays even though the employee will be working from Costa Rica?
It is important to understand that there are usually more holidays in Costa Rica then the USA so it is unlikely workers will be willing to give up the additional holidays. It can be agreed to swap out certain Costa Rican holidays BUT the replacement holiday day should be used within 30 days from the actual Costa Rican holiday, for example, if they decide to work on December 25, the employee will have to enjoy one day off before January 25.
What is the minimum number of hours per week am employee must work tp receive benefits like paid holidays?
The employee will be entitled to any of the benefits as long as works at least part time, meaning that if the employee works at least 24 hours per week is entitled to all the benefits.
What are the timelines to pay the monthly statutory tax payments in Costa Rica?
If the question refers to personal income tax, there is no deadline for the individual; however, the company shall comply with the tax obligation within the following 15 days after the end of the month payments are typically due on a monthly basis.