Employee Benefits in Costa Rica

Who Is Entitled to Employee Benefits in Costa Rica

In Costa Rica, all employees, regardless of their employment status—be it full-time or part-time—are entitled to certain mandatory benefits as stipulated by the country's labor laws. These legal requirements ensure that employees receive fundamental protections and compensations, including social security coverage, paid leave, and severance pay. Employers are obligated to adhere to these regulations to maintain compliance and promote fair labor practices.

Overview of Employee Benefits in Costa Rica

Employee benefits in Costa Rica are comprehensive, reflecting the country's commitment to social welfare. The mandatory benefits form the foundation of the employment relationship, ensuring basic rights and protections for all employees. In addition to these, many employers offer supplemental benefits to enhance their compensation packages, thereby attracting and retaining top talent in a competitive market.

Mandatory Benefits

Social Security Contributions

Employers must contribute to the Caja Costarricense de Seguro Social (CCSS), the national social security system, which provides employees with access to healthcare, pensions, disability, and maternity benefits.

Workers' Compensation Insurance

‍Employers are required to provide labor risk insurance (seguro de riesgos del trabajo) for all employees, covering work-related accidents or injuries.

Overtime Pay

The standard workweek is 48 hours, with a maximum of eight hours per day. Any work beyond this is considered overtime and is compensated at 150% of the regular wage. If employees work on holidays or their designated rest days, they are entitled to 200% of their regular wages.

Statutory Holidays

‍Employees are entitled to several national public holidays, including New Year's Day, Maundy Thursday, Good Friday, Juan Santamaria Day, Labor Day, and others.

Parental Leave

‍Pregnant employees are entitled to four months of maternity leave—one month before the due date and three months after – paid at 100% of their usual salary. The cost is shared equally between employers and social security. Fathers are entitled to eight paid days of paternity leave, taken as two days per week for the first four weeks after the child's birth.

‍Sick Leave

For the first three days of illness, employers pay 50% of the employee's salary, while social security covers the remaining 50%. If the illness extends beyond three days, social security pays 60% of the salary each day, and the employer is no longer required to contribute.

Annual Paid Leave

Employees who have completed at least 50 weeks of continuous service are entitled to a minimum of two weeks of paid vacation. This leave must be taken within 15 weeks following the entitlement period.

13th-Month Salary (Aguinaldo)

Employees are entitled to a 13th-month salary, known as "Aguinaldo," which is paid during the first 20 days of December. This bonus is equivalent to one month's salary and provides financial support during the holiday season.

Supplemental Benefits

Private Health Insurance

While the CCSS provides comprehensive healthcare, some employers offer private health insurance to give employees access to private hospitals and clinics, reduced waiting times, and additional services like dental and vision care.

Voluntary Pension Plans

Beyond the mandatory pension contributions, employers may offer voluntary pension plans to assist employees in securing a more comfortable retirement.

Life Insurance

Offering group life insurance provides financial security to employees' families in the event of unforeseen circumstances.

Meal Vouchers or Transportation Stipends

To support employees' daily expenses, some employers provide meal vouchers or transportation stipends.

Tuition Reimbursement

‍ Investing in employees' professional development through tuition reimbursement programs allows them to pursue further education or certifications.

Work-from-Home Allowances

‍With the rise of remote work, providing work-from-home allowances helps employees set up efficient home offices.

Additional Holiday Bonuses

‍Beyond the mandatory 13th-month salary, some employers offer extra holiday bonuses to reward employees' hard work.

Flexible Working Hours

‍Offering flexible working hours allows employees to balance their professional and personal commitments more effectively.

Tax Implications of Employee Benefits in Costa Rica

Employer-paid premiums for supplemental benefits, such as private medical insurance and group life assurance, are subject to a 2% tax. Additionally, Costa Rica employs a progressive income tax system, with rates ranging from 0% to 25%, depending on income levels.

How to Offer an Employee Benefits Program for Employees in Costa Rica

Set Budget & Goals

Begin by defining clear objectives for your employee benefits program. For example, you might want to boost employee satisfaction, improve retention rates or attract top talent globally. Now, establish a realistic budget that aligns with these goals, taking into account the financial implications of offering various benefits across different regions. 

Use tools like Playroll’s employee cost calculator to benchmark your offering across regions.

Partner with Benefits Providers

Collaborate with reputable global benefits providers who have proven experience in international markets. These partners can ensure compliance, and offer insights into local regulations, cultural expectations as well as competitive standards – making your benefits program more attractive to employees in each country. 

Customize Benefits for Local Culture and Expectations

Employee needs and preferences can vary significantly across cultures. That’s why it’s so important to tailor your benefits offerings to reflect local customs, values, and expectations. For instance, while flexible work arrangements might be highly valued in one country, healthcare benefits could be more critical in another. Customizing your benefits packages accordingly can help make your offering more competitive to local talent. 

Playroll’s benefits team provides expert insights into tailoring your benefits packages in 180+ regions to local needs, helping to attract and retain top talent.

Communicate the Benefits Program to Employees

Good communication is crucial to ensure employees understand and make use of the benefits available to them. Use appropriate messaging channels to inform employees about the program's details, how to access benefits, and any relevant procedures.

Encourage open lines of communication within the organization, and update the team on any changes in the benefits program. It’s a good idea to conduct regular employee engagement surveys to get feedback on satisfaction with your benefits program, to make proactive changes as needed.

Legal Considerations for Employee Benefits in Costa Rica

The Costa Rican Labor Code mandates specific benefits such as social security contributions, workers' compensation insurance, paid leave, and the 13th-month salary. Non-compliance can result in significant penalties, including fines and legal action.

How Benefits Impact Employee Cost

Employee benefits significantly impact payroll costs. Employers can manage expenses by conducting market benchmarking, implementing cost-sharing measures, and promoting preventive health programs.

How Can Playroll Help with Benefits Management in Costa Rica?

Managing employee benefits across multiple countries can be complex, but it doesn’t have to be. Playroll simplifies the process by handling administrative tasks, ensuring compliance with local regulations, and providing access to tailored benefits packages in 180+ regions.

With everything managed through a single platform, companies can focus on supporting their teams  – wherever they are.

• Pick and choose from localized benefits packages to attract and retain global talent.
• Built-in compliance to stay ahead of evolving regulations.
• Manage leave, expenses, and more, through one intuitive dashboard.