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Employment Contract
Article 18 of the Labor Code (LC) provides for the presumption of an existing employment contract –oral or written- between the employer and the worker. The mere indication of a labor relationship is enough to suppose the existence of a labor contract, which binds the parties to fulfilling the obligations and respecting the rights provided in the law.
Anything convened between the parties to such labor relationship, either in writing or otherwise, which is part of the actual working conditions, shall be part of the contract. This results from a basic principle in the local labor law (the principle of Contrato Realidad – Actual Contract), where regardless of anything convened by the parties in writing as an employer-worker contractual contract, and regardless of the contents of the initial contractual relationship, the actual and current content of the labor relationship shall prevail, even if different from a past agreement, all in favor of the worker.
WORKING DAY:
Shifts
The LC establishes three shifts:
• Day Shift: work performed between 05:00 and 19:00
• Night Shift: work performed between 19:00 and 05:00
• Mixed Shift: work including periods covering both the day and the night shifts.
Article 136 of the LC provides that an ordinary day shift shall not exceed eight hours; the night shift, six hours, and the mixed shift, seven hours. A mixed shift that exceeds three hours and thirty minutes in a night shift is considered a night shift for all legal purposes. This same Article provides that a week´s ordinary work cannot exceed forty-eight hours for the day shift, forty-two hours for the mixed shift, and thirty-six hours for the night shift.
Extraordinary Hours (Overtime)
Effective work performed outside the timeframe of the abovementioned shifts is considered extraordinary time and is remunerated with 50% additional to the ordinary salary. Additionally, six hours of the night shift are paid at a rate equivalent to that of an eight-hour day shift.
Shifts
An ordinary shift plus an extraordinary shift cannot exceed twelve hours per day (except in the event of force majeure).
Managers and administrators, workers with discontinuous or intermittent jobs, and workers whose tasks by nature cannot be carried out in normal working hours (such as brokers and agents) are excluded from the maximum working hour limitations; however, a person cannot be forced to remain on the job for more than twelve hours per day except in special, justifiable circumstances.
Holidays
There are eleven lawful holidays. However, the employer may grant other days off (for example, celebration of the Patron Saint) but these are not mandated by law. When a holiday falls on a Sunday, it is not transferred to the following Monday.
If, upon agreement, a person works on a holiday or on the seventh day of the week –Sunday-, payment will be double the amount corresponding to a normal work day.
SALARY:
Composition
Salary consists not only of a fixed global sum but also of other sums, in cash or in kind, for services, bonuses, extraordinary hours, sales commissions, profit sharing, etc. To calculate payments made prior to termination of the labor relationship, all payments other than the ordinary salary must be considered / examined.
Salaries are openly agreed between employer and worker, but cannot be less than the sum stipulated in the Minimum Wage Decree, regularly adjusted by the Government.
Form and Frequency of Payment
Remuneration may be agreed by units of time (month, week, day or hour), per unit of output or task, or even per share in profits, sales or collections realized by the employer.
Regardless of form of payment, salaries may not be less than the minimum established by law. Salaries are paid in legal currency, at the workplace, generally by means of business check or electronic wire transfer.
Frequency of payment shall be established openly but may not exceed fifteen days for manual laborers, or one month for professional workers or domestic servants.
SOCIAL SECURITY AND OTHER BENEFITS
Social Security
Costa Rica has a social security system funded through contributions by the Government, the employers and the workers.
Services
The Costa Rican Social Security provides medical assistance, maternity care and pensions, and manages most of the hospitals and health care centers in the country.
These same services are also provided by private entities. The Costa Rican health care system is among the best in Latin America.
Disabilities
Employers continue to pay their employees, in the event of a disability, at least fifty percent of their salary for the first three days of such disability. As of the fourth day, the Costa Rican Social Security (Caja Costarricense del Seguro Social – CCSS) pays 60% of the salary, provided that a doctor from the institution has issued a certificate of incapacity. Employers are not required to pay salary beginning of day four. The exception is maternity leave, where the employer pays half salary for three months and the CCSS pays the other half.
Vacation
Besides holidays and Sundays, workers are entitled to two weeks paid vacation for every fifty weeks worked. For contracts ending prior to those fifty weeks, the vacation corresponds to one day for each month worked. The vacation period may be split, but only once.
Upon termination of contract, unutilized vacation may be paid, calculated based on the average salary earned in the last six months.
Christmas Bonus
Companies pay a bonus equivalent to one month salary when a worker has been employed for one year, or the proportional sum in the event of workers that have been employed less than one year.
OCCUPATIONAL RISKS
Besides the safety requirements applicable to working conditions, the LC provides an insurance system to protect workers in the event of accidents during working hours.
This insurance is provided by the National Insurance Institute (Instituto Nacional de Seguros – INS). A table lists the percentages of labor accident-related disabilities. The Code includes temporary and/or permanent disabilities.
TERMINATION
Right to Termination
The Costa Rican law allows for either party to terminate a labor relationship. The Labor Code lists the conditions that entitle an employer or a worker to terminate a contract without liability.
Employer´s Right to Terminate a Worker Employers are entitled to end a labor relationship without liability in the first three months of the labor relationship, or at any time in the event of serious misconduct of the worker, including:
• Act contrary to morality, or physically or verbally attack the employer during working hours.
• Act similarly against another worker, if such act causes serious work disruption or disorder.
• Act similarly against the employer or its representatives beyond working hours if this hinders continuation of the relationship.
• Offenses, acts against employer property, intentional damage of equipment, raw materials or other assets related to company operations.
• Disclose company confidential information.
• Act in a manner that compromises safety and working conditions.
• Unjustified absence for two consecutive days, or three non-consecutive days in the same calendar month.
• Overt defiance of instructions or orders.
Worker´s Right to Terminate a Contract
Workers are also entitled to end an employment contract without employer responsibility in the event of serious misconduct of the employer, including:
• Non-payment of agreed salary.
• Act contrary to morality, and/or physically or verbally attack the employee during working hours.
• Similar behavior by employer, representatives or persons directly related to such employer.
• Damage to work tools caused by employer, persons related to such employer, or other employees.
• Acts as described in sub-paragraph b) above, during non-working hours if they hinder continuation of the labor relationship.
• Occurrence of infectious diseases in employer and/or relatives, or employees at the work place.
• Unhealthy or unsafe working conditions.
Notice Period
Article 28 of the LC provides that either party may terminate a labor contract without cause by notifying the other party. After three months on the job, the employee is entitled to prior notice by the employer. In absence of such notice, the worker will receive payment equivalent to one month of salary, or fraction thereof when the job has been held for less than one year. That month, or fraction, may be granted either in monetary form or its equivalent in time.
If such notice is granted in time, this must be reflected in writing; over this period, the employer will give the worker one day off per week to procure another job.
In the event of a monetary compensation, the sum is calculated based on the average salary earned by such worker in the last six months (last six months of the contract). The elements indicated in Section 3 above must be considered when calculating an average salary.
After three months on the job, the worker is entitled to receive notice of termination. Otherwise, the worker will receive payment equivalent to one month of salary, or fraction thereof when the job has been held for less than one year. The worker must also give notice. In all cases, terminated workers must receive a written document indicating such termination, and the reasons therefore.
Severance
In the event a worker on the job more than three months is terminated, the employer will grant severance pay proportional to the time worked, not exceeding twenty-two days per year worked, with the maximum calculated based on eight years, as provided in the calculation chart in the Labor Code.