An Employer’s Guide on How to Hire in Costa Rica

Costa Rica keeps showing up in boardroom conversations about talent. You need someone who speaks fluent English, works in your time zone, and costs a fraction of what you’d pay in Silicon Valley. The latest ManpowerGroup Employment Outlook Survey puts Costa Rica at the top of the Americas with a stunning finding. For Q3 2025, 41% of its employers intend to increase staffing, outpacing even the United States. Costa Rica is no longer just about cheap labor anymore.

The shift toward nearshore hiring has real momentum behind it. IT outsourcing revenue across Latin America is projected to grow substantially over the next five years, and Costa Rica is a sweet spot where skilled meets affordable. Technically-skilled university graduates earn around 784,139 CRC (US$1,550) monthly while delivering the same quality work their North American counterparts do for five times the price.

What sets Costa Rica apart from other LATAM destinations is the infrastructure that actually works. Political stability that you can count on. English proficiency that eliminates the lost-in-translation moments. Plus a business culture that understands deadlines, Slack notifications, and the rhythm of North American companies.

For employers ready to expand beyond traditional hiring boundaries, Costa Rica offers that rare combination of talent, cost savings, and operational simplicity that makes remote teams feel less remote.

Overview of Costa Rica’s labor market

Costa Rica’s labor force totals approximately 2.38 million workers as of 2025, with a participation rate of around 56%. The country invests heavily in education, dedicating 6.5% of GDP to building a skilled workforce that can handle complex business operations.

This focus shows up in the talent pool: you find engineers who understand U.S. business culture, customer service reps who can handle escalations without losing their cool, and financial analysts who can reconcile books across time zones.

English proficiency sets Costa Rica apart from regional competitors. The country ranks first in Central America and second in Latin America for English skills, trailing only Argentina. Schools teach English from an early age, universities offer bilingual programs, and the result is a workforce that can jump on video calls with teams in Chicago or London without the communication gaps that plague other outsourcing destinations.

Popular sectors driving employment include:

• Business process outsourcing (BPO) and shared services centers. Handling everything from customer support to complex back-office operations
• Fintech and financial services. Processing transactions and managing compliance for international firms
• Advanced manufacturing. Particularly in medical devices, where Costa Rica ranks among the global export leaders
• Information technology and software development. Supporting the growing demand for nearshore tech talent

Average monthly salaries range from 500,000 CRC (US$1,000) to 1,500,000 CRC (US$3,000), depending on industry and experience level. These figures deliver substantial cost savings compared to equivalent U.S. positions while maintaining quality standards that multinational companies actually trust. In turn, you get skilled professionals who understand deadlines, handle client relationships, and deliver results at a fraction of domestic hiring costs.

Core hiring options in Costa Rica

Hiring employees in Costa Rica typically involves either establishing a local entity or using an Employer of Record (EOR) to efficiently and compliantly build their teams.

Establishing a local entity

To establish a local entity in Costa Rica, you have to register with the Public Registry, get a tax ID, and meet local labor regulations. This path requires upfront investment both in terms of time (often several months) and money, including legal fees and administrative overhead.

Once set up, you assume full responsibility for payroll, tax filings, social security contributions, and compliance with employment laws. Setting up a local entity is a good option if you’re committed to long-term operations, direct hands-on control over HR, and gaining expertise in legal matters.

Partnering with an EOR

Partnering with an EOR in Costa Rica is a faster alternative that doesn’t even require you to register as a local company. An EOR legally employs talent on your behalf, handling all payroll, benefits administration, tax, and legal compliance locally.

This approach minimizes your risk of noncompliance and administrative burden, which means you can scale and hire without being slowed by bureaucracy. It speeds time to market and allows you to test or grow your Costa Rican workforce with ease.

Payroll and taxation in Costa Rica

Costa Rica’s income tax system is progressive, with rates ranging from 0% to 25% based on monthly salary brackets updated annually for inflation. For 2025, employees earning up to 922,000 CRC monthly (approximately US$1,814) pay no income tax, while rates climb to 10%, 15%, 20%, and finally 25% for high earners above 4.7 CRC million monthly. Employers must withhold these taxes from each paycheck and remit them to the tax authority along with detailed monthly reports.

Social security contributions form the backbone of Costa Rica’s payroll obligations. Employers contribute approximately 26.67% of each employee’s gross salary to the Caja Costarricense de Seguro Social (CCSS), covering healthcare, pensions, disability, and other social benefits. Employees contribute around 10.67% of their gross wages, and these combined contributions fund one of Central America’s most comprehensive social safety nets.

Costa Rica follows a monthly payroll cycle with salaries typically paid by the last business day of each month. The country also mandates a 13th-month salary equal to one month’s pay, which must be distributed by December 20th each year. While the official currency is the Costa Rican colón (CRC), many employers pay salaries in either colones or U.S. dollars, as both currencies are widely accepted in business transactions. Modern payroll services usually facilitate direct deposit to local bank accounts, streamlining both salary payments and compliance tracking.

Statutory benefits in Costa Rica

The heart of Costa Rica’s worker protection is the CCSS, “la Caja” as everyone calls it. The CCSS handles healthcare, pensions, disability coverage, and maternity benefits that make Costa Rica an attractive place to work and hire talent.

Key benefits employers must provide or contribute to include:

• Aguinaldo. The 13th-month salary paid to employees before Christmas is calculated as the average monthly salary earned that year.
• Paid annual vacation leave. Starting at 14 working days after just under a year of service, with incremental increases for longer tenure.
• Severance pay requirements. In specific cases, like unjust dismissal or redundancy.
• Labor risk insurance. Covering workplace accidents and occupational diseases.
• Mandatory healthcare contributions. Ensuring access to medical treatment through the national system.
• Optional competitive perks. Commonly offered extras include meal vouchers, private health insurance, and transportation allowances.

In addition to these statutory benefits, competitive companies layer on those optional extras to attract talent, especially in tech and finance, where professionals have options.

Working hours, holidays, and leave

Costa Rica’s work schedule is not what you might expect. The standard week stretches over six days, Monday through Saturday, with eight-hour shifts and one mandatory rest day. Overtime happens, but it has limits. Employees can work up to four extra hours daily, paid at 150% of regular wages, or 200% if it falls on a holiday.

The country celebrates 14 public holidays each year. Christmas, Labor Day, Independence Day, and others that are meaningful to people here. Most come with mandatory pay, so your payroll planning should account for these bumps. Annual leave starts at 14 working days after an employee hits 50 weeks of continuous service. Before that milestone, workers get prorated time off.

Family leave gets serious attention. Mothers receive four months of maternity leave at full pay. Fathers now get eight days of paid paternity leave, a recent win for work-life balance. Sick leave works through a partnership between employers and Social Security. The first few days come from company coffers, then the government safety net kicks in with partial wage replacement.

Employment contracts in Costa Rica

Written contracts rule in Costa Rica. The law demands proper documentation, typically in Spanish, with three copies filed: one for the employer, one for the employee, and one for the Ministry of Labor. This isn’t just bureaucratic box-checking. Clear contracts prevent disputes and protect both sides when relationships go sideways.

You’ll typically deal with three employment contract types. Indefinite-term contracts are the standard for permanent roles. Fixed-term contracts work for projects or temporary needs but come with strict limitations on duration and renewal. Probationary contracts give everyone a three-month trial period where either party can walk away without the usual severance requirements.

Every contract needs the basics:

1. Who’s being hired
2. What they’ll do
3. How much they’ll earn
4. When they’ll work
5. What benefits they get
6. How either side can end things

Job descriptions, salary details, working hours, termination procedures. While Spanish is the official language, bilingual contracts are now common as international companies build remote teams. The extra translation effort pays off when everyone actually understands what they’re signing.

Work visas and immigration

Most foreign nationals need a visa to legally work in Costa Rica, and that means employer sponsorship. The country offers temporary residence permits for workers hired by Costa Rican companies or international firms with local entities. There’s also a digital nomad visa for remote workers, but traditional employment usually goes through the standard permit route.

The visa sponsorship process starts with proving that you couldn’t fill the position with a Costa Rican national. Once you clear that hurdle, you’ll submit business justification documents and employment contracts to immigration authorities. The employee then enters Costa Rica on a provisional visa and completes fingerprinting and security registration with the Ministry of Public Security.

Processing times stretch from three to eight months, sometimes longer, depending on the applicant’s country of origin and visa category. Proactive employers start the visa process early, often before making job offers, because delays can derail onboarding timelines. The bureaucracy moves at its own pace, but the payoff is access to Costa Rica’s skilled, English-speaking workforce at competitive rates.

Worker classification and misclassification risks

Costa Rica draws clear lines between employees and independent contractors, and crossing them can be costly. Employees get social security, vacation pay, Aguinaldo bonuses, and severance protection. Contractors operate as self-employed, handle their own taxes, and receive none of those benefits. The distinction matters because labor courts enforce it strictly.

Misclassification penalties hurt. In 2023, a labor court ruled against Uber for treating drivers as contractors instead of employees, ordering the company to pay social security, vacation, and Christmas bonuses. The precedent now applies to other companies, especially those using gig workers or project-based talent. Fines, back taxes, and legal fees add up quickly when authorities find violations.

The test comes down to control, integration, and dependency.

Your talent is probably an employee if you:

• Set schedules
• Provide equipment
• Expect exclusive service

Your talent is probably a contractor if they:

• Operate independently
• Serve multiple clients
• Bear the business risk

Choosing an EOR over entity establishment removes the guesswork by ensuring proper classification from day one, letting you focus on managing talent instead of compliance risk.

Termination and severance rules

Costa Rica’s labor code protects workers but gives employers clear termination paths when they follow the rules. Just cause terminations (misconduct, theft, repeated policy violations) allow dismissal without severance pay. But the employer must prove the cause and document everything. Without just cause, terminations trigger notice periods and severance payments that scale with tenure.

Notice requirements start simple: no notice needed during the first three months, then one week for employees with 3-6 months of service, two weeks for 6-12 months, and one month for longer tenures. Employers can pay in lieu of notice, which often makes transitions cleaner. The real cost comes with severance pay, calculated as average monthly salary times years of service, capped at eight years maximum.

Wrongful dismissal cases go to labor courts, which can order reinstatement and back pay. The process takes months, creates uncertainty, and costs more than getting terminations right the first time. Proper documentation, progressive discipline, and clear employment contracts provide the best protection.

How to hire in Costa Rica with Pebl

Backed by our global EOR services that span 185+ countries, we turn Costa Rica hiring from a months-long bureaucratic maze into a streamlined process. We handle everything from compliant employment contracts and monthly payroll to social security contributions and work visa sponsorship, so you can focus on building your team instead of decoding labor laws.

With deep in-country expertise and proven global expansion experience in LATAM, Pebl becomes your local hiring partner, letting you tap into Costa Rica’s skilled, cost-effective talent pool without the overhead of establishing your own entity. Get in touch to learn more.

FAQs about hiring in Costa Rica

When hiring in Costa Rica, you’re likely to have some key questions. Here are some answers to help you get started.

Can I hire someone in Costa Rica without a local entity?

Yes, you can hire someone in Costa Rica through an employer of record, which acts as the official employer and handles all legal and administrative requirements. This approach avoids the need to establish a local business entity while ensuring full compliance with Costa Rican labor and tax laws. An EOR becomes your local partner, managing contracts, payroll, and compliance so you can focus on building your team.

What is the minimum wage in Costa Rica?

As of 2025, Costa Rica’s minimum wage varies by job category, ranging from approximately CRC 367,000 to CRC 784,000 per month (US$700 to US$1,500). The rates are set annually by the National Wage Council and depend on skill level and education requirements. Employers must comply with these rates and adjust salaries accordingly to remain lawful and competitive.

How can I ensure I stay compliant with local labor laws?

Compliance with local labor law involves adhering to Costa Rica’s labor code, including proper worker classification, employment contracts, social security filings, and payroll tax remittance. Partnering with local experts or an EOR provider can help navigate these requirements effectively and reduce risk. Regular updates on law changes and proper documentation are essential for avoiding penalties.

Why are companies hiring in Costa Rica?

Costa Rica is attracting companies because of its highly skilled, bilingual workforce, geographic proximity to the U.S., political stability, and cost-effective hiring. Its thriving nearshore ecosystem offers easy collaboration across time zones and cultures, making it a strategic base for technology, customer service, and shared services operations. The political and economic stability creates a reliable environment for long-term business relationships.

What are the most popular remote jobs in Costa Rica?

Some of the most popular remote roles in Costa Rica span technology and business services, with software developers, customer support representatives, digital marketers, and finance professionals leading demand. The country’s infrastructure and talent pool make it ideal for hybrid and fully remote roles that serve North American and global markets. Business process outsourcing and fintech positions are particularly strong given the workforce’s technical skills and English proficiency.

This information does not, and is not intended to, constitute legal or tax advice and is for general informational purposes only. The intent of this document is solely to provide general and preliminary information for private use. Do not rely on it as an alternative to legal, financial, taxation, or accountancy advice from an appropriately qualified professional. The content in this guide is provided “as is,” and no representations are made that the content is error-free.

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