There are more and more American companies hiring in Costa Rica, and it’s no surprise why.  The country has established itself as a technological hub within Latin America. Costa Rica now boasts many software development and healthcare technology companies, as well as skilled tech professionals. 

If your organization is interested in hiring employees in Costa Rica, take a look at the guide below. Here, we explain how to hire employees in Costa Rica, covering hiring methods, legal considerations, and how an Employer of Record (EOR) like Payoneer Workforce Management can help simplify the process of hiring in Costa Rica.

How to hire employees in Costa Rica

U.S. companies hiring in Costa Rica have three key options. They can set up a legal entity in Costa Rica, hire contractors, or use an Employer of Record.

Let’s take a look at the advantages and disadvantages of each approach.

1) Set up a legal entity in Costa Rica

To set up a legal entity in Costa Rica, you need to register your business there. This is a good option if you want to establish a long-term presence in the country, as it means you can hire employees in Costa Rica directly.

However, there are some downsides to this option. Setting up a legal entity is time-consuming and costly. It leaves you with a base in Costa Rica that you may not want or need in years to come. 

You’re also likely to need a specialized team that can support you to meet your obligations as an employer in Costa Rica. Your company will be responsible for onboarding, background checks, and payroll. You also need to be confident that you’re complying with all local labor laws.  

Because setting up a legal entity is such a significant undertaking, it’s not suited to companies looking for fast or flexible hiring solutions.

2) Hire contractors in Costa Rica

You can tap into Costa Rican talent without setting up a legal entity by hiring contractors. These workers are contracted to provide their services for a limited period and don’t enjoy the same benefits as employees.

This is a quick and cost-effective way to hire, but it can be risky without a comprehensive understanding of Costa Rican labor law. Misclassifying employees as contractors can lead to serious fines and penalties.

3) Use an Employer of Record

An Employer of Record in Costa Rica is a third-party entity that employs Costa Rican workers on your behalf, so you don’t have to set up a legal entity.

There are other benefits, too. Guidance to manage compliance, the onboarding process, payroll, taxes, and statutory benefits, so you can focus on the day-to-day work of the local hire.

Working with an EOR helps streamline the process, reduce risk, and manage legal obligations when hiring in Costa Rica.

Find out more about using an Employer of Record in Costa Rica.

Where to find employees in Costa Rica

You can find Costa Rican talent for your organization by using specialized job boards, recruitment agencies, or an EOR.

Popular job boards in Costa Rica

Using job boards, you can have a job advertisement online and start receiving applications in minutes. Some popular places to advertise jobs in Costa Rica include:

• OpcionEmpleo
• BuscoJobs
• Jobomas
• LinkedIn
• Indeed

Work with local recruitment agencies

Partnering with local recruitment agencies is an alternative way to hire in Costa Rica. These agencies help bridge cultural and language gaps, tailoring job postings to better connect with Costa Rican candidates. They also typically have an existing talent pool that you can access, which can speed up the hiring process.

However, this approach has its drawbacks. Recruiters often charge high fees, and while they assist with sourcing and screening candidates, responsibilities like onboarding, managing employment contracts, and handling payroll still fall to your organization.

Recruit through an EOR

Using an EOR to hire employees in Costa Rica gives your business full control over recruitment and candidate selection, while benefiting from local expertise throughout the hiring process.

An EOR, such as Payoneer Workforce Management, handles the administrative aspects of employment. They prepare employment contracts, help with onboarding, manage statutory benefits, and support your business to comply with Costa Rican labor and tax regulations.

Onboarding employees in Costa Rica

When hiring in Costa Rica, a smooth and compliant onboarding process is essential. It helps new employees get up to speed quickly and helps your company stay aligned with local labor regulations.

Here’s what’s involved when onboarding a new employee in Costa Rica:

• Check the employee’s work permit and eligibility to work in Costa Rica
• Gather copies of an employee’s ID, address, education certificates, and proof of employment
• Draw up an employee contract
• Register the employee with social security
• Register the employee in benefits and payroll
• Provide onboarding and training materials in both Spanish and English, including guidance on company culture and policies
• Provide cultural guidance, helping new hires to understand workplace norms and communication styles
• Make introductions to the team and colleagues, and assign an onboarding buddy or support contact
• Set up all the devices and workplace software your employee will be using
• Establish goals and expectations, clearly outlining the employee’s responsibilities, performance objectives, and success metrics

An EOR can simplify much of this process, from drafting contracts to collecting documents to handling registrations, so you can focus on welcoming your new employee to the team.

Key employment laws and requirements in Costa Rica

American companies hiring in Costa Rica have to abide by local labor laws and requirements. Here’s an overview of what you need to know.

Employment contracts

To legally hire employees in Costa Rica, you need to provide a written employment contract for any employment arrangement that lasts longer than 90 days. A copy of the contract should be sent to the employee and the Employment Office of the Ministry of Labor and Social Security within 15 days of the contract starting.

Contracts should include, at a minimum, the following details:

• The names and surnames, nationality, age, sex, marital status, and address of the contracting parties
• Identity card numbers, if the contracting parties are required to carry them
• The worker’s residence when they’re contracted to provide services in a place other than their usual one
• The duration of the contract
• The length of the workday and the hours during which work must be performed
• The salary, wage, or share the worker is to receive, and the form, period, and place of payment

Employee benefits

When you hire in Costa Rica, your employees are entitled to statutory benefits, including:

• Sick leave: Employees are entitled to full pay for the first 3 days of sick leave, with 50% paid for by the employer and 50% paid for by social security. They are then entitled to 60% of their pay from the 4^th day onward, paid exclusively by social security.
• Maternity leave: Female employees are entitled to a minimum of 4 months of maternity leave, with 1 month to be taken before the birth of their child and 3 months afterward.
• Paternity leave: Male employees are entitled to 8 days of paternity leave to be taken as 2 days per week in the first 4 weeks after the birth of their child.
• Pension/social security: Employers contribute to a pension and social security on behalf of employees.

Working hours and holidays

A standard working week shouldn’t exceed 48 hours. Employees should not work more than 8 hours per day shift and 6 hours per night shift. Employees are entitled to 1 day of rest after every 6 days of continuous work.

They are also entitled to a minimum of 14 vacation days per year after completing 50 consecutive weeks of employment. In addition to these 14 days, there are also 12 public holidays per year.

Income tax

Employers have to withhold employee taxes in Costa Rica. Income tax in Costa Rica is charged at a progressive rate, with 5 tax bands ranging from 0% to 25%. Here are the income tax brackets for 2025:

Income bracket (in CRC)	Tax rate
0 to 929,000	0%
929,001 to 1,363,000	10%
1,363,001 to 2,392,000	15%
2,391,001 to 4,783,000	20%
4,783,001+	25%

Social security

Employers and employees contribute to Costa Rica’s social security system. This system is managed by the Costa Rican Social Security Fund (CCSS).

Employer contributions are around 26.67% of an employee’s gross salary. Employee contributions are around 10.67% of their salary. Contributions cover benefits like health insurance and pensions.

Employers are also required to pay for labor risk insurance through the National Insurance Institute. This covers employees in the case of work-related injuries and accidents. Rates vary depending on your industry.

Termination and severance

When ending an employment relationship in Costa Rica, notice periods and severance obligations depend on the employee’s length of service:

Notice Periods for Employee Resignation:

• Up to 3 months of service: No notice required
• 3 to 6 months: 1 week
• 6 months to 1 year: 15 days
• More than 1 year: 1 month

Employer-Led Termination Without Cause:

If an employer terminates an employee without just cause, severance pay is mandatory and calculated based on years of service, capped at 8 years:

• Up to 3 months: No severance
• 3 to 6 months: 7 days of salary
• 6 months to 1 year: 14 days of salary
• 1 year or more: 21 days of salary per year of service, up to a maximum of 8 years

Termination With Cause:

If an employee is dismissed for gross misconduct and the employer can prove just cause, no severance is owed. If just cause cannot be established, the employee is entitled to severance plus compensation.

Mandatory Annual Bonus (Aguinaldo):

Employers must also pay a Christmas bonus equivalent to one-twelfth of the employee’s annual wages by December 20 each year.

Payoneer Workforce Management  helps hire employees in Costa Rica

U.S. companies hiring in Costa Rica need to understand local labor laws and meet their obligations in terms of employee contracts, payroll, statutory benefits, and more. Companies also have to decide how to hire employees in Costa Rica, by setting up a legal entity, hiring contractors, or working with an EOR.

With Payoneer Workforce Management as your Employer of Record partner, hiring in Costa Rica is flexible and seamless. There’s no need to establish a local legal entity, so you can get Costa Rican talent onto your team quickly.  

Our unified platform empowers you to:

• Onboard local hires quickly without a local entity
• Run global payroll securely in a few clicks
• Get guidance on local employment laws
• Manage taxes, benefits, timesheets, and more

Speak to our experts today.  

FAQs

1) How to hire in Costa Rica?

There are three primary ways to hire in Costa Rica. 

1. You can set up a legal entity in Costa Rica and hire employees directly.
2. You can hire a contractor for a limited-scope project
3. You can partner with an Employer of Record who will employ Costa Rican employees on your behalf.

2) Can a U.S. company directly hire employees in Costa Rica​?

Yes, a U.S. company can directly hire employees in Costa Rica if they have a legal entity in the country. To employ someone in Costa Rica without a legal entity, a U.S. company can use an Employer of Record.

3) How can an EOR help U.S. companies hiring in Costa Rica?

An EOR helps reduce the complexity of global hiring. It can help U.S. companies hire in Costa Rica by offering support with recruitment, employment contracts, onboarding, payroll, and more. Ultimately, an EOR can help a company hire Costa Rican talent while complying with local labor laws.