Hiring Domestic Help
Labor laws in Costa Rica are very comprehensive and totally universal. Strict enforcement of these laws ensures that all Costa Ricans are protected without discrimination. As a foreign resident, one should have a thorough understanding of the rules in order to develop a trusting and fair relationship with the employee and to avoid penalties and legal entanglements concerning workers' rights.
Here are the basics:
1. Length of Employment
The first thirty days of employment is the trial period. Either party, employee or employer, can terminate the work contract without notice. If, during the trial period, the employee works over 20 days, both vacation and a Christmas bonus are due (later explained). After the trial period, one day of vacation time is granted for each full month of employment for about two weeks of vacation per year. However, many employees, by custom or through union contracts, will receive three weeks of vacation per year.
2. Hours of Employment
As a general rule, domestic labor shall work no more than eight hours a day, six days a week. In addition, employees should get a paid day-off for major holidays including January 1st, Holy Thursday, Good Friday, Juan Santamaria Day (April 11th), Labor Day (May 1st), Annexation of Guanacaste Day (July 25th), Independence Day (September 25th), and December 25th. If an employee works on these days they are entitled to double their wage. For regular, non-domestic employees, double time is paid for work on Saturday and Sunday.
3. Social Security
Managed by the Caja Costarricense del Seguro Social (CCSSS), the institution of Social Security covers health care, disability and sick leave. It is probably the most important obligation for the employer and the one most stringently overseen by the government. Within the first eight days of employment, the employer must register the worker with the CCSSS. Failure to do this can produce stiff penalties. If an unregistered employee becomes injured or sick, the employer could be obligated to pay for the medical bills and half of his/her earnings for the time that they are incapacitated. Once the worker is registered, the employee is only liable for 50 percent of the earnings for the first three days, after which Social Security picks up the rest. Pregnancy is another issue that employers must be informed about. A pregnant employee is entitled to both full salary and a leave of absence. The leave of absence begins one months before the projected birth of the child and lasts until three months after birth. During this time, the employer is obligated to pay for half of the salary and Social Security picks up the rest.
The minimum wage varies according to the job and skills of the employee. As of 2001, the minimum wage was US$125 per month. This wage probably seems very low to the Westerner, exceedingly high to workers in neighboring Central American countries, and relatively low to the actual domestic help in Costa Rica. The truth is that US$125 is about twice what hired labor is paid in surrounding Central America, yet very low by Costa Rican standards. As a rule of thumb, in order to pay a fair wage and attract good, reliable help, employers should pay the acceptable wage of labor in that area, even if it is higher than the minimum wage.
5. Christmas Bonus
Otherwise known as Aguinaldo, hired labor is guaranteed by the employer an annual Christmas bonus payable between December first and the 20th. Payment works like this: Employees that have worked for a full year prior to December first should receive a Christmas bonus equal to one and a half month's pay. Those that have worked longer than the 30-day trial period but less than a full year shall receive a prorated bonus. Therefore, an employee that has worked for six months should receive a bonus equal to 9/12 of one month's earnings.
6. Notice and Severance Pay
Employees of more than 90 days and less than a year are guaranteed a two week notice before being laid off. Those employed after a year are entitled to a one month notice. If the employer fails to give notice, they are required to provide the employee's full wages for the period of notification. Dismissing an employee must be documented with the CCSSS and an appropriate severance pay is required dependant upon the employment period: up to three months, no severance is required; two weeks' pay for four to six months; one month's pay for seven months to one year. For each additional year of employment, one month's salary is due, or the employee is entitled to a prorated fraction of one month's pay after the first six months. The maximum amount of severance can never be more than the equivalent of eight month's pay. In addition to the total severance pay, the employee must be paid unused vacation time, the proportionate aguinaldo, and all wages due.
While it is evident that the Costa Rican government protects its workers, employers are also protected from the misbehavior of their employees. An employer can hold an employee responsible for damages to property or person caused intentionally or by accident. In addition, an employee can be dismissed without notification and severance if the employer can show a "notorious lack of respect or civil treatment". However, it is important to remember that the Ministry of Labor is partial to the working citizens of Costa Rica, and that to accuse your employee of such transgressions requires good, solid proof and, better yet, a reliable witness.