Navigating Termination and Notice Periods in Costa Rica: An HR Guide

For multinational companies operating in Costa Rica, understanding local employment termination laws is critical to ensure compliance and mitigate risks. Costa Rica's Labor Code provides specific guidelines for both employers and employees when ending an employment relationship.

Grounds for Lawful Termination by Employers

Employers may terminate a contract at its fixed-term conclusion or due to employee misconduct without notice or severance if the act occurred within three months prior to dismissal. Valid grounds include:

Immoral conduct, defamation, or abuse against the employer or colleagues
Intentional damage to company property
Disclosure of trade secrets or confidential information
Negligence jeopardizing workplace safety
Unauthorized absences exceeding two consecutive days or two days in one month
Repeated refusal to follow safety protocols
Fraudulent credentials discovered during employment
Criminal conviction leading to imprisonment
Serious breach of contractual obligations

Employees may resign with cause under circumstances such as:

Non-payment of wages
Employer misconduct, defamation, or abuse
Malicious damage to employee tools
Workplace health hazards or safety negligence
Discrimination against HIV-positive employees

Special Protections for Vulnerable Groups

Costa Rican law offers enhanced protections for:

Pregnant or nursing women
Minors
Union leaders
Complainants of sexual harassment or discrimination

These groups can access expedited judicial procedures where judges may order reinstatement, back pay, and damages within days.

Notice Period Requirements

Written notice is mandatory for all dismissals. Notice periods vary:

Employment Duration	Notice Period
Less than 3 months	Dismissal not permitted
3-6 months	7 days
6-12 months	15 days
Over 12 months	30 days

Severance Pay Calculations

Severance is calculated based on tenure and final six months' average salary:

3-6 months: 7 days' wages
6-12 months: 14 days' wages
Year 1: 19.5 days
Years 2-9: 20-22 days annually (increasing then decreasing)
Years 10+: 20-21.5 days annually

Payments cap at 8 years of service. Proportional calculations apply for partial years over 6 months.

Additional Mandatory Payments

Employers must also provide:

Christmas Bonus: One-twelfth of annual earnings, paid by December 20
Vacation Pay: Based on average wages over 50 weeks (e.g., 12-14 days' pay depending on pay frequency)

Unemployment Benefits

Costa Rica lacks a formal unemployment insurance system. Severance, bonuses, and accrued vacation pay serve as primary protections for wrongfully dismissed employees.

For seamless compliance with Costa Rican labor regulations, SailGlobal offers expert guidance to manage terminations lawfully and efficiently.

Costa Rica Termination Laws: Notice Periods, Severance & Compliance