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Foreign hi, I'm Sarah Williams, a recruitment consultant at Skills Provision. Today I'm going to discuss Employer of record services in Costa Rica. Expanding into new international markets can be an attractive strategy for businesses seeking growth, access to new talent or a foothold in a different region. However, navigating foreign employment laws, payroll regulations and compliance requirements is often daunting. For companies looking to establish a presence in Costa Rica without immediately setting up a legal entity, Employer of Record Services present an efficient and compliant solution. An employer of record is a third party organization that legally employs staff on behalf of a client company. While the client directs the employee's day to day responsibilities, the EOR takes on the legal obligations of being the employer. This Drafting compliant employment contracts managing payroll and tax withholdings overseeing statutory benefits and Social Security contributions handling terminations and severance in line with local laws. The EOR model enables companies to hire workers in Costa Rica quickly and compliantly without having to register a subsidiary or branch office in the country. Why choose Costa Rica for Business expansion? Costa Rica has become one of Latin America's most attractive destinations for foreign investment and global talent recruitment. The country offers political and economic stability. Compared with its regional neighbors, Costa Rica has a long standing democratic tradition and a stable investment environment. Skilled workforce the country boasts a highly educated population with strong emphasis on bilingualism, Spanish and English. Technology and professional services Favorable business Costa Rica is known for advanced manufacturing, medical devices, IT services, and green energy. Situated in Central America with strong links to north and South America, it is a convenient base for regional operations. Despite these benefits, companies must grapple with Costa Rica's detailed labor code, Social Security system and tax obligations, areas where an EOR can add significant value. Employment Law in Costa Rica Key Considerations before hiring in Costa Rica, employers should understand some core elements of local employment law. Employment contracts must be in writing and include details of salary, role, hours and duration. Probation Generally up to 3 months working the standard work week is 48 hours with limitations on overtime. Minimum wage set annually by the Ministry of Labor and Social Security and varies depending on job classification. These include holiday pay, annual bonus, Aguinaldo, maternity leave and severance entitlements. Social Security Contributions Employers and employees must contribute to the Caja Costari Sans de Seguro Social, covering healthcare, pensions and other benefits. Non compliance with these rules can result in fines, penalties and reputational damage. Partnering with an EOR ensures compliance is managed correctly. How an EOR Works in Costa Rica When a business engages an EOR in Costa Rica, the EOR legally employs the staff member while the client company Manages the individual's workload and performance. The division of responsibilities typically looks like this. EOR Responsibilities Drafting employment contracts in Spanish compliant with Costa Rican law Registering employees with the CCSS and handling ongoing contributions Processing monthly payroll including income tax and Social Security deductions Ensuring compliance with annual bonus requirements and holiday entitlements Advising on lawful termination procedures and calculating severance pay Client Responsibilities Directing the employee's tasks, performance goals and work schedule Providing tools, resources and training needed for the role Integrating the employee into the company culture and operations this arrangement allows businesses to access Costa Rican talent without navigating the bureaucratic hurdles of entity setup while also safeguarding workers rights. Advantages of Using an EOR In Costa Rica Engaging an employer of record brings several key Speed to market Hiring through an EOR can be completed in weeks rather than months, avoiding the delays of company incorporation. Legal Compliance the EOR ensures all employment contracts, payroll processes and benefits are in line with Costa Rican legislation. Reduced risk by shifting employment liabilities to the eor, the client company avoids potential fines or disputes related to non compliance. Cost efficiency Establishing a local subsidiary requires legal, administrative and financial investment. Using an EOR avoids these upfront costs. Focus on Businesses can concentrate on strategic goals rather than administrative HR tasks. Ideal for testing a new market or hiring a small remote team before committing to long term investment. Challenges and Considerations While EOR services offer many advantages, companies should also be aware of potential challenges. Eors charge service fees which may be higher than in house HR costs. Once a company has a large workforce. Control limitations Some decisions, particularly those relating to legal employment status, must go through the EOR rather than directly from the client. For large scale operations, establishing a local entity may eventually be more cost effective. A thoughtful assessment of long term strategy will help determine whether EOR or entity incorporation is the best route. Practical Steps for Hiring via EOR In Costa Rica select an EOR provider Compare providers based on expertise, service coverage, technology and local presence. Define roles and compensation Work with the EOR to set compliance salaries and benefits packages Onboard employees the EOR prepares contracts and registers staff with the authorities. Manage payroll and benefits the EOR ensures timely payments and compliance with CCSS requirements. Ongoing EOR providers often offer HR guidance, regulatory updates and support with employee relations sectors where EOR services are most valuable. In Costa Rica, EOR solutions are particularly useful in industries such technology and IT outsourcing. Given the strong English proficiency and skilled tech workforce. Shared services and call centers. Costa Rica is a hub for customer support and back office operations, medical devices and the country is a leading exporter of high tech, medical products, sustainability and renewable businesses in green energy find talent aligned with Costa Rica's environmental ethos. For these sectors, accessing talent quickly and compliantly can be a decisive competitive advantage. In conclusion, Costa Rica presents a dynamic and attractive market for international employers, offering a stable political environment, a skilled workforce, and a reputation for innovation. Yet, like any country, it comes with its own legal complexities and regulatory obligations. Employer of record services offer a practical solution for businesses seeking to hire in Costa Rica without establishing a local entity. By handling payroll compliance and HR administration, an EOR enables companies to focus on growth and performance while safeguarding employees rights and meeting local legal requirements. For organizations seeking agility, risk reduction, and quick market entry, partnering with an EOR in Costa Rica is often the most efficient path to building a successful local team.
