Practice Area Articles
By Erika Barrantes Ramírez and Raquel Moya Sànchez
Back to International Employment Law
KEY DEVELOPMENTS FOR 2021
Virtual hearings in Labour Law matters
On 4 May 2020, the Plenary Court approved the Protocol of Virtual Hearings in Labour Processes in Costa Rica, which regulates the development of hearings under virtual mode in labour processes.
This protocol was approved as a solution to the delays that the Judicial Branch was experiencing in scheduling hearings due to the COVID-19 emergency.
For a hearing to be held under this modality, the parties must give their express consent and have the technological means to participate. However, if any of the parties do not have internet access, the Judicial Branch will provide the "Virtual Hearing Stations" service through which any of the parties may go to the respective judicial office to participate in the hearing.
Reduction of work days
On 23 March 2020, Law No. 9832 or "Law authorizing the reduction of working hours" was approved. This law authorizes companies whose income has been reduced by the outbreak of the pandemic to reduce the working hours and wages of their workers in the same proportion, as long as they apply for and receive authorization from the Ministry of Labour.
This reduction of the working day was approved on a temporary basis as the law indicates that it shall only be established for a period of up to three months, extendable in two equal periods.
For companies that have applied this measure since April 2020, the term allowed by law expired in December 2020, so the Legislative Assembly introduced bill number 22,265 which added a transitory to the above mentioned law to authorize the extension of shift reductions for a single period equal to three months.
Once this project is approved, the Ministry of Labour will only authorize the new extension when the requirements of the law are met and it is demonstrated that the current conditions continue to affect the company.
The extension would mean that an employer will not be allowed to establish fractioned working hours for an individual who is subject to a reduction in their working day. Where the reduction of the working day is only applicable to a percentage of employees, an employer will not be allowed to pay its employees overtime, but will have to reintegrate the person with the reduced working day as required.
Increase of daily working hours and additional rest days
Bill number 21,182 was considered before the Legislative Assembly and sought to reform articles 136,142,144 and 145 of the Labour Code to authorize exceptional workdays that would allow the extension to a 12-hour workday and an annualized workday. The proposal was for the daily workday to be increased to 12 hours and the employee would then receive one or two additional rest days.
It was also proposed that an annualized working day would be designed so that the ordinary working day could be increased to 10 hours a day during peak periods, and then reduced to six hours a day during low periods. The wage amount may never be less than the minimum, regardless of the workday.
KEY DEVELOPMENTS FOR 2020
Implementation of telework as a measure to avoid the spread of
On 16 March 2020, the President of the Republic declared a state of emergency in the entire territory of the Republic of Costa Rica due to COVID-19. In light of the situation and as a way to avoid the spread of the virus, the Ministry of Health recommended that employers implement teleworking as much as possible.
One month extension to the BMC reduction
In March 2020, the Board of Directors of the Costa Rican Social Security Fund agreed to reduce the Minimum Contribution Base in health insurance and pensions to 25% up to June 2020. On 23 June 2020, the President of the Republic reported that the Board of Directors approved his request to extend the reduction of the Minimum Contribution Base for an additional month, which means that up to 31 July 2020, the Minimum Contribution Base is charged as follows:
- for employers, the temporary reduction of 75% to the Minimum Contribution base will be maintained; and
- for independent employees (individual and collective) and those who are voluntarily insured, the Minimum Contribution Base will be reduced by 25% by reference to the value of the Minimum Contribution Base in February 2020.
Suspension of employment contracts and reduction of working hours
The Executive Branch, along with the Ministry of Labor, has published new regulations which detail the steps employers should take to request the suspension of employment contracts before the Labor Inspection due to force majeure or other fortuitous event (such as the COVID-19 pandemic). Once the term in which the suspension was authorised has expired, the parties must resume the employment relationship as normal. During the suspension period, the employee must not render their services and the employer must not pay them any salary.
On 23 March 2020, the Legislative Assembly approved Law No. 9832, which authorizes the reduction of working hours by 50% if the company's income falls by 20%, or 75% if the company's income falls by 60%. The employees' salaries may be reduced accordingly, subject to approval from the Labour Inspection. The reduction of working hours is authorized for a set period of time, although companies may apply for an extension to this period if necessary.
KEY DEVELOPMENTS FOR 2019
Increase in minimum wage for private sector employees
From 1 January 2019, the minimum wage for private sector employees increased by 3%. The increase will also apply to employees who are paid above the minimum wage scale but have an agreement with their employers to receive the minimum salary increase.
KEY DEVELOPMENTS FOR 2018
Changes to Labour Code
On 25 July, 2017 Costa Rica’s Labour Code underwent its most significant amendment since 1943. Although the amendment’s primary focus is to reform and introduce new labor procedures, there are certain aspect of the day-to-day employment relationship that have experienced considerable variations. These changes include:
- a prohibition of discrimination in the workplace;
- the introduction of liability and personal responsibility for representatives that have the authority to make decisions on behalf of the company;
- equality of wages and benefits;
- Government sponsored counseling for employees whose compensation is not greater than ¢902,000 colones / $1,500; and
- the requirement for an employer to file a dismissal letter before the Ministry of Labor if the employee refuses to accept the letter. Whenever an employee is terminated for cause, the reason stated in the termination letter will be the only valid argument for the dismissal.
Protection for Vulnerable Workers
A fast-track procedure has been established in order to guarantee special protection to: civil service employees, pregnant or breastfeeding women, employees under the age of 18, union members, victims of sexual harassment and any other individual who has been granted special protection by law.
For a labor strike to be considered legal, the issues in dispute should be referred for conciliation or alternative dispute resolution.