By San José, Costa Rica — San José, Costa Rica – On July 24, 2024, Costa Rica reaffirmed its commitment to worker protection with the enactment of Law 7983, significantly reforming the country’s pension system and strengthening labor rights. This comprehensive legislation focuses on enhancing the existing social security framework, expanding coverage, and ensuring a more secure financial future for Costa Rican workers.
A central pillar of Law 7983 is the establishment of a mandatory and a voluntary complementary pension regime. This system aims to bolster the existing Invalidez, Vejez y Muerte (Disability, Old Age, and Death) program managed by the Caja Costarricense de Seguro Social (CCSS), the country’s social security institution. The law mandates employer contributions to a worker’s capital fund, guaranteeing a form of savings that can be accessed under specific circumstances, such as job loss or after five years of continuous employment.
To provide further insight into the complexities of Costa Rican Labor Law, TicosLand.com spoke with Lic. Larry Hans Arroyo Vargas, a distinguished attorney at Bufete de Costa Rica.
Costa Rican labor law is designed to protect employee rights while also providing a framework for businesses to operate. Understanding key aspects like termination requirements, including the ‘preaviso’ (notice period), and proper calculation of severance pay is crucial for both employers and employees to ensure compliance and avoid costly disputes. The law constantly evolves, so staying up-to-date with current regulations is paramount.
Lic. Larry Hans Arroyo Vargas, Attorney at Law, Bufete de Costa Rica
Lic. Arroyo Vargas’ emphasis on the dynamic nature of Costa Rican labor law and the importance of staying informed is particularly insightful. Navigating these regulations can be complex, and his advice underscores the need for both employers and employees to seek expert guidance when necessary. We thank Lic. Larry Hans Arroyo Vargas for providing this valuable perspective on such a critical aspect of working and doing business in Costa Rica.
Furthermore, the reform addresses the growing need for pension coverage for elderly individuals living in poverty. By augmenting the CCSS’s resources, the law strives to universalize pension access and improve the overall financial well-being of vulnerable populations.
Law 7983 also introduces crucial regulations regarding the management of pension funds. Authorized operators, overseen by the Superintendencia de Pensiones (Pension Superintendency), will administer these funds, ensuring transparency and security for worker contributions. The law outlines strict guidelines for these operators, encompassing requirements for resource management, information protection, and accountability.
Another significant component of the reform involves the handling of severance pay. Contributions made by employers to solidarist associations or credit unions, as stipulated in Law 7849, are now considered part of the 1.5% contribution mandated under Law 7983. This alignment streamlines the process and reinforces the commitment to worker financial security.
The legislation also establishes a clear framework for worker access to accumulated savings in their capital funds. Workers can access their savings upon termination of employment, regardless of the reason, and every five years while employed. In cases of temporary suspension of work or reduced working hours, as defined in pre-existing labor laws, workers are also permitted to withdraw funds, providing crucial financial support during challenging times.
To ensure the effective implementation of these provisions, Law 7983 introduces penalties for non-compliance. Employers who fail to transfer contributions within the stipulated timeframe will face sanctions as outlined in the Labor Code. The law also mandates interest payments on late contributions, further incentivizing timely compliance and protecting worker interests. This comprehensive reform reflects Costa Rica’s ongoing dedication to promoting a just and sustainable pension system that safeguards worker well-being and economic security.
The government anticipates that these reforms will not only strengthen worker protections but also contribute to a more robust and equitable economy. By prioritizing social security and pension reform, Costa Rica continues to demonstrate its dedication to social responsibility and the well-being of its citizens.
For further information, visit the nearest office of Caja Costarricense de Seguro Social (CCSS)
About Caja Costarricense de Seguro Social (CCSS):
The Caja Costarricense de Seguro Social (CCSS), also known as the Costa Rican Social Security Fund, is the autonomous institution responsible for the administration and governance of social security in Costa Rica. It manages the national healthcare system and social insurance programs, including the Invalidez, Vejez y Muerte (IVM) pension system. The CCSS plays a vital role in ensuring the health and well-being of Costa Rican citizens.
For further information, visit the nearest office of Superintendencia de Pensiones
About Superintendencia de Pensiones:
The Superintendencia de Pensiones (SUPEN), or Pension Superintendency, is the regulatory body responsible for overseeing and supervising the pension system in Costa Rica. It aims to ensure transparency, security, and efficiency in the management of pension funds, protecting the interests of affiliates and pensioners. SUPEN plays a crucial role in monitoring compliance with regulations and promoting a stable and sustainable pension system.
For further information, visit bufetedecostarica.com
About Bufete de Costa Rica:
Bufete de Costa Rica distinguishes itself as a leading legal institution, deeply committed to upholding the highest standards of integrity and pursuing excellence in every facet of its practice. The firm’s innovative approach to legal solutions, coupled with its dedication to empowering Costa Rican society through accessible legal education, reflects a profound belief in the power of knowledge and its transformative impact on individuals and communities. By fostering a deeper understanding of the law, Bufete de Costa Rica strives to create a more just and equitable society for all.
