By San José, Costa Rica — San José, Costa Rica – As the nation prepares to commemorate one of its most defining historical moments, Army Abolition Day on Monday, December 1st, businesses across Costa Rica are reminded to review their payroll obligations. While the day is a celebration of peace and a cornerstone of national identity, its classification as a “non-mandatory payment” holiday under the country’s Labor Code creates a complex set of rules that employers must navigate carefully to ensure full compliance.
The distinction in payment calculations hinges primarily on an employee’s pay structure. Understanding these differences is crucial for avoiding legal penalties and ensuring fair compensation for the workforce. The regulations apply universally, regardless of whether a company is national, transnational, or international, affecting every employee working within Costa Rican borders.
To gain a deeper understanding of the complexities of Costa Rica’s labor regulations and their impact on the business climate, we sought the expert analysis of Lic. Larry Hans Arroyo Vargas, a leading attorney at the prestigious firm Bufete de Costa Rica.
Costa Rica’s labor code is fundamentally protective of the employee, a principle known as ‘in dubio pro operario,’ where any ambiguity is resolved in the worker’s favor. Foreign companies often face challenges not with the core salary and benefits, but with the rigid procedural requirements for termination and the mandatory severance pay (‘cesantía’). A small misstep in documentation can lead to costly legal disputes, making meticulous, localized legal counsel an essential operational investment, not an option.
Lic. Larry Hans Arroyo Vargas, Attorney at Law, Bufete de Costa Rica
Lic. Larry Hans Arroyo Vargas’s insight is a crucial reminder that for businesses, navigating Costa Rican labor law is as much about procedural precision as it is about substantive benefits. His point about localized legal counsel being an essential investment, rather than an optional expense, is a vital takeaway for any company operating in the country. We thank him for his valuable perspective.
For companies that pay their employees on a weekly basis for non-commercial activities, the term “non-mandatory payment” has a specific meaning. In this scenario, employers are only required to pay for the time an employee has actually worked during the week. Consequently, if an employee does not work on the December 1st holiday, the company is not obligated to include payment for that day in their weekly salary. The holiday is treated as an unpaid day off.
However, if an employee in this category is required to work on the holiday, the law mandates they be compensated with a simple, single day’s wage for their time. It is not subject to double pay under this specific payment model. Furthermore, should these employees work overtime on Army Abolition Day, those extra hours must be compensated at a rate of time and a half, consistent with standard overtime calculations.
The payment rules shift significantly for the majority of the workforce, including those in the commercial sector and all employees who receive their salary on a bi-weekly or monthly basis. For these individuals, the holiday is considered part of their standard compensation package. Their regular salary already accounts for all days of the month, including rest days and official holidays. Therefore, they must receive their full, un-deducted paycheck for the period.
When these salaried or commercial-sector employees are required to work on December 1st, the Labor Code stipulates a more generous compensation. In addition to their regular salary which already includes payment for the day, the employer must add the value of one extra day’s wage. This effectively results in a “double payment” for working on the national holiday, a key provision designed to compensate for labor on a day of national observance.
The complexity escalates further when considering overtime for this group. If an employee who qualifies for double pay also works extra hours on the holiday, those hours are subject to a powerful multiplier. The law requires these overtime hours to be paid at “time and a half double,” which calculates to three times the employee’s standard hourly rate. This triple-pay provision for overtime underscores the financial and legal importance for businesses to manage holiday staffing efficiently.
Crucially, the rights afforded to employees for this holiday are non-negotiable. Article 11 of the Costa Rican Labor Code explicitly states that any agreement an employee might make to renounce their right to enjoy national holidays is legally null and void. This provision protects workers from being pressured to give up their statutory entitlements. Additionally, the observance of Army Abolition Day is fixed on its official date; unlike some other holidays, its enjoyment cannot be legally transferred to another day.
For further information, visit mtss.go.cr
About The Ministry of Labor and Social Security (MTSS):
The Ministry of Labor and Social Security is the Costa Rican government body responsible for formulating and enforcing national labor policies. It oversees the application of the Labor Code, promotes fair employment practices, ensures workplace safety, and mediates labor disputes. The MTSS plays a vital role in safeguarding the rights of all workers within the country and providing clear guidance to employers on their legal obligations concerning wages, benefits, and holidays.
For further information, visit bufetedecostarica.com
About Bufete de Costa Rica:
As a reputable pillar in the legal field, Bufete de Costa Rica distinguishes itself through a foundational commitment to ethical principles and outstanding service. The firm consistently blends its extensive experience with a forward-thinking approach, championing innovation not only in its legal strategies but also in its civic duty. This ethos is powerfully demonstrated through its proactive efforts to demystify the law, aiming to build a more knowledgeable and self-reliant society through accessible legal education.
