Employer of Record in Costa Rica: Hire with EOR for HR Success

Employer of Record (EOR) in Costa Rica is the most efficient way to hire employees without setting up a legal entity in another country to expand your business.

In this guide, we’ll cover everything you need to know about using an EOR solution in Costa Rica, including how it works, the employment relationships, benefits, compliance requirements, and payroll considerations.

1. What Is an Employer of Record (EOR)?

An Employer of Record (EOR) is a third-party company that legally employs workers for another business helping the global expansion. The EOR providers handle:

1. Payroll & Tax Compliance
2. Employment Contracts
3. Social Security Contributions
4. Employee Benefits
5. HR & Onboarding

The EOR solution enables companies to hire in Costa Rica without setting up a local entity, reducing compliance risk and administrative burdens.

2. How Does an Employer of Record Work in Costa Rica?

Hiring employees through an EOR in Costa Rica follows a simple process:

3. Employer of Record Outsource vs. Professional Employer Organization (PEO)

While both EORs and PEOs assist with HR and payroll, there are major differences:

👉 Conclusion: If you don’t have a local entity in Costa Rica, an EOR is the best solution for hiring employees.

4. Why Use an Employer of Record in Costa Rica?

Using a Costa Rica employer of record offers multiple advantages:

✔ Key Benefits of an EOR

👉 Hiring through an EOR is the fastest, most cost-effective way to expand into Costa Rica.

5. Payroll & Tax Considerations for Employers in Costa Rica

An Employer of Record in Costa Rica ensures compliance with taxes and payroll regulations and management tasks, including:

6. Employment Contracts & Labor Laws in Costa Rica

A valid employment contract in Costa Rica should include:

💼 Job Role & Salary
⏰ Working Hours & Paid Leave
📉 Termination & Severance Pay
🎁 Employee Benefits

Employers in Costa Rica must follow the Costa Rican Labor Code, ensuring contracts comply with local employment laws. We provide you with an article from our labor law legal team: https://aglegal.com/labor-law/costa-rica-labor-laws/

7. Employee Benefits & Leave Policies in Costa Rica

Employees in Costa Rica are entitled to the following benefits:

👉 Hiring through an EOR ensures compliance with all employee benefit requirements.

8. How to Choose the Right EOR Partner for Global Expansion

When choosing an EOR provider, consider the following:

9. FAQs: Hiring Through an EOR in Costa Rica

How much does an Employer of Record cost in Costa Rica?

EOR pricing varies based on the provider and number of employees. Costs typically include a fixed fee per employee plus payroll taxes.

How long does it take to hire an employee through an EOR?

With an EOR, you can hire employees in Costa Rica within 1-2 weeks, compared to months if establishing a legal entity.

Can an EOR help with employee termination?

Yes! The EOR services include handles termination in compliance with Costa Rican labor law, including severance pay and notice periods.

What happens if I don’t use an EOR?

Without an EOR, you’ll need to set up a local entity, register with social security, manage taxes, and handle payroll compliance—a time-consuming and expensive process of establishing a local team to learn how local regulations works.

Why Hire Employees in Costa Rica With AG BPO? Onsite and remote workers

Costa Rica is a prime destination for foreign companies, offering a stable business environment, a highly skilled workforce, and a growing tech sector. Here are just a few reasons to consider expansion into Costa Rica and hiring employees:

• Top Talent: Costa Rica boasts a well-educated workforce with a strong command of English, making it easy to find qualified candidates for various roles.
• Stable Democracy: The country enjoys a stable political and economic climate, creating a secure environment for businesses to operate.
• Growing Tech Hub: Costa Rica is rapidly becoming a central tech hub in Latin America (Latin America’s Silicon Valley), attracting talent and investment worldwide.
• Beautiful Living: With its stunning beaches, lush rainforests, and friendly culture, Costa Rica offers an attractive lifestyle for employees and their families.
• Costa Rica money currency strength: The US dollar is stronger than the Costa Rican colón, meaning remote Costa Rican workers can earn more working for a US company. However, the economy is very stable, the cost of living is high but safe, and there is an Americanized culture with many web purchases in dollars but living expenses in colones.

10. Difference between hiring employees and contractors in Costa Rica, working for a US company.

This differentiation is significant; your company will have fewer complications if you hire through a professional services model; this option should be considered for personnel hired for on-site work in Costa Rica or personnel working remotely from Costa Rica in another country.

The personnel under the company’s payroll as an employee requires that the company is responsible for the labor contract, local labor laws and regulations, and social charges, but the contractor is not. This Contractor´s Model is the most common way of working for a US company for foreign workers. This is a good solution for finding the best local talent through a third-party company as our EOR, we can have the personnel under services model or employee model.

The employee can claim labor rights in the country where they perform their work, but the contractor cannot because they assume it to be an independent professional.

🔹 Key Takeaways

An Employer of Record (EOR) is the fastest way to hire employees in Costa Rica.
EOR providers handle payroll, HR, taxes, and compliance with local labor laws.
Employers must offer benefits in Costa Rica like social security, severance pay, and maternity leave.
Choosing the right EOR partner ensures a smooth expansion and reduces compliance risks.

If you want to know more about the benefits of outsourcing in Costa Rica, you can read our related article: Nearshoring – Outsourcing

🚀 Ready to Expand to Costa Rica?

At AGBPO Services, we offer EOR solutions to help businesses hire in Costa Rica without complications, we trust in the global employment!

👉 Contact us today and start hiring employees in Costa Rica hassle-free! 🎯 info@agbposervices.com