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Contractors in CrCosta Rica.






Country Capital

San José


Costa Rican colón (CRC)

As companies gain traction around the globe, they may turn to independent contractors to help complete high-value projects, such as marketing initiatives and IT developments. Contractors can be helpful contributors in various ways when companies understand how to hire them and pay them for their services.

Hiring contractors in Costa Rica

Consider these stipulations of the contractor designation to ensure compliance and a seamless hiring process.

Independent contractors vs. full-time employees

The key difference between independent contractors and full-time employees is the presence of subordination. Employees must comply with employer direction and instructions regarding working hours, location, and how the work is performed. Independent contractors have the freedom to determine these factors for themselves.

Independent contractors can also work with subcontractors to complete their responsibilities. Once an employee is hired, they are the only person permitted to complete the job.

Penalties for misclassification

If you misclassify a full-time employee as an independent contractor, your company could face a range of penalties. The Costa Rican Social Security Fund may charge you late payments with interest for the contributions you did not make. You may also have to make retroactive payments regarding unpaid employment benefits.

How to hire independent contractors in Costa Rica

Once you’ve decided to hire a contractor, you’ll work through the following steps.

1. Carefully conduct interviews.

The Civil and Commercial codes do not dictate how employers should conduct interviews for independent contractors. However, you can use this initial step to define the boundary between the company and contractors.

In employment interviews, a company may ask questions regarding character traits and values to determine how a candidate will fit into the company. Since contractors are not subordinates or permanent contributors to the company, you can focus on skills and experience instead. This focus in the interview can help clarify that you have no intention to dictate a contractor’s performance.

2. Create a service agreement.

While an employment contract covers rights and obligations according to the labor code, a service agreement describes the details of a contractor’s project. This document should cover the following information:

  1. Description of the project to be completed
  2. The definition of a completed project
  3. Termination policies
  4. Pay rate and arrangements

3. Introduce necessities.

Training and onboarding processes align with subordination and should only exist in full-time employment relationships. When hiring contractors, you should only introduce necessities for completing the project. These necessities might include the workflows they’ll contribute to or people within the company they may interact with.

How to pay independent contractors in Costa Rica

The service agreement should define payment requirements. Depending on the agreement between your company and the contractor, payment may be made in equal installments, as a down payment before services begin, or as a lump sum following project completion.

Contractors are responsible for providing invoices for their services, and they must handle any social security or tax payments on the income they earn. The company is not responsible for making these deductions.

Terminating independent contractors

Independent contractors have no dismissal or termination protections because they do not fall under labor code regulations. If you wish to define termination policies, such as notice periods and reasonable causes for dismissal, you can outline them in the service agreement.

Turn to G-P when hiring independent contractors in Costa Rica.

As a part of our #1 suite of global employment products, G-P Meridian Contractor™ allows companies to hire and pay global contractors faster, with self-service workflows and a wide set of flexible payment options. Whether you’re hiring employees or contractors, our platform streamlines the process with a single solution for your global workforce.

Contact us to learn more.


THIS CONTENT IS FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSTITUTE LEGAL OR TAX ADVICE. You should always consult with and rely on your own legal and/or tax advisor(s). G-P does not provide legal or tax advice. The information is general and not tailored to a specific company or workforce and does not reflect G-P’s product delivery in any given jurisdiction. G-P makes no representations or warranties concerning the accuracy, completeness, or timeliness of this information and shall have no liability arising out of or in connection with it, including any loss caused by use of, or reliance on, the information.

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