Costa Rica severance calculator

When an open-ended employment contract ends in Costa Rica, the employer owes a final settlement, the liquidación, and what goes into it depends on how the job ended. This calculator estimates the four possible items: pay in lieu of notice (preaviso), statutory severance (cesantía), unused vacation and the pro-rated aguinaldo, the 13th-month bonus every employee in Costa Rica earns. You enter your average salary over the last six months, how long you worked, your pending vacation days and the months since the last 1 December. It helps an employee who wants to check an offer after a dismissal, and an employer who hires in Costa Rica and needs to budget a termination. The result is an estimate under the general rules of the Labour Code and Law 2412; a case with a collective agreement, payment in kind or periods of sick leave should be confirmed with the Ministry of Labour and Social Security (MTSS) or with an employment lawyer.

What the settlement includes and when each item is due

A Costa Rican settlement can combine up to four amounts. If the employer dismisses you without just cause, you are owed notice pay (unless you were given notice and worked it), cesantía, your unused vacation and the pro-rated aguinaldo. If you resign or are dismissed with just cause, only the unused vacation and the aguinaldo remain, because both correspond to time you have already worked.

The exception is a resignation with employer liability (renuncia con responsabilidad patronal), known as constructive dismissal: if you end the contract because of a serious fault by your employer (article 83 of the Labour Code), you are also owed notice pay and cesantía, just as after a dismissal without just cause.

For example, with an average salary of ₡750,000, 50 months of service (four years and two months), 4 pending vacation days and 3 months since the last 1 December, that is ₡750,000 of notice pay, ₡2,100,000 of cesantía (4 years at 21 days, 84 days), ₡100,000 for vacation and ₡187,500 of aguinaldo, for a total of ₡3,137,500. Everything is calculated on the average monthly salary of the last six months, or of the whole period if it was shorter, as article 30 of the Labour Code requires.

That average is divided by 30 to get the daily salary, which is how the Ministry of Labour treats monthly pay. Use your gross salary, before the deductions for the CCSS (the Costa Rican Social Security Fund) and income tax.

Notice and cesantía: the days set by the Labour Code

Notice under article 28 depends on length of service: nothing below three months; one week from three to six months (the calculator uses 7 days); 15 days from more than six months up to one year; and one month, paid as 30 days of salary, after more than a year.

Cesantía, the severance of article 29 as amended by Law 7983 (the Ley de Protección al Trabajador), pays 7 days of salary for three to six months of work and 14 days for more than six months but less than a year.

From the first year on, it pays a number of days for each year worked: 19.5 days with 1 year, 20 with 2, 20.5 with 3, 21 with 4, 21.24 with 5, 21.5 with 6, 22 with 7, 8 or 9, 21.5 with 10, 21 with 11, 20.5 with 12 and 20 with 13 or more. However long you worked, cesantía never covers more than 8 years.

The calculator counts a fraction of more than six months as a full year and picks the row of the table by total length of service; that detail is a matter of interpretation, so if your amount hinges on it, confirm it with the MTSS.

Unused vacation and the pro-rated aguinaldo

Article 153 of the Labour Code grants two weeks of paid vacation for every 50 weeks worked, and at least one day per month worked if the job ends sooner. When the contract ends, all vacation not taken must be paid (article 156, paragraph a); the calculator multiplies the pending days by the daily salary. The aguinaldo of Law 2412 is the average of everything earned from 1 December to 30 November, overtime included, and a partial year gives a proportional share.

The calculator estimates it as the average salary times the months since the last 1 December, divided by 12; if your pay changed during the year or you worked a lot of overtime, add up what you earned in those months and divide by 12 for a closer figure. The aguinaldo is free of social security charges and income tax (articles 7 and 9 of Law 2412).

Cesantía is an indemnity, so it is not subject to income tax either (article 35, paragraph c, of the Income Tax Law), and according to the MTSS it carries no social charges. The amounts the calculator shows are gross, with nothing deducted.

A worked example with real figures

Take an average salary of ₡600,000, 30 months of service (two years and six months), 7 pending vacation days and 10 months since the last 1 December. The daily salary is ₡20,000. After a dismissal without just cause and without worked notice, you would receive ₡600,000 of notice pay (one month), ₡800,000 of cesantía (2 years at 20 days, 40 days), ₡140,000 for vacation and ₡500,000 of aguinaldo, for a total of ₡2,040,000.

Under the calculator's rule the extra six months do not count as a third year, because the fraction must exceed six months. If you resign instead, only vacation and aguinaldo remain: ₡640,000. With long service the cap shows: an average salary of ₡900,000 over 125 months (ten years and five months) gives a daily salary of ₡30,000, ₡900,000 of notice pay and 172 days of cesantía (21.5 days for 8 years), that is ₡5,160,000, for a total of ₡6,060,000.