Costa Rica Approves Emergency Rules on Employee Contracts

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In response to the COVID19 pandemic, the government of Costa Rica yesterday approved emergency legislation that will permit an employer to “suspend” or put on hold the labor contracts of employees, if the company has been directly affected by the current coronavirus situation.

The temporary rules apply as long as the business – as a direct result of the novel coronavirus – has had a decrease of 20% or greater in revenue compared to the same month of last year (or, if in business for less than a year, a similar reduction in revenue compared to the average of the three months prior).

Further, the emergency rules will permit, if the business sees a drop of 60% or greater in revenue, to reduce shifts by 75% (no more than that).

In order to apply for this permission, a business must submit a sworn declaration and a public accountant’s certificate proving the percentages. This is temporary and not definite – an employer cannot lay off staff without paying the complete liquidation.

The full text of the legislation can be viewed on La Gaceta (Spanish only – the document can be translated using Google Translate.)