The arrival of the COVID 19 has changed the labor law in Costa Rica, the Labor Ministry and social security have been forced to be lenient and flexible with the law that regulates the relationships between the company and its workers.
- On Friday, March 20th, 2020, this following regulation will begin to take place “Regulation for the procedure of the temporary suspension of work contracts in cases related to a) and b) of Article 74 of the work law” Its most important points are the following:
- The temporary suspension of the labor contracts is authorized by following the emergency measurements placed by the executive power based on the COVID 19 pandemic.
- Follow the measures placed by a higher power and the state of emergency on all the territory of the Republic due to the sanitary situation of the COVID 19.
- On Monday, March 23rd, 2020, this following regulation began to take place “THE AUTHORIZATION OF REDUCTION OF LABOR HOURS BY THE DECLARATION OF NATIONAL EMERGENCY” This decree establishes
- The authorization to reduce labor hours and the remuneration of the workers due to the COVID 19 pandemic following these parameters
–A verification of a 20% minimum reduction of the gross income of the company, compared to last year´s one, requesting a 50% of labor hours, which must be demonstrated to be caused by the COVID 19 pandemic.
–A verification of the reduction of gross income that is bigger of 60%, can demand 75% labor hours’ reduction and remuneration of workers.
–Maximum period of authorization: 3 months that can be extended for 2 equal periods.
–The verification of the reduction of income can be done by CPA or by a sworn declaration by legal representation.
Both cases are a temporary measure to treat this current emergency caused by COVID 19 in Costa Rica and to continue with this inquiry, the following is required:
-Explain, in detail, the impact in the business, indicating the casualties that bring a reduction of income or the cessation of the business.
-Both inquiries can be requested simultaneously, but need to be separated when requested, indicating each one of the pleas, employees will have a reduction of work hours and a suspension of contracts.
-Another aspect to follow in this modification of the labor contract, the employer must make a list indicating: Full name, ID number, job contracted to, e-mail, sex, cell number, job entry date.
-From a Labor Law and the COVID 19 pandemic standpoint, these are unilateral measures of the employer and it is not necessary to have the employee’s consent.
-As long as the employer presents the request to adjust the measures caused by the COVID 19 emergency, these can also be applied as long as the permit of the Labor Ministry and Social security is conceived, however, the permit must be managed with a maximum of 3 days that would begin since the measures took place.
-The requests that are presented require a sworn declaration of a company representative explaining the reasons in which the petition is being placed and must be authenticated by a lawyer.
-These requests and annexation documents, must be presented through this email: firstname.lastname@example.org
-In the case that the Labor Ministry and Social Security denies the requests, it is necessary to pay all the salaries that were not perceived since the measures took place.
-For the cases that proceeded to law offs of suspended or labor-reduced workers, for the liquidity calculation, the net salary must be taken in place, without the reduction of labor hours.
III. The “Caja Costarricense de Seguro Social” (Costa Rican Social Security Institution) due to the COVID 19, has taken a series of lieutenant measures to attend the health situation that affects the country and its economy such as the following things:
- Reduce 25% of the Base Mínima Contributiva (BMC) (Minimum Tax Base) that are valid on health insurance and pensions.
–The BMC is the basic salary for which every worker must quote for the health insurance and pensions. For the health insurance the BMC went form 291.619 colones to 73.654 colones, in the case of the pension insurances, the BMC went from 275.759 colones to 68.639 colones.
–The measure is automatic according to the filing forms and will be extended for three months until the 31 of August of 2020.
– Adjustments to payment agreements: this measure will allow those who currently have an agreement payment with the institution and suffer delays, readjusting debts in an easy and fast way, making additional payments to be up to date with the institution will not be demanded. If the independent employer or worker does not have debts but has delays since February and during those months, the Board of Directors have approved the option to make covenants with the sole requirement of paying the contributions of the Labor Protection law- in the case of employers- and for independent workers, it will only be requested a 5% initial payment of the delayed dues. This measure will be applied until the 30th of June, 2020.
- Interest Rate reduction for payment agreements: for other approved measures for the maximum authority of the institution it was to reduce the interest rate for arrangements and covenants of payments, with the end of decreasing the financial load to those who currently have payment agreements and those who want to apply to new methods. This measure will take place until 31 of August 2020.