Practical Guide for Employers in Costa Rica: Compliance with the CCSS

01.10.24 06:10 PM - Por Amado Sánchez Harding

In Costa Rica, social security is managed by the Caja Costarricense de Seguro Social (CCSS) (also called CAJA), an institution that guarantees access to health services and pensions. As an employer, it is your legal responsibility to register your workers and comply with the established contributions. Below, we explain the process, key deadlines, and obligations involved.

Who Pays What?

Contributions to the CCSS are divided between the employer and the employee. However, the employer is responsible for managing and making the total payment, deducting the employee's share from their gross salary.

Employer Contributions (26.67% of gross salary):

Health Insurance (SEM): 9.25%
Pension (IVM): 5.42%
Other Institutions: 7.25% (IMAS, INA, Banco Popular)
Worker Protection Act (LPT): 4.75%

Employee Contributions (10.67% of gross salary):

Health Insurance (SEM): 5.50%
Pension (IVM): 4.17%
Banco Popular (LPT): 1.00%

Practical Example: Salary of 500,000 CRC

In this case, the total amount to be paid to the CCSS would be 186,700 CRC, where:

133,350 CRC are employer contributions.
53,350 CRC are deducted from the employee's salary.

Key Deadlines for Compliance

Employee Registration:
Must be completed within the first eight business days of starting the employment relationship.
Payroll Submission:

Available from the 26th of each month to the fourth business day of the following month.
If using the Large Clients or Magnetic Media systems, the deadline is the third business day of the following month.

Invoicing and Payment:

Once the payroll is submitted, the employer must generate the invoice and make the corresponding payment.
If the payroll is not invoiced on time, the CCSS will automatically generate the invoice on the fifth business day, applying a 2% surcharge on SEM and IVM contributions.

Operational Process

Employer and Employee Registration:
The employer must register both their business activity and their employees with the CCSS.
Payroll Submission:
Gross salaries and corresponding contributions are recorded through the Virtual Office CCSS or SICERE.
Consolidated Payment:
The employer makes a single payment, including both their contribution and the employee’s share. The CCSS automatically allocates the funds to the respective areas.

Consequences of Non-Compliance

Failure to comply with these obligations can result in fines, interest surcharges, and legal actions. Additionally, it jeopardizes employees' access to essential benefits such as medical care and pensions.

Costa Rica is known for its worker-protection approach. In labor disputes, courts often rule in favor of employees, based on the legal principle that, in cases of doubt, the interpretation should favor the worker. For this reason, it is crucial for employers to strictly comply with their legal obligations.

Non-compliance can lead to highly costly labor lawsuits, especially if the employer lacks proper legal and operational coverage.

Conclusion: Comply and Protect Your Business

Adhering to CCSS regulations is essential to ensure your employees' peace of mind and protect your business. At TCT Outsourcing, we provide comprehensive support so you can focus on growing your business while we handle legal compliance.