The CAFTA Report
Labor laws in Costa Rica

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Protection and promotion of worker rights

According to the U.S. Trade Representative:
 
The Central American Free Trade Treaty fully meets the labor objectives set out by Congress in the Trade Promotion Act of 2002 and makes labor obligations a part of the core text of the trade agreement.

The agreement includes unprecedented provisions that commit Central American Free Trade Treaty countries to provide workers with improved access to procedures that protect their rights.

The Central American Free Trade Treaty goes beyond Chile and Singapore free trade agreements through a three-part cooperative approach to improve working conditions by:

1. Ensuring effective enforcement of existing labor laws.

Agreement requires that all parties shall effectively enforce their own domestic labor laws, and this obligation is enforceable through the Agreement's dispute settlement procedures.

2. Working with the International Labor Organization to improve existing labor laws and enforcement.

International Labor Organization found that Central American nations have laws on the books that are largely consistent with International Labor Organization core labor standards.

Central American governments are now working to address gaps between existing laws and International Labor Organization recommendations.

For example, in response to the recent International Labor Organization report, several Central American countries have already drafted new legislation and regulations, dramatically increased funding for their labor ministries, expanded the number of labor inspectors, and streamlined procedures for creating unions.

Costa Rica, El Salvador, Guatemala and Nicaragua have each carried out major revisions of their labor codes over the last decade.

All parties reaffirm their obligations as members of the International Labor Organization, and shall strive to ensure that their domestic laws provide for labor standards consistent with internationally recognized labor principles.

Agreement clearly states that it is inappropriate to weaken or reduce domestic labor protections to encourage trade or investment.

A comprehensive three-part strategy to improve worker rights in Central America.

3. Building local capacity to improve worker rights.

The Central American Free Trade Treaty includes a groundbreaking cooperation mechanism to promote labor rights through specialized consultations and targeted training programs in the areas of child labor, public awareness of worker rights, and labor inspection systems.

Public participation, including the input of worker and employer organizations, is called for in the design and implementation of technical cooperation activities.

As part of the Central American Free Trade Treaty process, the U.S. Department of Labor has allocated $6.7 million to educate Central Americans on core labor standards and to improve the administrative capacity of the Central American Free Trade Treaty countries in labor matters.

The U.S. Department of Labor will also support efforts aimed at reducing exploitative child labor. Through the International Labor Organization's program to eliminate the worst forms of child labor, U.S.-funded projects will remove children from hazardous and exploitative work and provide them with educational opportunities.

The many ways to lose an employee
By Garland M. Baker
Special to The CAFTA Report

There is a lot of myths surrounding how an employer must treat an employee, particularly if the issue is termnination. One such myth is the so-called three-letter rule.

Many employers believe that they must give three warnings. that is not supported by the law.

The Código de Trabajo or labor code Article 81 refers to “causes for firing an employee” but does not refer to a warning anywhere except in Section i. This section states the following: “when a worker, after an employer’s first warning, commits another fault described in Article 72, Sections a), b), c), d) and e) the act is sufficient for dismissal.”  

Here is a gist of the content of those sections:

a.) Abandoning work during working hours without just cause or permission from the employer;

b.) The promotion of political, electoral propaganda and/or spreading information against the democratic institutions and religious liberty guaranteed by the constitution;

c.) Working under intoxication, drunkenness or a similar state;

d.) Using work tools and/or supplies for something other than their defined use,

e.) Carrying a firearm during work hours unless doing so is authorized or the gun is a tool of the job.

This would lead a reader of the labor law to surmise that any other infraction not listed above is sufficient for immediate firing.  However, this is not the case. Recent court decisions state an employee should be given the chance to correct any fault.  Neither the law nor the court decisions state how many chances an employee should get.  Jurisprudence does dictate that giving an employee too many chances gives the worker judicial security turning a fault into the norm.

There is something else in the labor law that most people and even legal professionals do not know.  An employer only has one month to censure an act that constitutes a firing offense.  To censure means to reprimand or fire the employee. The custom of giving employees warning letters is to document breaking the rules for a court proceeding if one should arise.  A verbal censure with two witnesses is also sufficient.  This said, it is better to use the customary warning letter not witnesses.

Here is a list of firing offenses:

1.) Acting in an immoral, insulting or slanderous manner during work against the employer;

2.) Acting in an immoral, insulting or slanderous manner during work against a fellow worker if the such behavior alters the worker’s labor;

3.) Acting in an immoral, insulting or slanderous manner away from the workplace against an employer or representatives unless the behavior is provoked;

4.) Using property, machinery, tools, prime materials, products and supplies of the employer in an illegal or illegitimate way;

5.) Reveling trade secrets;

6.) Putting the workplace or fellow
you're fired

worker at jeopardy due to an imprudent, neglectful act;

7.) Not showing up for work for two consecutive days or for more than two days in a calendar month;

8.) Not following procedures to prevent accidents or sickness or not following directions to improve work performance and efficiency;

9.) Violating the sections of Article 72 after a first warning;

10.) Lying about work qualifications and/or references;

11.) Getting a prison sentence;

12.) Any other fault set forth in a labor contract with the employer.

In summary, the Costa Rican law labor is unclear about warning employees regarding committing acts that warrant dismissal from their jobs. 

Only one section of one article in the entire law even mentions a warning.  However, court jurisprudence suggests employers must give their employees a chance to correct wrongs.  

Thus, this writer recommends giving employees at least one written warning letter for an offense warranting firing.   An employer should write the letter to the employee in Spanish and it should go something like this:

“You have committed an act described in Article 81 of the Costa Rican labor law, and we are calling your attention to the fault.”  The employer should describe the fault in the letter. 

If the employee commits another violation, an employer should fire them immediately without employer responsibility.  The employer should use another letter that says, “You are dismissed for committing an act described in Article 81 of the Costa Rican labor law.”  The employer should describe the fault in the letter but not mention the first letter.

Without employer responsibility means the employer will not pay the employee separation pay, which comprises two parts: 1.) preaviso, notice pay, and 2.) cesantia, severance pay.  An employee’s accumulated vacation and Christmas bonus are untouchable, and even a fired worker has the right these amounts.

Cesantia can be significant, up to eight months of pay for an employee who has worked eight years for the employer.

Almost all expats who come to Costa Rica have to deal with workers. Whether they are domestic help or laborers in a company, going to labor court is a nightmare and usually the bosses lose when battling with a worker in court.   At least knowing how to fire a bad employee is a start in the right direction.  Following these guidelines does not guarantee a court win but only a better chance of not losing so miserably.

Garland M. Baker provides multidisciplinary professional services to the international community.   Copyright 2008. Use without permission prohibited.

A brief rundown  of annual tax dates
To avoid getting a surprise from the tax man this next tax year, print and pin this article to your refrigerator. 

Here is the most important tax filing deadlines.  If a date falls on a weekend, or holiday, the deadline is moved ahead to the next business day.

January

Employee withholding due Jan. 15.  Form D.103 
Sales Tax due Jan. 15. Form D.104 and D.113 
Simplified Tax Reports due Jan. 15. Form D.105

tax deadlines
February

Employee withholding due Feb. 15.  Form D.103
Sales Tax due Feb. 15. Form D.104 and D.113

March

Employee withholding due March 15.  Form D.103
Sales tax due March 15. Form D.104 and D.113
Income tax partial payments due March 31. Form D.108 
Educational and culture Tax due March 31. Form D.110 

April

Employee withholding due April 15.  Form D.103
Sales tax due April 15. Form D.104 and D.113
Simplified tax reports due April 15. Form D.105

May

Employee withholding due May 15.  Form D.103
Sales tax due May 15. Form D.104 and D.113

June

Employee withholding due June 15.  Form D.103
Sales tax due June 15. Form D.104 and D.113
Income tax partial payments due June 30. Form D.108

July

Employee withholding due July 15.  Form D.103
Sales tax due July 15.  Form D.104 and D.113
Simplified tax reports due July 15.  Form D.105

August 2005

Employee withholding due Aug. 15.  Form D.103
Sales tax due Aug. 15. Form D.104 and D.113

September

Employee withholding due Sept. 15.  Form D.103
Sales tax due Sept. 15. Form D.104 and D.113
Income tax partial payments due Sept. 30. Form D.108

October

Employee withholding due Oct. 15.  Form D.103
Sales tax due Oct. 15. Form D.104 and D.113
Simplified tax reports due Oct. 15.  Form D.105

November

Employee withholding due Nov. 15.  Form D.103
Sales tax due Nov. 15. Form D.104 and D.113
Employee withholding summary due Nov. 30. Form D.150 
Sales and purchases summary due Nov. 30. Form D.151 

December

Employee withholding due Dec. 15.  Form D.103
Sales tax due Dec. 15.  Form D.104 and D.113
Wheel tax (Marchamo) due Dec. 31.  Form D-121 
Income Taxes due Dec. 15.  Form D.101 v2 
 










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