Jun 29, 2026
By Kimberly Esquivel
Many companies use contractors, consultants, external technicians, or specialized vendors to meet specific needs. That is valid. The problem arises when the relationship is documented as independent, but in reality, operates as an employment relationship.
The Labor Code starts with a simple idea: an employment contract exists when a person binds themselves to provide services to another, under permanent dependency and immediate or delegated direction, in exchange for remuneration. In more practical terms, the key is to identify if there is personal provision of service, payment, and subordination.
Subordination is usually the most important element. It can be seen when the company sets schedules, gives constant instructions, controls how the work is executed, requires daily presence, integrates the person into the internal team, imposes permanent reporting, or limits the ability to provide services to other clients.
Element | Sign of an employment relationship | Sign of independent contracting |
Schedule | The company defines the workday, arrival, departure, and daily availability. | The person organizes their time to deliver an agreed-upon result. |
Direction | Receives continuous orders on how, when, and where to do the work. | Defines the methodology, within the contracted scope. |
Integration | Uses internal email, participates as part of the team, and covers ordinary functions. | Provides an external, delimited service and does not substitute permanent positions. |
A professional services contract helps, but it does not shield the company on its own. If in practice the person follows a schedule, receives instructions like any other employee, uses company tools, reports to a manager, and handles permanent business functions, the risk of reclassification increases.
The risk is not only labor-related. If an authority or a court concludes that an employment relationship truly existed, the company could face claims for vacation time, Christmas bonus (aguinaldo), severance notice (preaviso), severance pay (cesantía), overtime, social charges, workers' compensation insurance, and other labor entitlements, as applicable.
There can also be an impact regarding the CCSS. An independent contractor has their own affiliation and contribution obligations when acting autonomously. However, if the relationship behaves as an employment relationship, the exposure can shift to the employer due to payroll omissions and social security contributions.
Best Practices:
Best Practice | How It Helps |
Defining scope and deliverables | Focuses the relationship on concrete results, not on permanent availability. |
Avoiding workday control | Reduces indicators of subordination when dealing with non-salaried personnel. |
Separating external and internal functions | Prevents the contractor from covering ordinary needs as if they were a fixed part of the payroll. |
Backing up invoicing and payments | Allows demonstrating the commercial or professional nature of the service. |
From a tax perspective, the electronic invoice and registration as a taxpayer are important elements, but they do not determine the nature of the relationship on their own. They serve as backup for an independent contracting arrangement, provided that the operational reality is consistent with that form of hiring.
The key question is not whether the person issues invoices or if the contract says "professional services." The correct question is: does the person truly act as an independent provider, or do they work under the direction, control, ¿and dependency of the company?
When form and reality do not match, the risk increases. Therefore, before hiring for professional services, it is advisable to review the position, the business need, the method of supervision, the deliverables, the payment scheme, and the documentation. A well-designed hiring method protects both the company and the person providing the service.
Bibliographic References
Attorney General's Office (Procuraduría General de la República), Costa Rican Legal Information System.Labor Code, Law No. 2, especially provisions on individual employment contracts, employer obligations, and labor protection.
Ministry of Labor and Social Security (Ministerio de Trabajo y Seguridad Social). Labor Code of Costa Rica and general legal-labor criteria.
Costa Rican Social Security Fund (Caja Costarricense de Seguro Social). Regulation for the Contributory Insurance of Independent Workers and institutional guides for employers and independent workers.
Ministry of Finance (Ministerio de Hacienda). Regulations and guides on electronic vouchers, tax registration, and formal obligations applicable to professional services.