How long does an employer have to pay severance in Costa Rica?

By Kimberly Esquivel, Esq.

Work Area | EAS LATAM Group

When an employment relationship ends, one of the most frequent questions is when severance pay should be issued . Although many companies assume there is a fixed deadline established by law, the Labor Code does not explicitly specify a number of days. This omission has led to administrative criteria, business practices, and, more recently, a legislative proposal seeking to define a clear timeframe.

The starting point: there is no express legal deadline

The Ministry of Labor and Social Security has maintained that the obligation arises at the moment the employment relationship ends. In other words, the starting point is not "how many days the law allows," but rather that the company must calculate and pay in a timely manner. Unjustified delays can open the door to claims and conflicts that could have been avoided with prior preparation.

For businesses, the practical interpretation is clear: the fact that the Code doesn't specify a number of days doesn't mean payment can be postponed at will. It's advisable to calculate, document, and promptly pay the corresponding amounts, such as outstanding wages, vacation pay, Christmas bonus, notice pay, or severance pay, as applicable.

When the relationship between the parties is not properly defined, a possible reclassification may generate obligations for vacation, Christmas bonus, notice and severance pay.

Termination of an employment relationship: timely calculation and documentation reduce contingencies.

What does Bill No. 25,113 intend to change?

Legislative bill No. 25,113 proposes adding Article 30 bis to the Labor Code. Its objective is to ensure that severance pay is paid no later than eight days after the termination of employment. As of September 2026, the bill remains under consideration and is on the agenda of the Standing Committee on Legal Affairs; therefore, it is not yet a legally binding obligation .

The project aims to fill the existing gap and provide greater legal certainty for both employees and employers. For EAS, this issue can also be linked to relevant changes and projects in labor law , allowing readers to follow legislative developments without leaving the firm's content ecosystem. It is important to note that the eight-day period is, for now, a legislative proposal; until it is approved and published as law, a clear distinction must be made between the text of the proposal and the current criteria of the Ministry of Labor and Social Security (MTSS).

Can a deadline be agreed upon or can conciliation be sought ?

The criteria compiled by the Ministry of Labor and Social Security (MTSS) allow employers and employees to voluntarily agree on a reasonable timeframe for completing the severance payment. The key element is that there be a genuine agreement between the parties, not an imposition. Because these are inalienable labor rights, any deferred or installment payment plan must be handled with particular care and properly documented.

If there is disagreement regarding the amounts or the settlement method, the Ministry of Labor and Social Security (MTSS) offers a free labor conciliation service as a tool to prevent conflicts . According to the Ministry, the agreement reached through conciliation has the same legal effect as a court judgment and can be enforced directly in court if it is breached.

Practical recommendations for companies

Regardless of what ultimately happens with the project, a company can reduce its labor exposure through a simple, orderly, and consistent internal procedure:

• Prepare the settlement calculation once the departure date is known.

• Clearly separate each item and keep the supporting documentation for the calculation.

• Provide proof of payment and keep evidence of the cancellation date.

• Document any exceptional agreement clearly and voluntarily.

• Escalate to conciliation when there is a real difference that cannot be resolved internally.

• Review special situations: vacations, commissions, work schedules, disabilities, notice periods, or contractual benefits.

Prevention depends not only on knowing the rules. Organized documentation, clear timelines, and consistent management are elements that help reduce disputes and facilitate eventual settlements. This point can be directly linked to labor consulting , payroll management , and corporate compliance .

The Labor Code does not yet explicitly establish a numerical deadline for severance pay. The Ministry of Labor and Social Security (MTSS) interprets the obligation as arising upon termination of the employment relationship, while Bill No. 25,113 aims to incorporate a maximum of eight days thereafter. Until an approved reform is in place, the best practice remains to calculate severance pay promptly, document it correctly, and avoid unjustified delays .

Bibliographic references

Ministry of Labor and Social Security. Labor issues: severance pay and settlement. Consult source

Ministry of Labor and Social Security. Compendium of Legal-Labor Criteria 2014-2018, section “Payment Deadline”. See source

Ministry of Labor and Social Security. Conciliation, calculation of benefits, and labor advice. Consult source

Office of the Attorney General of the Republic / SINALEVI. Opinion on Legislative File No. 25,113. See source

Legislative Assembly of Costa Rica. Bill, file No. 25.113. See source