The Costa Rica Labor Code stipulates the procedure for dismissing employees from service. The employer is allowed to fire an employee for just reasons as detailed in Article 81 of the Labor Code. The employer has to compensate the employee, according to law, if there is no substantial reason for firing the employee.

• What are Preaviso and Cecantia compensations?

  An employer has to Cecantia compensation if an employee is fired from service without a just reason. This compensation usually includes a month's salary for each year of service. An employer can also fire an employee giving him a stipulated notice period.

  The employer has to pay a Preaviso compensation if he does not want an employee to serve out the notice period. An employer might not wish to pay the Preaviso and ask the employee to serve out the notice period. In that case, the employer has to give the fired employee one free day a week so he can look for other employment.

• How Is Compensation Claimed?

  An employer is allowed to compensate the employee if he does not want the latter to serve out the notice period. An employer can not deduct the compensation from the benefits of an employee if the latter resigns without notice.

  The employer has to claim the compensation from court within 30 days of the termination of services. The employee has a full year to claim compensation though the employer is duty-bound to pay the compensation immediately upon termination of services.

• How Is Compensation Calculated For Immediate Dismissal Of Employee?

  The compensation to be paid to an employee for the notice period is based on the average earnings of the employee for the last six months.

• How Is Notice Period Calculated?

  The notice period depends upon the time the employee has remained in employment. If an employee has worked for more than three months but less than 6 months then the notice period has to be of one week. The notice period for more than six months of employment but less than that of a year is two weeks. The notice period of service of more than a year is one month.

• How Is The Severance Pay Calculated?

  The Cecantia is also based upon the days of service. A daily average of pay is calculated for the last six months of service. This daily average is paid for the number of days of Cecantia based on the total time of employment. For example, seven days' of wages have to be paid as Cesantia if the total employment period was more than three months but less than six months.

  Fourteen days' wages have to be paid for employment period of more than six months but less than one year. Similarly, the Costa Rica Labor Code stipulates payment of Cesantia for varying durations of employment. Domestic employees are also covered by Cesantia.

• Is Vacation Pay And Christmas Bonus Included In Cesantia?

  The employee has to pay additionally for any unused vacation time. In addition, the Christmas Bonus is not affected by the payment of Cesantia or the Preaviso. The Christmas Bonus has to be paid if services of an employee are terminated before December. The amount to be paid is calculated based upon the average of total pay earned from the previous December 1 to the day of termination of services.