Countries › Costa Rica › Guide › 16. What is normal abroad but not here › Dismissal without cause is allowed, but costs notice and cesantía of up to eight years

Dismissal without cause is allowed, but costs notice and cesantía of up to eight years

Last verified: 2026-10-30 · Status: Stable

Abroad, at will employment often lets an employer end an indefinite contract with little or no payment. In Costa Rica either party may end an indefinite contract without cause, but the employer must give up to one month of written notice (or pay it) and pay cesantía of 7 days to 22 days of salary per year, counted over the last eight years at most. Both are computed on the average salary of the last six months and cannot be waived, offset or assigned.

USD figures use the Banco Central de Costa Rica reference selling rate of ₡454.82 per US dollar published for 29 October 2026 (indicator 318 on bccr.fi.cr), rounded to the cent; conversions are for orientation only.

Key facts

Cesantía cap	8 yearsCódigo de Trabajo art. 29(4), as of 2026-10-30 · in force
Maximum statutory notice (after one year)	1 monthsCódigo de Trabajo art. 28, as of 2026-10-30 · in force
Highest cesantía days per year of service	22 daysCódigo de Trabajo art. 29(3), as of 2026-10-30 · in force

The rule

1. Either party may end an indefinite contract without just cause by giving written notice: at least one week after three to six months of continuous work, fifteen days after six months to one year, and one month after one year. Notice can be replaced by paying the salary for those periods, without prejudice to cesantía. During notice the employer must give one day off a week to look for work.
Cost to do it: Up to one month of salary in lieu of notice.
Example: Worker with two years on ₡1,200,000 a month: notice pay ₡1,200,000. / About US$2,638.41.Ley 2, Código de Trabajo, art. 28, 1943-08-27 official text · verified 2026-10-30

2. When an indefinite contract ends by unjustified dismissal or another cause outside the worker's will, the employer pays cesantía: 7 days of salary after three to six months, 14 days after six months to a year, and above one year a per year amount from 19.5 days (year 1) rising to 22 days (years 7 to 9) and back to 20 days (year 13 onward). No more than the last eight years are compensated, and cesantía is owed even if the worker immediately joins another employer.
Cost to do it: From 7 days of salary to a maximum of 176 days (22 days x 8 years).
Example: Five years of service and a daily salary of ₡40,000: 21.24 days x 5 = 106.2 days, ₡4,248,000. / About US$9,339.96.Ley 2, Código de Trabajo, as reformed by Ley 7983 (Ley de Protección al Trabajador) of 16 February 2000, art. 29, 2000-02-16 official text · verified 2026-10-30 · changed: Ley 7983 (2000) introduced the current cesantía table and the eight year cap.

3. Notice pay and cesantía cannot be offset, sold, assigned or attached (save half for child support), are calculated on the average salary of the last six months of the contract, and continuity is not broken by illness, vacation, legal strikes and similar causes; any clause meant to break continuity is void.Ley 2, Código de Trabajo, art. 30, 1943-08-27 official text · verified 2026-10-30

4. In fixed term and specific work contracts either party may end the contract early without cause by paying the other the proven damages, judged by the labor courts.Ley 2, Código de Trabajo, art. 31, 1943-08-27 official text · verified 2026-10-30

Continuous service	Notice	Cesantía
3 to 6 months	1 week	7 days
6 months to 1 year	15 days	14 days
Year 1	1 month	19.5 days per year
Years 2 to 4	1 month	20, 20.5 and 21 days per year
Years 5 to 6	1 month	21.24 and 21.5 days per year
Years 7 to 9	1 month	22 days per year
Years 10 to 12	1 month	21.5, 21 and 20.5 days per year
13 and more	1 month	20 days per year, last 8 years only

Notice and cesantía by length of service (Código de Trabajo art. 28 and 29).

Worked example

Dismissal without cause after 5 years, average monthly salary ₡1,200,000 and daily salary ₡40,000: notice in lieu ₡1,200,000 plus cesantía 106.2 days ₡4,248,000, total ₡5,448,000 (US$11,978.37), before vacations and proportional aguinaldo.
Twelve years of service at the same daily salary: 20.5 days x 8 years (cap) = 164 days, ₡6,560,000 (US$14,423.29).

Step by step

Check the cause: a dismissal for a just cause listed in the Code removes notice and cesantía, but the employer must prove it.
Give written notice or pay in lieu; grant one day off a week during worked notice.
Compute both on the average of the last six months of salary.
Add pending vacations and proportional aguinaldo to the final settlement.

Common traps

Cesantía is not waivable: a release signed at hiring or a clause that restarts seniority is void.
Rehiring after a short break does not reset seniority if continuity was not truly broken.
Fixed term contracts ended early expose the employer to court assessed damages, not a fixed table.

Sources

Ley 2, Código de Trabajo (SINALEVI)

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