The Caja Costarricense de Seguro Social known to most in its abbreviated form as CCSS or just the Caja is out in force to collect money owed to the institution. Many companies owe the Caja money. Some try to play games with the system, so they do not have to pay. Here is a bit of background and a company structure that most expats and Ticos alike do not know about which can be used to avoid the game playing.

The CCSS is the foundation of the social security system in Costa Rica. It collects money each month for itself and various other institutions to cover employee health, death and old age benefits to name a few.

Many companies get behind paying their monthly dues to the Caja. This is causing a severe breakdown of the system which is already taxed by rising health costs in general.

About a month ago, there were protests all over the country by the public complaining about the inefficiencies of the CCSS system and the poor medical care the institution provides in some areas of the country.

Some companies try to play games with the usual system of putting their employees on the payroll to avoid paying social security charges. One of the most notorious ruses is to have an employee provide an invoice to the company so it appears the employee is an independent contractor and not an employee.

There are three basic proofs that make up the definition of an employee in Costa Rica: remuneration, personal service and subordination.

Remuneration means a person gets paid for the work they perform. Personal service means the worker being paid for the services they provide must do the work, they cannot simply replace themselves with someone else when they do not want to work. Subordination means the worker takes orders and must obey them.

One problem with this ruse is that the worker usually does not pay into the CCSS system and thus is not covered by any benefits. In many cases, they do not pay for worker compensation either. That is provided by the Instituto Nacional de Seguros or INS for short. This fact contributes to the financial problems of the whole system and is one of the reasons the Caja is in a financial crisis.

True, independent workers can opt into the CCSS system by paying their quotas as such “trabajadores independientes” which mean independent – or professional – workers. However, if they meet the basic proofs of an employee as listed above, they are not independent and should be on a company’s payroll.

Due to the uproar by the public, Caja inspectors are everywhere trying to find the companies that do not pay and also trying to identify the companies that are playing games with the system.

Some companies like having certain professional workers off the payroll and it is more convenient for them to pay for professional services. Even the country itself has found it more economical to pay for services rendered and keep the payroll down.

For this reason, Law 7407 was created in May of 1994 adding a type of special company structure just for independent workers. It is called a S.A.L. or Sociedad Anónima Laboral. Translated into English this means a company for workers.

This company structure was initially created for companies that work with the government so thecountry could cut costs, but anyone can use it. One example is the phone company, Instituto Costarricense de Electricidad known as ICE for short. It uses S.A.L.s to do contract work like fix telephone lines and install telephone services.

A S.A.L must have at least four workers, and the workers must own the majority of the shares of the company. Outside investors can invest in a S.A.L. but they must remain a minority. If a worker of a S.A.L. leaves, he or she must return the stock holdings back to the company.

Here is how they work: Independent or professional workers constitute a S.A.L. to work with a company or companies. They bill for their work, and then the S.A.L. is responsible for paying into CCSS system and also paying for their workers compensation.

This keeps them off the payroll of the companies they work for and gives them the ability to work independently. The CCSS gets their money, and the companies receiving services do not have to worry about big payrolls.

An interviewed Caja inspector said, “S.A.L.s work well if the people that manage them do not play internal games with the company.” He was referring to the fact that in some S.A.L.s the workers’ pay themselves more than they report to the social security system and do not pay their workers compensation.

A company that has independent workers who are not on the payroll but meet the definition as an employee probably will have problems with the CCSS sooner or later. If these independent workers number less than four, the company should put them on the Caja system and get them workers compensation as soon as possible. If they number more than four and can manage themselves according to Law 7407, they should create a S.A.L and bill the company they are working for to keep in line with the law.

Most people do not know that if they hire a company and that company is not up to date with the Caja Costarricense de Seguro Social, the Caja can collect the money from the company or people to which the delinquent firm is providing services. For example, a security firm might not have all its guards on the payroll or might cheat by not listing any. The Caja has the right to come back at the firm or person who hired the company that did not pay into the system.

The Caja is on a rampage to get non-payers. Everyone, should evaluate the payroll to be sure they are being reported correctly and check to see if the companies they work with on a continual basis are up-to-date as well.

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Today’s employee could be a company’s worst enemy tomorrow. If an employee turns, some will do as much harm as they can to their employer.

There are three important rules to finding and keeping a good employee: selection, training and remuneration. Even after going through a strict selection process, training employees extensively and paying them well, a day could come when they turn on the company.

There does not need to be a particularly good reason for this to happen. An employee may just decide to find another job, move on with their lives or decide they do not want to work anymore. Whatever the reason, many employees – especially in Costa Rica – see easy money by accusing their boss and/or others in their company of mistreatment. Even though this strategy knows no sex, women employees know they can stretch their charges farther than men.

This is due to Costa Rica’s stringent domestic violence laws where women use them to their own advantage to harass — and even steal from — men. The chance of an employer winning in a labor case is slim. A man winning a domestic violence case is also equally unlikely. A loss in a labor case can cost an employer thousands of dollars.

What should an employer do? Employees are usually a necessity in a business. The answer is to do things by the book as much as possible considering the labor laws are confusing to most expats. When in doubt, expats should ask a legal professional. Many of them do not know the answers either. The labor ministry is full of people who can answer questions, but few speak English. The ministry’s new Web site is very good. Many queries can be answered by a visit to http://www.mtss.go.cr/

The best rule of thumb is to have a written set of rules, and if an employee violates one twice, fire him or her the third time. Here is a very important fact to remember. Any fault expires after one month. If an employer does not reprimand an employee for a fault within that time frame, they lose the chance to do so.

Remember, a disgruntled employee will use everything and anything in their power or possession to fight a battle with an employer. They will even make things up and offer false witnesses to testify in a labor case. Judges are more inclined to listen more to an employee than to an employer due to the legal principle in dubio pro operario, or “when in doubt favor the worker.” Keeping paperwork is essential.

Today when everything is on a computer or portable device, an employer must have a plan so an employee cannot steal important company information. This includes, but is not limited to, passwords, financial statements, credit card information and company as well as personal secrets.

Employers should plan for the eventuality that an employee may leave – usually it is more the case when they leave not if they leave – and first and foremost protect company information, especially, the information on computers.

A bad employee can do much worse than simply leave the door open for an office theft. Having the passwords to go along with the data can put the entire business out the door with the computers. Often the critical data can fit easily onto a portable hard drive or memory stick.

Worse yet is when the disgruntled employee is also the company computer expert. A business owner can find himself in a battle of wits with the very person trusted to protect the computers.

One solution to protect data is cloud computing, and while it may not yet be practical to keep everything in the cloud, it is now quite possible to put the keys to the data into the off-site Internet cloud.

Microsoft Bit Locker, a feature of Windows 7, when combined with the right server software, can control computer data even when it leaves the office. Information copied onto an external disk is transparently encrypted so that it becomes totally inaccessible once the employee’s access is revoked.

Businesses can now trust their employees to work from home with sensitive data knowing that it remains safe from theft and can be revoked the minute the employee is off the payroll.

Stolen laptop computers are equally inaccessible, and attempts to retrieve the data directly from the hard disk using other computers or recovery software are impossible thanks to strong encryption.

The key feature that makes Bit Locker work is a Windows Server running Active Directory. While in the past the investment in computer hardware and trained IT staff to support it may have been out of reach for smaller businesses, the Internet cloud now makes it possible to outsource the data keys to a trusted partner.

Protecting a company’s computers in a breakup with an employee is only one area of concern, but one of the most important and should be on the top of the business continuity plan.

Complimentary Article in PDF Fomat

Most expats in Costa Rica have experienced the problem of firing an employee or have one leave unexpectedly. One of the biggest headaches is calculating what is owed to them.

What usually happens is the employee goes to the labor ministry and has the calculations made there. An employer never knows if the numbers are right or wrong. Since many employees exaggerate the truth, the amounts sometimes end up in the stratosphere.

Here is a secret for expats to get a handle on employee severance pay.

First a note: An employee’s pay off varies based on years worked. The more an employee has worked, the more they get in cesantía. This is equivalent to severance benefits. Every employee is entitled to them, if they do their job in a satisfactory manner. The amount an employee is entitled to in vacation pay also varies with time.

Expats usually cringe when they have to make these calculations or call a lawyer to do it for them. Believe it or not, most lawyers do not calculate the amounts correctly either.

The savior is on the Internet located here.

This Web page takes the pain out of employer-employee separation. There is some information on the Web site that is in English, but not the severance calculations, so here is a quick course to use this valuable resource. The process is simple, so just follow this example for an employee:

Go to the Web site. Several boxes are on the page to fill in. They are in groups, the first group is called Tiempo laborado or “time worked.” Type in the date in the box labeled Ingreso. This is the employee’s start date. One can use the calendar, but it may not work on some browsers. If not, be sure to input the date as it is represented in Costa Rican format. For example, the day after Christmas two years ago would be represented as 26/12/2009. The dates are in a day/month/year format. Use this date for this example to see if the result at the end is the same as in this example.

The next box is labeled Salida for the termination date. The employee in this example will lose their job at the end of this month so put 30/06/2011 or use the calendar.

The next group is called Tipo de pago or “type of payment.” There are only two boxes, one is labeled Mensual for “monthly” and the other Semanal for “weekly.” Monthly includes monthly and bi-monthly payments. Weekly includes payments by the week, day or hour. For this example, check monthly.

The next grouping is named ¿Le ha sido otorgado el preaviso en tiempo? This means “Was the worker given notice of termination.” The answer is either SI or NO or Parcialmente for some notice was given. If the latter is the case, put in the number of days the employee was given to look for another job before termination. For this example, check no.

The last group on this page is labeled Días de vacaciones por disfrutar. This means, “How many vacation days does the worker have coming.” For this example, use five.

On the right side of the page — on the top and on the bottom of the calculations tables — in small letters are arrows with the word Siguiente. This means “next.” Click one of the arrows.

On this page there are 12 boxes to fill in. These boxes represent the last twelve months of a workers monthly payments. Fill in the boxes with the correct amounts.

Any in-kind benefits should be included in this amount. In-kind benefits include housing, food, or anything else that fits this definition: Payments for goods or services in lieu of money for labor. The domestic worker in this example is provided lunch by the employer worth 20,000 colons a month. For this example, fill in the boxes with the number 155,000 colons, 135,000 – this is a bit more than what a domestic employee earns according to the labor law – and add the 20,000 of in-kind benefits – their lunch.

Again, on the right side of the page – on the top and on the bottom of the calculations tables — in small letters are arrows with the word Resultado. This means “results,” click one of the arrows.

On the page, the employee is presented the amount of what is called liquidación. To pay off the employee in this example would cost 472,750.00 colons. At today’s exchange rate that would translate into $945.50.

Having employees tends to be a pain. In Costa Rica — as in other parts of the world – the employees are really the bosses of the employers. Going to labor court is expensive, and unless an employer has an iron-clad case they will most probably lose.

The best advice is to have a good labor contract, give written reprimands when they are needed – but no more than two, the third is to terminate. Most importantly, and something most people, not even lawyers know, is an employer only has 30 days to act on any fault of an employee, otherwise, the fault expires.

When one needs to end an employment relationship, this handy calculator is easy to use and very accurate and very few people even know it exists.

Complimentary Article in PDF Fomat

Being an important expat destination, Costa Rica offers great weather, beaches and plenty of rainforests, and it can be, bureaucracy and all, a good location for expats who want to grow their businesses. However, there is a group of expats who not only do not own businesses but also need to make ends meet. They get to know a very different kind of jungle: Costa Rican workplaces.

Common employment for expats or foreigners looking for a temporary Costa Rican experience include English teaching, sales and customer service at sportsbooks, casinos, other call centers and real estate firms. Jobs in tourism are the fewest, and they usually require applicants to speak fluent Spanish. In addition, some expats or foreigners seek to get hired or, if popular enough, get requested for cultural activities, especially in the music scene.

In many interviews with expates about their employment experiences in Costa Rica, there seems to be some common denominators in Tico workplace environments. Aiming to set the record straight – unlike many sites that sugarcoat everything about this country – the following are some of the most important ones.

Contract discrepancies. Expats who get hired in jobs whre employers do not require work permits should get paid the full amount offered during the interview. Too often companies wait until it is time to pay the first salary to fast-talk foreigners into believing they are required to pay 9 percent of their salary as government withholdings because of immigration scrutiny. This constitutes employer fraud. Employers can only deduct 9 percent of salaries from employees who are registered in the Caja Costarricense de Seguro Social. The social security agency in Costa Rica is commonly referred to as the “Caja.” That percentage goes directly to that organization. If employers are deducting the withholdings from unregistered employees, they are keeping the money, plain and simple. They cannot send those percentages to Caja because they would be questioned as to whom that money corresponds, nor will they be exempt from a hefty fine if they are caught employing illegal workers, even when deducting the monthly amount. Expats should ask about this aspect during their interviews, and address their knowledge on the matter.

Other complaints have to do with hours promised vs. hours offered. This is especially true for English teachers. Many report being promised full-time schedules and only being given a fraction of that once they sign six-month to one-year commitments with deceiving schools.

Payment irregularities. This seems to be the aspect drawing the most resentment from expats. Some state they applied for jobs that advertised salaries in dollars to then find out that their first salary was paid in colons. Even if they always had the option to quit, some of them decided to endure their jobs, always worrying about converting their monthly payments to dollars to make sure they reflected accurate exchange rates.

Payment delays are also very frequent, especially in sportbooks or casinos. Expats have reported up to a week’s delay in getting their salaries, always being told bogus excuses by their employers about having problems with bank transfers. The ironic thing is that most call center employers are expats themselves, but they have adopted hora tica (Tico timing) when doing business.

Unannounced, gradual salary cutbacks have also been reported. This aspect is frequent in places where salaries are paid under the table. If management decides to start cutting back on commissions or salary amounts that were initially promised, employees have no way to legally protect themselves.

Lying about payment amounts or payment at all also seems to be common in contracts concerning the music scene. Foreign disc jockeys who are hired in local bars complain about how often they have to address problems with the amount they get paid compared to the one offered, which is also true for foreign performers. Some music concerts have been cancelled, even once the audience has arrived to the location, due to payment disagreements between foreign artists and event organizers. Fans have even vandalized facilities once they find out they are not getting their money back either. Expat disc jockeys who aim to get jobs at radio stations say it is good exposure, but forget about getting paid.

Some of them were lied to during job interviews at different stations, being told that once the ratings were received, they would sit down to discuss compensation. Instead, they were given the runarounds by employers once it was time to discuss payment and when some pressed the issue, they were magically taken off the air. Others opted for sucking up to the station and were able to get full-time administrative jobs that would give them monthly salaries ranging from only $300 to $400.

No degree recognition. Costa Rica may be the education diploma paradise for Ticos, but not for expats. Costa Ricans know the more degrees they obtain, the better they will do professionally and financially. That is why there are so many Ticos enrolled in master’s degree programs and short-term trainings that will give them some kind of certificate or diploma. Those open doors. However, expats rarely share this advantage. Expats with bachelor’s degrees do not get better salaries compared to Ticos who have no college education for call center jobs or travel agencies.

The same happens with post-graduate degrees. English teachers who have master’s degrees or Ph.D.s do not get better salaries or positions in language schools unless they have mastered Spanish as well. Ticos do not seem to recognize professional achievement unless it is spoken in their language. Most expats do not even get it until they are residents. Therefore, foreigners with higher education usually end up founding their own language schools in order to put their degrees to good use.

Crazy work ethics. Although this aspect can be true of any office around the world, at least it is true that in Costa Rica it is the one thing you can always count on in the workplace: From increasing daily tasks with no corresponding raise to blatant favoritism reflected in treatment and unjustified raises from management to certain employees, Expats describe Tico office environments as an indoor Wild Wild West. Even though labor code violations are penalized, and the court usually rules in favor of the victim, work ethics that cannot be evidenced in paper are hard to prove in court. There are many cases of sexual harassment, sexism and verbal abuse that go unreported as well.

Concerning the Costa Rican music scene, anarchy seems to be the rule. Many expat and visiting musicians claim that event organizers, bar owners and promoters leave everything for the last minute, provoking embarrassing interruptions or performance delays due to their negligence concerning sound or equipment quality.

No professionalism. Costa Ricans holding an authority position anywhere seem to think that supervising or managing equals patronizing. Tico employees appear used to being disrespected by their employers or supervisors, but foreigners are not. However, Ticos who are not internationally educated treat foreign employees the same way they treat their own. They could have older expats under them, and they still scold them as if they were children. What they also ignore is that most foreigners will hold their own and put them in their place, which sometimes has resulted in unfair firings, since disrespectful Tico supervisors are usually backed up by companies due to their opportunistic skills. Some expat supervisors are not exempt from being jerks, but they usually patronize Ticos, not fellow expats.

Physical contact and no personal space. Costa Ricans have a very physical way of relating to others. Expats often complain about having to kiss Tico co-workers of the opposite sex on the cheek every morning, even the ones they do not like, as Ticos do among themselves. Many expats also feel Ticos have no sense of personal space, since they usually get too close to walk by or talk to them.

No political correctness. Ticos do not know what the term politically correct means. There is no equivalent for that phrase in Spanish either. Costa Ricans feel free to make ignorant racist, sexist, homophobic and ageist jokes in the workplace, disregarding the feelings of those around them. They also feel free to openly discriminate against others based on race, ethnicity or class. Many expats still cannot get over that aspect, especially because it is legally and culturally allowed.

Moving to any foreign country will always need some kind of adjustment, but most relevant information about what to really expect in Costa Rica is unavailable, and most Ticos do not want to have certain aspects of their culture revealed abroad. They need to keep Costa Rica’s reputation intact, and so far it has been working. Until now.

Complimentary Article in PDF Fomat

Costa Rica is labeled a paradise by many sources on the Internet: by visitors who describe their great trips in online blogs, by travel websites trying to entice tourists to visit and websites offering general information about Costa Rica’s nature, history, culture, and the like.

Too many — especially young people — take the bait and move to Costa Rica thinking they’re going to earn big bucks teaching or by working in call centers. Only they get trapped earning very little and what they do receive is easily consumed by living expenses.

Surprisingly — if not suspiciously — bad reviews about this so-called Central American Switzerland are sometimes hard to find, but digging deeper into the Internet pays off to get the true story. Most sources offering a realistic — and far from paradise — view of Costa Rica are foreigners who felt tricked into believing all the heavenly reports about a country that basically hit them with a harsh reality once they had already moved in.

It turns out that the most wonderful features of Costa Rica can only be enjoyed by tourists. Except for jobs offered in beaches — which all got perfect reviews — foreigners interested in trading their own country for a San José way of living have a much less idyllic view of their surroundings.

Besides tourism, Costa Rica is increasingly becoming an employment attraction, especially for college students who want to spend a couple of months abroad while making some money. The two main industries employing foreigners are English language schools and call centers.

Most people looking for a change of scenery get lured with all they read in the Internet, given that there are virtually no bad testimonies online about living or working in Costa Rica. Most Web sites on those topics say things like, “…there are plenty of jobs in Costa Rica for Westerners . . ” or “. . . if you are fluent in Spanish and English, then you can obtain many more jobs.” In reality, while there are some jobs, there are not plenty like the Web claims.

Although language schools are always looking for foreigners, most of them require teachers to have teaching certificates such as TESOL, ESL, TEFL or CELTA, which are an expensive investment, costing $2,000 if obtained in Costa Rica. Moreover, luck plays an important role in finding a school that will pay and treat an employee well. Most schools paint a prettier picture than what they actually offer. Some of their employment ads read “highly competitive hourly wages and full-time salary positions” when they actually pay no more than $8 an hour. They say “free private transportation to out-of-office locations” when it is free only from the teaching location back to the language school, not to the teacher’s residence. Some charge a fee for that extra service after late-night classes.

Some schools also offer “flexible hours up to 40 per week” only for teachers to find out that they only can get up to 20 hours a week. It is common to find schools that hire more teachers than they need in case some decide to leave. So, a lot of teachers are left with a fraction of the time they were offered in the interview or training. There is even a school that claims the most hours teachers can aim for is between 8 and 12 hours a week: “Not one English school can give you a guarantee of more than that. If they do, they are lying to you.”

One Web posting says “if we don’t have your schedule filled to at least 12 hours, then we don’t blame you if you look for a second company/school to help with your income!”

That is an aspect never mentioned in any of the school sites. Working for at least two language schools is a really difficult task. Most schools offer classes at similar hours because students tend to schedule them between 4 and 6 p.m. Teachers must take into account that language schools are not within walking distance of each other. Some trips even require taking two buses and spending an hour, depending on traffic jams. Or a teacher can take a taxi with a $5 to $7 cab fare, equaling an hour of payment in most schools.

Foreigners will find it too complicated and sometimes impossible to juggle two schools at a time. Yet, due to necessity, some eventually get into crazy schedules such as teaching at 7 a.m. (when they are lucky to find schools offering those schedules) and then teaching again in the evening on weekdays, plus all day Saturdays. This type of daily commitment leaves no time and very little money to explore Costa Rica.

Financially speaking, at least one school website was honest about this matter, saying that Costa Rica is “not a great place for a person trying to make a lot of money teaching.” Teachers can expect to earn from $400 to $700 a month, but there some rare exceptions of full-timers who find a good place and can earn up to $1,500.

Since most schools employ teachers under the table, they pay in cash or have an agreement with private banks to open accounts for their employees to deposit their salaries. Some schools have a deal with immigration authorities to let their employees work while providing them with free Spanish lessons. Others promise a temporary work permit that must be renewed every year. That costs $250, which is covered by the schools, but if the teacher quits or gets fired before the contract term ends, they frequently have to reimburse the schools the permit fee.

Another aspect to consider is that many foreigners end up quitting after a short time of being employed because they want to travel or get discouraged. For this reason, many schools are now requiring between four and 12 months of commitment, which can be inconvenient for teachers who feel tricked into taking a job at a school that does not honor its promises.

In sections for frequently-asked questions of some language schools, when asking why they would want to come and get a teaching job, there are responses like “highly motivated students, the fantastic climate, and beautiful places to explore” or “Safety of a foreign government that has no military.” These statements are highly misleading.

First, local students are rarely motivated to work hard at learning a language. Most think that by paying for lessons, their teacher will somehow telepathically transfer them language fluency and vocabulary. Thus, a lot of teachers lose motivation because the lack of effort from students makes class flow virtually impossible, and they end up going over the same mistakes to only be blamed for failing students at the end of the term.

Second, it rains copiously almost every afternoon and evening from May to December, making it very uncomfortable for anybody who is commuting between buses. They get at least their feet soaked and have to teach wet until they get home, making them prone to getting sick.

Third, a country with no military does not equal a safer country but a system with less control or accountability. The crime rate goes higher by the day in Costa Rica, and as an expat expressed it, “You will never see so many security bars around houses and guards outside stores and banks with loaded shotguns in any other country.” Foreigners are walking wallets to local criminals, which makes them a favorite target.

For a good list of language schools, visit the eslbase.com website.

International workers have more chances of getting a lousy teaching job than getting one at a call center, unless it is in a sportsbook or casino. There is limited access to the call center industry, especially now that immigration authorities have a more strict surveillance of the operations. Some places are accepting only foreigners with residency, giving more job opportunities to Ticos.

A Web site stated that “. . . the most popular and best paid jobs in Costa Rica for English speakers can be found in call centers.” However, in reality call centers used to pay really high salaries, but due to the increase of English-speaking Ticos, monthly salaries now range between $600 and $1000. Only a few poker places or sportsbooks are still paying over $1,000. They pay in cash or through opening a bank account through them, but many foreigners complain about payment delays with lame excuses given by managers, and lack of professionalism in the workplace.

Call centers seem to offer more convenient schedules, although many operate on weekends and allow only one day off, making it impossible for foreigners to travel around Costa Rica. Some are flexible for requesting time off, but it depends on the place. Jobs in tourism are not in high demand, and they require foreigners to speak fluent Spanish. Plus, salaries are not great, ranging from $600 to $1,200. The same is true for real estate positions, which mostly work on commission and require employees to own a car.

Expense consideration is crucial when deciding to take a job in Costa Rica. The cost of living can amount up to $1,000 a month for one person. Rent is no less than $300 (unless shared with one or two roommates) for a livable apartment, but it can go up to $600 for a decent place, plus $100 in utilities. Food and groceries are really expensive due to importing taxes, since there are only some locally produced items. The cost of groceries can be as high as $500 a month for 2 people, and restaurant meals are no cheaper than $3. Transportation by bus is approximately $20 a month, and cab fares are no less than $1 a ride. Appliances, clothes and accessories are all taxed, but clothing can be found on sale often.

Culturally speaking, Costa Rica does not offer many options in terms of nightlife or daytime entertainment. Foreigners who like urban excitement will not find it in this country.

Of course there is the occasional dream story of people who came here to visit, found their niche, partnered or built a business and became prosperous, making them permanent and happy residents. But those people usually live by the beach and got really lucky. These cases are the exception, not the rule.

The ugly truth is most foreigners moving to Costa Rica to work find it hard to make a living here and wish they would have stayed home.

Complimentary Article in PDF Fomat

So many expats make the same mistakes with domestic workers in Costa Rica. Usually their intentions are good. Nevertheless, from the outset of the work relationship most start it off on the wrong foot, giving workers a reason to go to court. Why should they wait to be fired upon by the domestic staff? They should fix the mistakes. It is easy to do.

The scenario usually starts innocently enough. Expats come to the country and start looking for a domestic employee to help with household chores. This process starts by asking others for references or putting the word out in their community. Placing ads is not common practice for domestic workers because all kinds of weirdos answer them. Some even are crooks looking to case out locations to rob.

First mistake: Once a person is found for the job, most people do not sign them up as a legal worker but pay them by the hour. The going rate today for this type of worker -— someone working by the hour and not registered legally to work — is around 1,500 colons ($2.75) an hour. The official rate for a servidora doméstica is 518.67 colons an hour with an upward adjustment coming Jan. 1. People pay more thinking they can circumvent the law. Some get away with it, many do not.

Paying a worker by the hour and not putting them on an official payroll is a mistake because the Ministerio de Trabajo says that even temporary or part-time workers need to be registered with the Caja Costarricense de Seguro Social, the nation’s social security agency.

Doing so is easy enough. An employer needs to go to their local social security office and ask them to start a planilla, a payroll for their domestic staff. The amount paid to an employee is reported at the beginning of each month and the social security costs are paid around the third week of the month. Reporting can be done online at the Sistema Centralizado de Recaudación, “central collection center,” Web site. Payment can also be done online. Once a payroll is reported to the collection center, the amount due can be paid from one’s bank account via a link to the social security agency.

An employer is responsible for deducting 9 percent from the employee’s wages and paying it to the social security department along with the employer’s payment of 24.5 percent for a total of 33.5 percent. For example, for a total payroll of 100,000 colons — this is just an example in round numbers — an employer needs to pay the Caja 33,500 each month over and above the wages of the worker. This extra amount covers the worker for health insurance, old age and disability benefits, among other things.

Second mistake: Giving the employee too many “in-kind” benefits is a big no-no. “In-kind” means things in a form other than money. This includes meals, lodging, clothes, education assistance, and transportation. In Costa Rica, any “in-kind” benefits an employee receives can become part of their payment for work performed. In addition to the legal consequences, being too nice can backfire on any employer.

All domestic workers are entitled by law to some extras like meals. If no percentage is set in a contract, 50 percent of their salary is assumed the amount. It is very important to have an employment contract with domestic workers stating the exact monetary value of their “in-kind” benefits.

Third mistake: Not covering an employee with workers compensation is a legal problem just itching for court. Most expats do not cover their domestic staff with workers compensation — called riesgos del trabajo — because they do not know they have to. It is easy to do for domestic workers by purchasing a homeowner’s policy called seguro hogar comprensivo or comprehensive homeowners insurance. One does not need to be an actual owner of a home. The policy also works for people renting.

If an employee is hurt on the job and the employer does not have workers compensation, depending on the injury, the employer could be looking at criminal liability. Comprehensive homeowners insurance is relatively cheap. Why would any expat take the risk? Those without should call an insurance agent today.

What constantly happens is that at some point where a worker is not covered as they should be according to the law, they complain and want to be compensated. If they go to the work ministry or the social security agency all hell breaks loose. Inspectors are sent to the workplace to study the complaint, and they are not very friendly. Employers can be liable for all back payments and be fined heavily for not complying with the law.
If the situation goes to court, the matter becomes even worse. There is no winning for the employer just paying through the nose to set things straight. This is one area where Costa Rican attorneys take cases on contingency because they know they will eventually win.

Expats that have made these classic mistakes should start over before they get stuck up and extorted. They should end any work relationship that is not properly set up, pay the person the legal amounts due for dismissal. Then re-hire the person and put them on a payroll, stipulate their “in-kind” benefits in a labor contract and cover them with workers compensation.

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And an employer could be just a homeowner

Employers are suffering heavy losses in their labor court battles with employees. Judges are also clobbering employers with hefty awards to the employees to serve as a warning to bosses to stay out of court.

In one labor case, a court decree Friday surprised a retired couple. A judge ordered them to pay thousands of dollars to a guard service. The judge ruled that the proprietor of the service really was an employee and not an independent contractor. The homeowners have contracts between themselves and the guard firm to prove otherwise, but the judge discarded the documents as rubbish.

Another case is unbelievable but true. An employer fired a worker after giving the worker three letters of reprimand for disobeying orders. It is law that an employer must give a worker three letters before firing the individual for disobedience. In this case, the worker sued and won. The worker said the third letter should have read, “We are calling your attention for disobeying an order for the third time, so you are fired,” not what it read: “It is the third time we call your attention for disobedience, and since we have called your attention twice before, you are fired.”

The judge ruled each letter is a punishment and the third letter should not mention the first two. One Costa Rican lawyer calls this kind of law kindergarten jurisprudence.

Why do employers lose and employees win in labor court? Here is an analysis:

There are three elements that make a person working for another an employee in Costa Rica: prestación personal, remuneración, and subordinación laboral.

Prestación personal means a worker must do his or her work personally. They cannot hire others to do their work. Remuneración means payment. Workers receive payment for their work. Subordinación laboral means the worker takes orders.

So in the case of the homeowners, the judge put a lot of weight on the fact that the operator of the guard service did most of the work himself and that the couple contracted directly with him as an individual and not as a third-party corporation.

So the guard was entitled to be reimbursed for overtime, vacation, the Christmas bonus, social security charges and other employee benefits. Usually corporations can only collect the contract amount.

Legally speaking, certain inherent principles apply to legal matters with employees, and these principles are the reason workers win most of the time in labor court.

The protector principle grants workers social protection. Courts act in dubio pro operario. When in doubt regarding the circumstances and evidence of a conflict between an employer and an employee, the court must rule in the favor of the employee. In addition, many times different laws can be applicable to the same situation. In theses cases, the law most favorable to the employee applies.

The non-renounce principle grants employees non-renounceable rights. This means workers cannot renounce their rights under any circumstances. The nature of labor law in Costa Rica guarantees worker rights over any private agreement.

The continuity principle views all labor contracts as indefinite. This means labor law contemplates that contracts with workers do not have an end. They go on forever. This is why when one company buys out another, the law guarantees the employees all

their rights under the new administration. This principle also gives employees the benefit of the doubt when they do something wrong. If a worker breaches any rules, and the employer does not take immediate action to correct the situation, the lack of discipline turns the breach into a right.

A perfect example of this principle is cellular telephone use in the workplace. Nowhere in the labor law is there an article that states employees have the right to use cellular telephone at work. However, most employers do not curb their use, turning the use into a right.

The primacy of the reality principle guarantees workers — no matter what any contract or agreement states, whether it be for an indefinite or definite term, outsourcing or for professional services — that the reality of the circumstances will rule. Therefore, if a judge believes a freelancer is an employee, regardless of an existing contract to the contrary, the contractor will lose in a dispute and have to pay the freelancer all the benefits of an employee with interest and costs.

The reasonability principle gives the benefit of the doubt to the employee. In many cases, employees do not know for whom they work for in a job. They know who gives them orders and who reprimands them, but they do not know the legal entity responsible for their rights. In these cases, the employees can sue everyone they think is responsible and request everything they believe they are due.

In many situations — one example is construction — many companies work together on a job. A construction worker in a labor dispute can sue the construction company that hired him or her as well as the owners of the project individually.

Recent changes to the labor law extended the statute of limitations from six months to 12 months to file a claim against an employer. The statute of limitations is suspended when an employer denies the worker a letter specifying the reason for dismissal or when a worker files a claim at the labor ministry. When an employee files a lawsuit within the proper period, the worker can file for up to 10 years worth of benefits.

The moral of this article is a simple one. Do not play games with labor relationships in Costa Rica. The labor courts are ruthless in dealing with employers who try to skirt the rules.

Complimentary Article in PDF Fomat

The ultimate mediation and arbitration
. . . Paul mediates while Peter selects destination

Q. What is the difference between a good priest and Peter at the Pearly Gates?

A. One is a mediator and the other is an arbitrator.

Most people do not know they can pick their own arbitrator in Costa Rica if they know what they are doing.

A mediator is a person who can assist two or more persons to come to an agreement but has no decision power one way or the other if they do not.

An arbitrator moderates disputes but in the end can make a decision as to who wins and who loses.

Law 7727 of Dec. 9, 1997, called the “Ley Sobre Resolución Alterna de Conflictos y Promoción de la Paz Social,” or law of alternative resolution of conflicts and promotion of social peace is a very important and under-utilized set of rules to resolve conflicts and avoid the judicial system.

Good advice for living and doing any kind of business in Costa Rica is to stay out of the courts. The judicial system in this country is slow and inefficient.

Getting into a legal action in Costa Rica is like two kids throwing mud pies over a fence. One throws one pie, and the other tosses two. Usually this goes on geometrically making lawyers wealthy.

Law 7727 can keep people out of court and solve problems quickly. However, the trick here is to learn how to use it effectively. Some of the articles of the law do not work as designed. For example, the law states that in a conflict one can request the bar association or the Sala Primera of the Corte Suprema to appoint an arbitrator. However, several calls to both determined that neither put its part of the law to work.

Employees recommended calling the Ministerio de Justicia y Gracia where one can find a list of arbitrators.

All contracts in Costa Rica should have mediation and arbitration clauses in them. The resolution of conflicts center at the justice ministry’s office provides a detailed list of approved mediators and arbitrators. These are referred to as justice centers.

Mediators are generally free or low cost where arbitrators are not free and their costs can jump all over the place. Some justice centers provide both mediation and arbitration, some only mediation and others only arbitration.

In mediation, a decision reached by the parties is binding and is as good as a judgment by the courts and is executable as such. The keyword here is parties. The mediator cannot make the decision. If there is no agreement reached in mediation between the parties to the dispute, the conflict then can go to arbitration or to court.

Good contracts include an arbitration clause to stay out of court after failed mediation.

In arbitration, parties pick representatives to plead their case in front of an arbitrator or arbitrators referred to as an arbitration panel. The decision of the panel is final and again as good as a court judgment.

The secret that most people do not know is that articles 19 and 20 of the law states arbitration can be either be by law or by equity. This means a contract can appoint an arbitrator or arbitrators in the event of a dispute, avoiding justice centers all together. The arbitrator or arbitrators can be anyone, even people with no knowledge of law.

A great tip is to put mediation and arbitration clauses in employment contracts. (Yes, even with domestic employees.) They are constantly making proverbial mountains out of molehills at the expense of employers. When disgruntled employees go to court, employers generally lose. Employment contracts cannot take away any inalienable rights of employees but contracts with the correct clauses can sure level the playing field and protect employers rights much more so than the courts do.

In conclusion, wise expats will use contracts in Costa Rica to conduct business affairs including buying or investing in property. They should put mediation and arbitration clauses in the contracts and appoint an arbitrator or arbitration panel in the contract to avoid justice centers.

Justice Centers

Casa de Justicia Universidad Latina de Costa Rica
mediation 253-7729.

Casa de Justicia de la Municipalidad de Mora
mediation 249-3124.

Casa de Justicia Universidad de Costa Rica, Liberia mediation 665-5064

Casa de Justicia en materia del Consumidor
mediation 284-8888, 800-CONSUMO.

Casa de Justicia de San Ramón mediation 437-9844.

Casa de Justicia de Santa Cruz mediation 680-4747.

Centro de Conciliación de la Cámara de Comercio de Costa Rica mediation and arbitration 256-4041, 221-0005 Ext. 102.

Centro Resolución de Conflictos Colegio Ingenieros y Arquitectos mediation and arbitration 202-3942, 202-3989.

Centro Internacional Conciliación y Arbitration Cámara Costarricense Norteamericana de Comercio. CICA-AMCHAM mediation and arbitration 220-2200, 296-0696.

Centro Resolución de Conflictos, Ministerio de Trabajo, mediation 256-2798.

Centro Mediation y Manejo Conflictos, Enseñanza e Investigación CEMEDCO mediation 221-7425.

Instituto de Conflictos Familiares INCOFAMI
mediation 256-7232, 222-0647.

Centro de Resolución de Conflictos en Materia de la Propiedad. Cámara de Corredores de Bienes Raíces. CRCP mediation and arbitration 224-8607, 283-2891.

Centro Latinoamericano de Arbitration Empresarial. CLAE arbitration 253-2545, 253-0728.

Centro de Mediation y Arbitration, CEMEDAR

mediation and arbitration 296-5203.

Centro de Mediation, Balanza y Nivel JURISIS
mediation 257-5747.

Centro de Mediation y Arbitration AUSA
mediation and arbitration 288-2861.

Centro Autónomo RAC Laboral
mediation and arbitration 223-6603.

Casa Armonía Centro de Mediation Familiar
mediation 376-5850, 886-5322.

Complimentary Article in PDF Fomat