What you should know about the annual salary adjustment for the private sector in Costa Rica for the private sector in Costa Rica

On December 14 of the previous year, the Executive Decree establishing the list of minimum wages for the private sector was published and became effective as of January 1 of this year.

What is the reason for the annual salary adjustment?

Every year with the publication of the minimum wages, employers are in uncertainty as to whether they have a legal obligation to increase the salary of their workers, for which reason, we will explain under what assumptions the salary of the employees must be adjusted, and the consequences to which the employer is exposed if it does not make the salary adjustment.

Both the Political Constitution and the Labor Code provide that workers have the right to earn a minimum salary that covers the normal needs of the household and provides welfare and dignified existence, and that such salary is adjusted periodically, so that new minimum salaries are decreed annually with an increase over the salaries of the previous year, depending on factors such as inflation and the cost of living.

How is the salary adjusted for private sector workers?

For private sector employers, wages must be adjusted if the current wages of employees are below the minimum wage set forth in the Executive Decree issued by the Ministry of Labor and Social Security. 

On the other hand, if the current wages are still above the new minimum wages, there is normally no legal obligation to increase them.

However, if a worker has received annual salary increases in accordance with the percentage increase decreed, even though his/her salary has been higher than the minimum salary established by the MTSS, the employer must continue to increase his/her salary, since it has become a custom and, therefore, an acquired right of the worker to receive such annual increase.