News

From past days, Costa Rica has been in Yellow Alert and State of Emergency decreed by the President of the Republic. With 158 confirmed cases at national level, the main recommendation of the authorities, especially the Minister of Health, is to remain in their homes and not to go out, in order to avoid massive contagion and an exponential growth of the pandemic curve.

The government has adopted legal measures by introducing new legislation that reliefs the pocket of debtors and protects workers in order to avoid mass layoffs, business closings or worsening the economic crisis:

• Teleworking: Teleworking is maintained and private sector employers are urged to implement the necessary measures to enable employees who are able to do so to carry out their work by means of this tool. This is based on guideline No. 073-S-MTSS.
• Reduction of Working Hours: On Thursday, March 20, Bill 21854 for the reduction of working hours as a way to safeguard the economy in times of coronavirus was approved in the first debate and unanimously.

This rule is intended to prevent excessive growth in unemployment, allowing reductions of up to 75% according to the proven effect on business activity, which must range from 20 to 60% of the company’s income.

It is expected that the bill will be voted on in a second debate and will become a law of the Republic and that these measures can be maintained for up to three months.

• Reduction of the Minimum Contributive Base: The CCSS Board of Directors approved the reduction of the current Minimum Contributive Base for health insurance and pensions to 25%, this as part of the measures to solve the current economic crisis. This will increase health insurance from 294,619 colones to 73,654 colones in its BMC, and pension insurance from 275,759 colones to 68,639 colones in its BMC.

This measure will help to lower the monthly payment of social security contributions for the months of March, April and May of this year.

With regard to the suspension of employment contracts: The suspension of employment contracts is provided in Chapter 6 of the Labour Code, Articles 73 to 79 inclusive. Article 75 indicates what is of interest to us:

“The temporary suspension of employment contracts shall take effect from the conclusion of the day on which the event giving rise to it occurred, provided that full verification of the cause on which it is based is initiated before the General Labour Inspectorate or its duly and specially authorized representatives within three days following the above-mentioned date”.

From this we can conclude that the suspension of the contracts will take effect from the termination of the day on which the event that gave rise to it occurred (in the current context it will apply from the day of closure or from the day on which operations were reduced, this being the fact that the event giving rise to the suspension is the national emergency against the spread of the COVID-19 virus). The article also states that the MTSS must begin the process of fully verifying the cause for the suspension within three days of the aforementioned event that gave rise to the measure.

The MTSS argues that the suspension of contracts should be dealt with by them before applying the measure, which is understood to be against the law and also illogical and unrealistic, taking into account the current situation. In view of this, we consider it prudent that, if employers are forced to suspend contracts in order not to dismiss their employees, they should do so immediately and in parallel with this, initiate proceedings before the MTSS.

Carlos Gómez Fonseca
Partner
García & Bodán
Costa Rica