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Costa Rica – Employee loans
Publications || 2019 || Costa Rica – Employee loans

Costa Rica – Employee loans

by charbds, 13 May, 2019


May 13, 2019
Lucía Solórzano / lsolorzano@bdsasesores.com
Attorney at law BDS Asesores


At some point in our lives most people go through financial crises for different reasons that make us asking for help. Workers often resort to their employers to ask for financial aid in emergency situations, which usually leads to requesting salary advances.

This is why many companies have questions about the appropriate way to provide said financial aid while ensuring the protection of their interests in terms of recovering the money lent to their employees.

Firstly, it should be noted that loans granted by their employees are subject to rules different to those agreed upon between two parties governed by a civil or commercial relationship. For said purposes, it would be necessary to mention Articles 30, 36, 172 and 173 of the Labor Code, which sets forth the following conditions to be met for the granting of loans or salary advances deducted in the employee’s payroll:

  1. Payments should be scheduled in at least 4 installments payable during the effective term of the contract.
  2. In case of employment termination, the employer may definitely settle said debt. Said settlement, however, may not affect any entitlements for vacation leave and Christmas bonus (nonwaivable rights) or payment in lieu of prior notice and unemployment pay (amounts not subject to set-off).
  3. The installment may not exceed the lawfully garnishable salary amount.
  4. Debts assumed by the employee to his/her employer will not accrue any interests.

In addition, it should be reminded that the employer may only conduct salary deductions when these are established by law or upon express authorization of the relevant employee. To that effect, when granting a loan or any salary advances, the employee shall authorize the employer in writing to perform said deductions on the agreed upon amounts.

The foregoing rules also apply when the employer wrongly pays the employee in excess. In this case, however, no express authorization is required from the employee in order to perform the corresponding deductions.

Finally, it should be noted that employers are not legally required to grant loans or salary advances to their workers; however, if the employer wishes to grant them in its sole discretion, these grants will be subject to the aforementioned rules, being advisable to regulate their specific conditions.

For instance, certain policies may be implemented to define the cases in which a company or an employer grants this type of facility or benefit, the maximum amounts to be considered, eligibility requirements, and the necessary documentation to be signed by the relevant employee. This way it would be possible to avoid any discrimination complaints for unequal treatment.

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