#CostaRica 🇨🇷 #BDS_Article: Internal Regulations in Your Company: Among What Is Mandatory, Desirable, and Discretionary

In legal matters, there’s a popular saying: “paper speaks.” This could not be truer when it comes to employment relationships. When we are talking about obligations and rules regarding the provision of services or how we should behave at work, we find ourselves referring to regulations that date back primarily to 1943. In other words, they tend to be rules and conditions that fail to account for the complexity of technological use, globalization and regionalization of production processes, or the specifics of each innovative company.

Every employer holds managerial authority, through which they may organize their production resources in whatever way they deem appropriate to achieve greater efficiency and business outcomes. In reality, this authority also enables a range of other actions—such as setting the "rules of the game" for any activity, preventing errors or omissions by employees in the performance of their duties, establishing evidentiary elements in the event of judicial claims, or allowing for secure, regulated changes over time in specific aspects such as commissions, bonuses, or other benefits.

In light of this, it is striking that in Costa Rica, there is only one internal regulation that is currently mandatory: the implementation of a policy for the prevention and penalization of behaviors that constitute sexual harassment, as required by Law No. 7476. If Bill No. 20.873 is passed in the Legislative Assembly, it would add a further requirement mandating that all companies adopt a policy for the prevention of workplace harassment. This clearly outlines what is mandatory in terms of internal regulations.

Expectations

Let’s now discuss what is desirable. Considering that, in recent years, illnesses linked to depressive and anxiety disorders have increased by over 35%, and that 5% of our population has experienced illnesses of this nature—not to mention the alarming number of medical leaves due to work-related stress in 2024—it seems more than necessary to implement internal policies that address these issues. Such policies should aim to strike a balance between work hours and employees’ personal lives and establish internal standards for workload and performance based on objective and reasonable criteria.

Another desirable element, dating back to 2017, is the implementation of non-discrimination policies. Since that year, Costa Rica’s Labor Code underwent significant changes in this area. With the expansion of non-discrimination grounds in Article 404, it has become practically mandatory to base any personnel decisions or disciplinary actions on objective criteria that must never be deemed arbitrary or discriminatory toward the employee’s personal characteristics.

Finally, among the desirable measures, we must mention the protection of confidential or sensitive business information. From highly sensitive economic secrets to recipes or marketing strategies, a lack of regulation in these areas can lead to serious damage—especially when little or nothing can be done to repair it.

Defining what is considered confidential, who is responsible for safeguarding it, where and how it is stored, under what conditions it stops being confidential, or distinguishing between proprietary and intellectual property rights—these are issues that, regardless of your company’s size, must be taken seriously.

To conclude, let’s briefly open the door to what is discretionary. This includes everything each company must assess for itself—whether or not it needs to be regulated. Use of uniforms, commissions or bonuses, work schedules, permits and leaves of absence, use of work tools, reimbursements, and per diems are among the best-known policies in Costa Rica. Each and every one of these policies should, as previously mentioned, be designed with flexibility to be reviewed and adjusted over time.

That said, if we take a look at global markets and practices in other jurisdictions, now might be the right time to begin envisioning new internal regulations which, within three to five years, may become more important than the policies mentioned above. Consider workplace use and development of artificial intelligence; protection and registration of patents in foreign markets; regional workforces; digital platforms; and green jobs—these are just a few of the emerging trends that are gradually getting the attention of labor law worldwide.

There may be much—or little—to regulate, but what is certainly not optional is to forgo exercising this employer authority or to continue relying on internal regulations that have not been updated.

Cristhian Monge Arce

Partner, BDS Asesores

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