Labor Unions in Costa Rica have expressed in these past weeks their disagreement and discomfort with the cuts the government has proposed to control the expenses and bring down the fiscal deficit; now, they receive a new blow, the Constitutional Court limited to 12 years the payment of ‘cesantía’ in the public institutions.

‘Cesantia’ is a compensation that an employee receives as part of their liquidation when they are fired from service without justified reason. As established in the labor code, it is calculated as one month’s salary for each year of service, with a limit of 8 years; however, this limit does not apply for the public sector.

In the past the ‘Cesantia’ payment had no limit for employees in the public sector, meaning they got a month’s pay for every year of service without limitation; the Constitutional Court had already ruled this as unconstitutional in 2006 and had recognized the benefit with a limit of 20 years.

Now, the new ruling establishes a limit of 12 years, as it considers 20 years irrational and disproportional in relation to what is established in the Labor Code.

The judges also eliminated the regulation that allowed public employees to receive ‘cesantia’ benefit when they quit their job. As well as the use of public funds to pay funeral services, end of the year parties or social and sports activities.

The majority of this benefits are granted to public employees through a figure called “Convenciones Colectivas” (collective conventions) which is an agreement celebrated between one or several worker unions and their employers to regulate the conditions under which the work will be given and all aspects related to the same. Collective Conventions stand as a law (Art.62 of the Political Constitution) and its norms must be considered in individual or collective contracts.

The ruling of the Constitutional Chamber is of obligatory compliance by all public institutions, including the central government, municipalities, etc. and even in the even that these benefits are covered by ‘convenciones colectivas’.

According to daily La Nacion, there are currently 27 public institutions that recognize cesantia payments of more than 12 years; out of these, 19 recognize up to 20 years of cesantia when the worker quits; among them ICE (Costa Rican Electricity Institute); CCSS (Social Security Service); Recope (Costa Rican Oil Refinery), to name a few.

Albino Vargas, one of the strongest labor union leaders in the country, secretary of the group of labor unions Patria Justa, has already expressed their opposition to this ruling and the strong possibility that they will soon call a strike.