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- Employee Cost Calculator
- Colombia
Employee cost calculator in Colombia
Looking to hire in Colombia? Our Employee Cost Calculator gives you a clear view of expenses including taxes and employer contributions.
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Request a demoFrequently Asked Questions (FAQs)
What are the mandatory employment costs and statutory benefits employers must provide in Colombia?
Employers in Colombia are required to contribute to social security (Seguridad Social), health insurance (Salud), pension funds (Pensión), occupational risk insurance (ARL), and pay into the Family Welfare Fund, SENA, and ICBF. Statutory benefits include paid annual leave, sick leave, maternity/paternity leave, and legal bonuses such as the 'prima de servicios' and severance (cesantías) with interest. The combined mandatory contributions typically represent 30%–35% of the employee’s gross salary.
How are payroll taxes and employer/employee tax obligations calculated in Colombia?
Payroll taxes in Colombia include employer contributions to health (8.5%), pension (12%), occupational risk (0.522%–6.96%, depending on risk level), and parafiscales (9%). Employees contribute 4% to both health and pension, which are withheld from their salary. Employers must also withhold and remit monthly income tax (retención en la fuente) based on the employee's income bracket.
What common hidden costs should employers anticipate when hiring in Colombia?
Beyond salary and standard contributions, employers must budget for the 'prima de servicios' (a mandatory 13th month salary paid in two installments), annual severance (cesantías) plus 12% interest, and vacation pay. Additional costs can include administrative and compliance expenses, required ARL coverage, and potential legal fees for contract management. These hidden costs can add 15%–20% to the total employment cost.
What legal requirements affect the total employment cost in Colombia?
Colombia enforces a national minimum wage (Salario Mínimo Legal Vigente, SMLV), updated annually, and strict termination rules including severance pay and advance notice regulated by the Código Sustantivo del Trabajo. Working hours are capped at 47 hours per week, and collective bargaining agreements (convenios colectivos) may impose additional cost obligations for certain industries or unions.
What country-specific employment practices should employers be aware of in Colombia?
Employment contracts in Colombia are typically indefinite or fixed-term, with probation periods (período de prueba) allowed up to two months. It is customary to provide meal vouchers, transportation allowances (auxilio de transporte for lower-wage employees), and supplementary insurance for senior roles, although these are not always legally mandated. Local practice also strongly favors formal written contracts to ensure compliance and avoid disputes.
