Employer of Record in Colombia: Hire, Manage, and Pay Talent Seamlessly
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Employment Norms in Colombia
Colombia is a country located in South America with a population of over 50 million people. The country has a diverse economy and labor force, with a range of employment norms and practices that vary across different regions and industries. In recent years, the Colombian government has taken steps to promote job creation and economic growth, including labor market reforms and investment in education and training programs.
General Information:
- The Colombian currency is the Colombian Peso (COP)
- Bogota is the capital of Colombia
- Spanish is the official language of Colombia. Documentation can be in Spanish to be considered legally valid.
- As of 2021, the GDP of Colombia was reported to be 314.46 Billion USD
Labor laws in Colombia establish minimum labor standards, prohibit discrimination, and require social security benefits for employees.
Table of Contents
- Agreements
- Onboarding Process
- Visa
- Minimum Wage
- Payroll Cycle
- Annual Bonus
- Health Benefits
- Working Hours and Overtime
- Leaves
- Social Security
- Taxes for Employers
- Taxes for Employees
- Probation
- Termination
- Severance Pay
- Employees or Contractors
- Final Words
AgreementsOnboarding ProcessVisaMinimum WagePayroll CycleAnnual BonusHealth BenefitsWorking Hours and OvertimeLeavesSocial SecurityTaxes for EmployersTaxes for EmployeesProbationTerminationSeverance PayEmployees or ContractorsFinal Words
Agreements in Colombia
- Colombia has ratified several international agreements related to labor and employment, including the International Labour Organization (ILO) Conventions on freedom of association, collective bargaining, and forced labor.
- The Colombian Constitution recognizes the right to work and guarantees freedom of association, collective bargaining, and the right to strike.
- The Ministry of Labor is responsible for enforcing labor laws and regulations, including the inspection of workplaces to ensure compliance.
- In 2016, the Colombian government signed a peace agreement with the Revolutionary Armed Forces of Colombia (FARC), which includes provisions for the reintegration of former combatants into society and the workforce.
- Colombia has free trade agreements with several countries, including the United States and Canada, which include labor provisions to protect workers' rights.
- Discrimination based on race, gender, religion, sexual orientation, or disability is prohibited by law.
- The agreements/document should be in Spanish or if a document is in another language then also it should be translated into Spanish.
Onboarding Process in Colombia
There is no specific onboarding process mandated by law in Colombia. However, best practices for onboarding new employees may include:
- Providing a detailed job description and employment contract to the employee.
- Verifying the employee's identification documents, tax ID, and social security number.
- Registering the employee with the social security system and enrolling them in healthcare and pension plans.
- Providing an orientation session that includes information on the company's policies, procedures, and culture.
- Providing training on job-specific skills and responsibilities.
- Assigning a mentor or supervisor to help the new employee adjust to their role and the company.
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Visa in Colombia
Colombia has several types of visas available for foreigners, including:
- Visitor (V) visa: for short-term stays of up to 180 days for tourism or business purposes.
- Temporary (TP) visa: for stays of up to three years for work, study, or family reunification.
- Resident (RE) visa: for stays of more than three years for work, investment, or family reunification.
- Migrant (M) visa: for individuals who intend to reside permanently in Colombia.
Minimum Wage in Colombia
As of January 2023, the monthly minimum wage in Colombia is COP 1,300,606.00.
Payroll Cycle in Colombia
A biweekly or monthly payroll cycle is followed in Colombia.
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Annual Bonus in Colombia
Employees earning an ordinary salary, which is less than 15,080,000 COP get the 13th month's salary every year, split into two installments. One is paid in June and another one in December. Those employees who earn 15,080,000 COP or more in a year, comes under the integral salary. The salary of one extra month is not paid to the employees getting an integral salary.
Health Benefits in Colombia
Employers in Colombia are required by law to provide health benefits to their employees, including:
- Enrollment in the national healthcare system provides coverage for medical services, medications, and hospitalization.
- Employer contributions to the employee's pension fund provide some healthcare coverage.
- Workers' compensation insurance provides coverage for work-related injuries or illnesses.
Working Hours and Overtime in Colombia
- Work hours: Employees have to work 48 hours a week and 8 hours per day for 6 days.
- Break: Employees are entitled to a 15-minute break for every four hours of work, and a one-hour lunch break for workdays that exceed six hours.
- Overtime: Overtime work is permitted, but must be compensated at a higher rate than regular hours. The overtime rate is typically 25% higher than the regular rate for daytime work, and 75% higher for nighttime work.
Leaves in Colombia
Sick Leaves
- In Colombia, employees are entitled to up to 540 days of sick leave per year, which is paid differently by different employers, based on the tenure of employees' association with the employer.
- For the first two days of sick leave employees 66.6% of their base salary paid by the employer and from day 3 to 90, they receive the same base salary paid by the employer but later refunded by Social Security. From day 90 to day 180 and from day 181 to day 540, employees receive 50% of their salary, paid by the employer, refunded by Social Security.
- If in case an employee has to take a sick leave due to an accident at work, then they are eligible to receive 100% salary, which is paid by the insurer.
Parental leaves
- There isn't a provision for parental leaves in Colombia, only maternity and paternity leaves are granted to employees.
Maternity leaves
- Female employees can avail of 126 days of paid leave. Out of which 7 days' leave should be taken before the birth of the child. Employees are entitled to receive 100% of their average salary during the maternity leave. This leave is paid by the employer and refunded by Social Security.
Paternity leave
- Paternity leave is granted to employees for 2 weeks. They can take this leave after the birth of the child. 100% salary is given to the employees during this period, which is paid by the employed and refunded by Social Security.
Annual leaves
- Employees in Colombia are entitled to get 15 consecutive days of paid annual leave.
Other leaves
- Bereavement leave: 5 consecutive days of bereavement leave is provided in Columbia to the employees.
- Marriage leave: After marriage, an employee can avail of 5 paid consecutive days of leave.
Public Holidays (for the Calendar year 2024)
A few of the following dates may vary according to the traditional calendar.
- New Year's Day: January 1st
- Epiphany: January 8th
- Saint Joseph's Day: March 25th
- Palm Sunday: March 24th
- Maundy Thursday: March 28th
- Good Friday: March 29th
- Easter Sunday: March 31st
- Labor Day: May 1st
- Ascension Day: May 12th
- Corpus Christi: June 3rd
- Sacred Heart: June 10th
- Saint Peter and Saint Paul: July 1st
- Independence Day: July 20th
- Battle of Boyacá: August 7th
- Assumption of Mary: August 19th
- Columbus Day Holiday: October 14th
- All Saints' Day: November 4th
- Independence of Cartagena: November 11th
- Immaculate Conception: December 8th
- Christmas Day: December 25th
Public Holidays (for the Calendar year 2025)
A few of the following dates may vary according to the traditional calendar.
- New Year's Day: January 1st
- Epiphany: January 6th
- Saint Joseph's Day: March 24th
- Palm Sunday: April 13th
- Maundy Thursday: April 17th
- Good Friday: April 18th
- Easter Sunday: April 20th
- Labor Day: May 1st
- Ascension Day: June 2nd
- Corpus Christi: June 23rd
- Sacred Heart: June 30th
- Saint Peter and Saint Paul: July 7th
- Independence Day: July 20th
- Battle of Boyacá: August 7th
- Assumption of Mary: August 18th
- Columbus Day Holiday: October 13th
- All Saints' Day: November 3rd
- Independence of Cartagena: November 10th
- Immaculate Conception: December 8th
- Christmas Day: December 25th
Taxes for Employers in Colombia
Employers in Colombia are required to pay a percentage of employee salaries towards various funds. This percentage is:
- Pension Fund - 12%
- Medical Plan - 8.5%
- Labor risks - 0.52% - 6.96%
- Family Compensation Funds - 4%
- Family Welfare (ICBF) - 3%
- National Apprenticeship Service (SENA), will apply an integral salary - 2.0%
- 21.02% - 27.46% is the total Employment Cost with 20% being the employer's social security contribution.
Taxes for Employees in Colombia
- A pension fund is set up with a contribution of 4.0%-5.0% of the employee's salary.
- A healthcare fund is also established with a contribution of 4.0% of the salary going towards it.
- So a total of 8% is contributed by the employee as Social security contribution.
- Income tax contribution ranges between 19% to 39%:
- Income up to 1,090 TVU: 0%
- Income ranging from 1,090 TVU - 1,700 TVU: 19%
- Income ranging from 1,700 TVU - 4,100 TVU: 28% + 116 TVU
- Income ranging from 4,100 TVU - 8,670 TVU: 33% + 788 TVU
- Income ranging from 8,670 TVU - 18,970 TVU: 35% + 2,296 TVU
- Income ranging from 18,970 TVU - 31,000 TVU: 37% + 5,901 TVU
- Income above 31,000 TVU: 39% + 10,352 TVU
TVU is the taxing unit used by the government of Colombia.
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Probation in Colombia
The maximum probationary period must be in writing and must not exceed two months.
Termination in Colombia
In Colombia, there are several conditions and scenarios under which an employee can be terminated, including:
- Termination by mutual agreement between the employer and employee.
- Termination due to expiration of the employment contract.
- Termination due to resignation by the employee.
- Termination for just cause, such as serious misconduct, fraud, or insubordination.
- Termination without just cause, which requires the employer to pay severance to the employee.
Severance Pay in Colombia
In Colombia, severance pay is should be paid to employees who are terminated without just cause. The amount of severance pay is based on the employee's salary and length of service, with a minimum of one month's salary for each year of service. Employers must also pay an additional 25% of the total severance amount as a penalty for terminating the employee without just cause.
Employees or Contractors in Colombia
In Colombia, the distinction between employees and contractors is important because it affects their legal rights and obligations. The definitions of employees and contractors are as follows:
- Employees are individuals who provide personal services to an employer, under the employer's direction and control, in exchange for a salary or other compensation. They are entitled to certain legal protections, including social security benefits, paid time off, and severance pay.
- Contractors are individuals or businesses who provide services to a client or customer, using their methods and resources, and who are not under the direction or control of the client or customer. They are not entitled to the same legal protections as employees.
- Misclassifying an employee as a contractor, or vice versa, can result in penalties for the employer, including fines and legal action by the affected employee or contractor. Employers should carefully evaluate the nature of their relationship with each worker to determine their correct classification under Colombian law.
Final Words
In conclusion, Colombia has a well-defined legal framework for employment, with clear provisions for employers and employees. With its growing economy and diverse workforce, Colombia offers a range of employment opportunities for both local and foreign workers, and businesses can benefit from the country's strategic location, trade agreements, and skilled labor force.
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Social Security in Colombia