Decrypting Colombia’s Labor Environment
Article 4 minute read

Decrypting Colombia’s Labor Environment

30 November 2016

With a mixture of emerging and booming economies, political uncertainty and extreme contrasts in business customs, the Americas can never be categorized as one homogeneous whole.

Colombia provides a gateway for companies to expand into Central and South American states. But when you operate in multiple countries and start to hire your employees, you must be aware to be fully compliant with the local labor regulations as well as your internal HR and payroll policies. Here we take a look at how HR & Payroll works in Colombia.

Social security system

  • Colombia has a mandatory social security system, which provides benefits for retirement, healthcare, and labor risks.
  • Both the employers and the employees are required to make contributions towards social security. Total payroll contributions:
    • Employer: up to 31% of salary, including the payroll taxes
    • Employee: up to 10% of salary

Hiring/Retrenchment Issues

  • Employment contracts can be verbal or written, as well as of fixed or indefinite duration. Employers can also enter into collective bargaining agreements with employees.
  • Employers may require employees to serve a trial period, not exceeding 2 months.
  • The employer and the employee can both terminate the employment contract without notice.
  • Employees dismissed without a lawful cause are entitled to a severance payment ranging from 15 days for employees under indefinite term contract, depending on their salary and tenure of service. Employees under a definite contract have the right to receive compensation according to the time it takes to finish the agreed period.

Foreign Personnel

  • Foreigners are required to hold a valid work visa to live and work in Colombia.
    • Entry of foreigners with technical, professional or intellectual qualifications and experience that can contribute to the development of economic, scientific, cultural or educational activities that benefit Colombia is facilitated.
    • In general, the foreigners have to comply the same obligations like the Colombian workers in relation with the HR& Payroll matters.

Work Permits

  • Decree 834, 2013 issued by the Ministry of Foreign Affairs must be reviewed to determine which visa or permit must be obtained. This law consolidates visas in the following categories: Business (NE), Temporary (TE) and Resident (RE).
    • Temporary Visa TP-4 (employee) authorizes the entry and permanency in the country of a foreign  employee that has a  labor  contract  with  a  personal  or  legal  entity domiciled  in Colombia.

Paid leave

  • Employees are entitled to receive a paid annual vacation time of 15 days for each year of service.
  • Employees are also entitled to 14 weeks of paid maternity leave, 8 days of paid paternity leave, and 5 days of paid bereavement leave.

Currently, the Colombian Congress is preparing a law to extend those paid leaves.

Payroll Cycle

  • Employees are paid either monthly or biweekly basis.
  • The monthly minimum wage is COP $ 689.455 (Approx. 230 USD) effective from 1 January 2016 until the 31st of December of 2016.
  • Night-time work is payable at a rate of at-least 35% above the normal pay rate.
  • Overtime during daytime working hours is payable at a rate of at-least 25% above the normal pay rate, while overtime during night-time working hours is payable at a rate of at-least 75% above the normal pay rate.
  • If an employee works for 2 Sundays in a calendar month, he/she is entitled to an extra pay of at-least 75% of the normal pay rate or a compensatory day off in the subsequent week. An employee who has worked for 3 Sundays in a calendar month is entitled to both an extra pay of at-least 75% of the normal pay rate as well as a compensatory day off in the subsequent week.

HR Legislation

  • Employment in Colombia is primarily governed by the Labor Code which applies  to  all  employers  and  employees  in  Colombia,  regardless  of  their nationality. The Code governs the terms and conditions of employment, such as the form and duration of the employment   contracts,   probation   periods,   wages,   working   hours,   holidays   and   leaves, termination of employment, and collective bargaining.

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Note: This is only a short summary. We highly recommend to check any information in detail based upon the individual case.

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