Employer of Record Services for Colombia

Employing in Colombia

Employing staff in Colombia requires an understanding of the country's diverse cultural and economic landscape. Known for its rich cultural heritage and dynamic economy, Colombia offers a unique environment for global businesses. Businesses must comply with the Labour Code and adhere to social security regulations set by the General Social Security System. Additionally, they are required to ensure proper reporting to the National Tax and Customs Office.

TopSource Worldwide's comprehensive knowledge and expertise in EOR and employer services can effectively assist businesses in navigating these complex employment and tax regulations in Colombia. Our services ensure compliance and streamline employment processes, making us a valuable partner for businesses expanding into and operating in Colombia.

Our Expertise

Managing a global workforce in Colombia

To manage a global workforce in Colombia, effectively navigating Colombian labour laws, which include specific provisions for contracts, benefits, and terminations, is crucial. TopSource Worldwide's expertise in EOR and global payroll services in Colombia ensures compliance with these regulations, while leveraging the country's vibrant workforce and growth opportunities, making it an ideal partner for managing employees in this region.

Extensive expertise

Our team of experienced, knowledgeable staff collectively provide up-to-date employment information across 180 countries, so you can always get accurate advice.

Entity-free employment

Feel free to hire employees from all over the world without being weighed down by setting up entities, running complex payroll or recruiting a hiring team.

Payroll without hassle

Have the confidence that your staff will always be paid accurately and on time, so that you can focus on your core business activities and work towards your success.

Always-on support

Access helpful, relevant, personalised advice whenever you need it, along with expert-led recruitment policies and tried-and-tested HR best practices.

"With TopSource we were able to have employees hired or maintained in Nutreco without having to establish an entity in these countries for only 1-2 employees. I think most countries are covered by TopSource, so they can help us with almost all cases. Good advice on conditions and direct contact with employees. Invoicing done directly to the company. An easy process compared to hiring employees by ourselves."

Annette van Duijnhoven

Nutreco

See our customer stories

”We searched the market for a local payroll vendor in 2014 and we chose TopSource as our partner. We were looking for error-free and timely payroll processing and TopSource Worldwide delivers this, saving us time and money. We have worked together for 8 years now and would recommend them to anyone."

Praveen Lihinar

Sungard

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”TopSource Worldwide has a detailed and methodical onboarding process that made it easy for us to get set up and running with our UK employees. They were able to take the worry out of trying to comply with all local laws and regulations. Because they have this knowledge we do not have to research on our own and hope we are in compliance. This has saved us hours of time and gives both the company and employees a sense of security."

Supervisor

Client based in Ft Worth, Texas, USA

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GLOBAL EXPANSION STRATEGY

Personalised Employer of Record services in Colombia

TopSource Worldwide offers personalised Employer of Record (EOR) services tailored to meet the specific needs of your business in Colombia. This includes handling employee onboarding, payroll processing, tax compliance, employee benefits management, and HR support. Our EOR services ensure that your business meets all legal and regulatory requirements, providing a hassle-free solution to manage your Colombia-based employees.

End-to-end Colombia payroll services

Looking to expand into Colombia? Our unparalleled expertise in global payroll services ensures that your business can seamlessly navigate the complexities of payroll on a global scale, supporting your Colombia expansion initiatives.

Global entity management

Venturing into the Colombian market can be both exciting and challenging. With distinct business regulations, cultural nuances, and economic landscapes, it's essential to have a clear roadmap for your business establishment journey.

Accounting

Whether your goal is to process your purchase-to-pay transactions with minimum errors or manage your expense claim procedure, our team of experts can handle your accounting responsibilities, allowing you to focus on your core business and save time and money.

Global EOR services

Managing a diverse global workforce can be complex. This is where TopSource steps in as an invaluable employer of record services partner for companies seeking to expand their global reach while ensuring compliance with local employment laws and regulations.

Global Expansion Simplified

How to do business in Colombia

Entering the Colombian market presents a mix of excitement and challenges. Given unique business regulations, cultural intricacies, and economic dynamics, a well-defined roadmap is crucial for a successful business establishment.

TopSource Worldwide is with you at every stage. Whether it's navigating local regulations or facilitating seamless operational transitions, our expertise ensures a swift and efficient process for establishing your business in Colombia.

Start your Colombia expansion

Colombia Insights

Key insights into Colombia's landscape

VAT rates: Colombia has a standard VAT rate of 19%, with some exemptions and reduced rates for specific goods and services.

Ease of Doing Business rank: Colombia ranks 65th in the World Bank's Ease of Doing Business Index, reflecting a moderate business environment.

Consumer Confidence Index: As of 2022, Colombia's Consumer Confidence Index was 28.2, indicating cautious economic sentiment.

Employee maternity/paternity leave: Maternity leave is 14 weeks, and paternity leave is 8 days, supporting the work-life balance for new parents.

Employee termination period: Standard notice for termination is 15 days, but specific terms may vary based on employment contracts and circumstances.

Employee salary pay date: Wages are commonly paid monthly, with specific pay dates agreed upon in employment contracts and subject to labour regulations.

Bank holidays: Colombia observes national holidays, including New Year's Day, Independence Day, and Christmas, with a total of 18 public holidays throughout the year.

Statutory benefits

Salary

In Colombia, there’s a legal requirement to pay out month 13. 15 days is paid out in June, and 15 days is paid out in December.

Please be mindful of this when negotiating terms with new candidates. Clients can determine that the salary on offer includes these statutory payments, which will be reflected in the contract of employment. However, this should be made known to your candidate in the pre- hiring stage.

We invoice for these additional salaries monthly and funds are accrued to be paid out at the appropriate time.

The Christmas bonus must be paid by the 21^st of December each year. The period for which Christmas bonus is calculated begins from the 1^st of May to the 31^st of December each year. Employees whose employment relationship has lasted without interruption throughout this period are entitled the whole Christmas bonus that is equal to one monthly salary.

Salary pay date & currency

Salary is paid on the last working day of the month and is paid in local currency (Colombian Pesos — COP).

Statutory provisions

Employer costs

As a guide, the following employer costs are payable in Colombia; however, this is subject to variation depending on the salary and job risk.

Pension fund: 12%
Medical plan: 8.5%
Labour risks: 0.5%
Family compensation funds: 4%

Employee contributions equate to 4% (pension fund) and 4% (medical plan).

Other provisions

Working hours & Probationary period

In Colombia, it’s customary to have a 48-hour work week distributed over six days (eight hours per day).

It should be noted that an employee may not be required to work more than two hours per day as overtime, or more than 12 hours in a given week.

The maximum period allowed is two months. Extensions are not permissible under Colombian law.

Overtime

The ordinary working day is from 6:00 am to 9:00 pm. Overtime during the day is paid at a rate of 25% on top of the ordinary hourly rate. The working night is from 9:00 pm to 6:00 am; workers who ordinarily work during these hours must be paid 35% on top of the ordinary hourly rate.

Overtime pay for night work is equivalent to 75% on top of the ordinary hourly rate.

Employees who perform functions of direction, trust or management — as well as employees who are engaged in intermittent activities or in activities of simple vigilance, such as security guards — are excluded from the above rules regarding the maximum work day and overtime, provided they stay at the workplace.

Termination

Grounds for termination in Colombian legislation can be divided into three categories:

Legal grounds
Termination with a fair cause
Termination without a fair cause (one month’s extra severance payment)

In Colombia, employment contracts may be terminated by any of the parties at any moment with immediate effect and without it being necessary to mention the reasons that led to the termination, unless a fair cause is alleged for the dismissal. Period of notice is only needed for fixed-term contracts when ended by the expiration date.

In the case that the employee opts to terminate their employment contract, alleging a breach by the employer (fair cause), the Labour Code mandates the obligation to pay a severance payment as if the contract were terminated without a fair cause.

Holiday & leave

Holiday entitlement

Employees are entitled to a minimum of 15 days of holiday per year.

These days accrue and are usually taken after the first year; however, it’s possible to allow employees to use their accrued days at the rate of 1.25 per month prior to that.

Sick leave

If an employee cannot work due to illness or an accident, a medical authorisation from a Colombian social security entity must be obtained in order for the employee to get paid for the days they could not attend work. The employer pays sick leave during the employee’s absence (for an indefinite period). However, the employer can claim the payment back from the social security system from the third day of sick leave.

Employ and pay anywhere

Specialising in multi-country payroll solutions

TopSource Worldwide offers comprehensive payroll outsourcing services, ensuring seamless and accurate management of your organisation's payroll functions. With cutting-edge technology and a team of experienced professionals, we handle payroll processing, tax compliance, and regulatory requirements with precision.

Discover our payroll benefits

Calculate Your Employer of Record Taxes in Seconds

Employment Cost Calculator in Colombia

Our Employment Cost Calculator simplifies complex tax calculations for global businesses. Accurately assess tax obligations, ensuring compliance with local regulations. Streamline payroll management effortlessly with our user-friendly tool, providing transparency and efficiency in international workforce taxation.

In addition to calculating your EOR taxes, our calculator can also help you:

Understand the different types of EOR taxes
Stay up-to-date on the latest changes to EOR tax regulations
Avoid penalties for non-compliance

Speak to our team

Our author

Mark Robbins

Global Sales Director

Mark is the Sales Director at Topsource Worldwide. He has been a pioneering figure in the global expansion space since 2013. He is the first salesperson to sell EOR services in Europe, a feat he accomplished in 2013.

Published 2023-11-14 00:00:00

Updated 2023-11-15 00:00:00

Reviewed by:

Adrian Cooney

Fact checked by:

Adrian Cooney

Employer of Record FAQ

Frequently Asked Questions about Colombian employment solutions

What is an Employer of Record in Colombia?

An Employer of Record (EOR) is a professional services provider that assumes the responsibility of being the legal employer for a company's workforce in Colombia. This entails managing tasks such as payroll processing, tax withholding, benefits administration, and ensuring compliance with local labour laws and regulations.

How do global employment services work?

Global employment services operate as a comprehensive solution for businesses seeking to expand their workforce across borders. These services, often provided by Employer of Record (EOR) companies like TopSource Worldwide, streamline the complexities of international employment.

What are the benefits of working with an Employer of Record in Colombia?

Employer of Record companies assume the legal responsibilities associated with employment, alleviating the burden of compliance, payroll, and HR management in Colombia. This allows companies to expand globally without the complexities of establishing legal entities in each location.

What is the difference between EOR & PEO?

An EOR acts as the legal employer, handling tasks like payroll, tax compliance, and benefits administration. This allows companies to expand internationally without establishing legal entities. On the other hand, a PEO shares employer responsibilities with the client company, often co-employing workers.

How are employer payroll taxes calculated in Colombia?

Calculating employer payroll taxes involves understanding the various taxes associated with employing workers and complying with tax regulations in Colombia. Key components include federal and state income taxes, Social Security, Medicare, and unemployment taxes.

What global employment solutions does TopSource offer?

TopSource Worldwide facilitates hassle-free global expansion by acting as the legal employer, handling payroll, tax obligations, and HR responsibilities. With expertise in global entity management, TopSource assists businesses in navigating the intricacies of legal structures across borders.