Employing in Colombia
An employer of record, sometimes known as an international PEO can help you quickly hire and onboard workers in Colombia – often with just two weeks’ notice. Establishing your own local entity without risk and saving costs, this type of service makes an EOR in Colombia worth checking out!
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 21st of December each year. The period for which Christmas bonus is calculated begins from the 1st of May to the 31st 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 is paid on the last working day of the month and is paid in local currency (Colombian Pesos — COP).
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).
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.
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.
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
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.
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.
Keen to engage an EOR in Colombia?
At TopSource Worldwide, we work with local experts to help you navigate the various admin and cost obstacles you may come across along your expansion journey
To find out how we can help your business with our employment solutions, contact us today.