Effortless Hiring in Colombia

Employment Contracts

• Employment relationships in Colombia are primarily governed by the Labor Act No. 50. Key points include:
• Indefinite-Term Contracts: Standard contracts without a predetermined end date.
• Fixed-Term Contracts: Permissible only under specific conditions and must be in writing. These contracts cannot exceed three years but may be renewed indefinitely.
• Seasonal Contracts: Applicable for work tied to specific seasons or periods.

Probationary Period

• A probationary period of up to two months is permissible, during which either party can terminate the contract without cause.

Payroll Frequency

• Employees are typically paid on a monthly or biweekly basis, depending on the employer's policies and industry standards.

Minimum Wage

• As of January 2023, the minimum monthly salary is set at COP 1,160,000 (approximately USD 300).

Overtime

• The standard workweek is 48 hours, with a maximum of 8 hours per day. Overtime is compensated at:
• 1.25 times the regular hourly rate for standard overtime.
• 1.75 times for work performed on weekends or holidays.
• Overtime work is limited to a maximum of 270 hours per year.

Mandatory Bonuses

• Prima de Servicios (Service Bonus): Employees are entitled to a biannual bonus equivalent to 15 days' salary, paid in two installments: one in June and the other in December.
• Cesantías (Severance Pay): Equivalent to one month's salary per year, deposited into a severance fund by February 14 each year.
• Interest on Cesantías: An additional 12% annual interest on the severance pay, paid directly to the employee by January 31 each year.

Employee Contributions

1. Pension Fund: Employees contribute approximately 4% of their gross salary.
2. Health Insurance: Employees contribute approximately 4% of their gross salary.
3. Solidarity Fund: An additional 1% for employees earning more than four times the minimum wage.

Employer Contributions

1. Pension Fund: Employers contribute approximately 12% of the employee's gross salary.
2. Health Insurance: Employers contribute approximately 8.5% of the employee's gross salary.
3. Occupational Risk Insurance: Between 0.522% and 6.96% of gross salary, depending on the risk level.
4. Family Welfare Fund (ICBF): Approximately 3% of gross salary.
5. National Apprenticeship Service (SENA): Approximately 2% of gross salary.
6. Family Compensation Fund: Approximately 4% of gross salary.

Income Tax

• Colombia employs a progressive income tax system with rates ranging from 0% to 39%, depending on income levels.

Types of Leave in Colombia

1. Annual Leave

• Employees are entitled to:
• 15 consecutive working days of paid vacation for each year of service. At least six days must be taken consecutively, while the remainder can be deferred with mutual agreement.

2. Sick Leave

• Employees are entitled to paid sick leave with a medical report. The Social Security System (EPS) provides sick pay starting from the third day of illness at a rate of 66.67% of the regular salary.

3. Maternity Leave

• Female employees are entitled to:
• 18 weeks of fully paid maternity leave, which can start up to two weeks before birth. The employer pays this and is then fully reimbursed by social security.

4. Paternity Leave

• Fathers are entitled to:
• Two weeks of paid paternity leave at 100% of the regular salary rate.

5. Bereavement Leave

• Employees are entitled to:
• Five days of paid leave in the event of the death of an immediate family member.

6. Marriage Leave

• Employees are entitled to:
• Five days of paid leave upon marriage.

7. Public Holidays

• Colombia observes 18 public holidays annually, among the highest globally.

Mandatory Benefits

1. Health Insurance: Both employers and employees contribute to the Social Security System, providing healthcare coverage.
2. Pension Contributions: Mandatory contributions to the national pension system.
3. Occupational Risk Insurance: Employers must provide insurance covering work-related accidents and illnesses.
4. Family Welfare Contributions: Employers contribute to family welfare programs, including the Family Compensation Fund, ICBF, and SENA.

Optional Benefits

Employers may offer additional benefits such as private health insurance, meal vouchers, transportation allowances, and flexible working hours to attract and retain talent.

Notice Period

• While Colombian law does not mandate a specific notice period for termination, it is customary to provide reasonable notice based on company policy or collective agreements.

Severance Pay

• In cases where termination is unjustified or due to collective redundancies, employees may be entitled to severance pay calculated based on their length of service and average earnings.

Just Cause Termination

• Termination can occur for just cause under specified conditions outlined in labor laws (e.g., misconduct). In such cases, no severance is owed; however, written notice detailing the reasons must be provided