For everyone doing business in ColombiaColombian employment law can be confusing if you are already there or plan to start your business there. It is crucial to maintain your good standing with local authorities, and to ensure the success of your company.
The Colombian government oversees the employment law. Works MinistryThere are many similarities between the markets, but there are also some unique aspects to navigate. You will need to find a professional to help you. corporate lawyer in ColombiaWith a strong track record in assisting investors in this market.
If you are looking to hire local employees or plan a short-term market entry, this is the best option. employer of record in ColombiaApart from the fact that you won’t have to form a local entity, one of the main advantages of the service is the fact that your services agreement will guarantee compliance with local employment laws.
Below is a brief guide to Colombian employment law. It includes information about the most common types and types of contracts, allowances for different types and leave types, and statutory contributions for employees and employers.
You can contact us to learn more about how we can help you negotiate employment law in Colombia or any other aspect in doing business in the country. contact us today. A snapshot of Colombian employment law is also available at the end.
Standard hours under Colombian employment law
The maximum amount of work a person can do in Colombia is 48 hours per week, according to the employment law. A person’s regular working hours are eight hours per day and a maximum of six consecutive days.
Sunday is a required rest day in Colombia. Therefore, those who work six days per weeks will usually work on a Monday-Saturday schedule. However, employers can negotiate with their employees to select a different rest period.
Colombia has 18 national holidays per year. February and September are the only months that at least one national holiday is observed. These holidays are generally observed on Mondays.
Colombian employment law: Common types of contracts
Depending on the job and nature of the business, there are five types of contracts that Colombians use.
- Fixed-term employment contractsIt can be extended up to three times and lasts for as long as you need. If the original contract does not last for more than one year, it may be renewed but for a minimum of one year.
Colombian employment law stipulates that fixed-term contracts must include a trial period. The trial period cannot last more than two months. The trial period can not last more than one-fifth of a contract for contracts less than one year.
- Indefinite-term employment contractsThe nature of the job or an agreement between the employer/employee may dictate the length of the contract. A contract like this cannot be terminated unless both the parties agree to it or under conditions that allow one side to act unilaterally.
A contract for indefinite-term cannot be signed for a trial period of more than two months. This must be stated in the contract.
- Contracts for a particular taskFor the completion of a particular project, they are provided. To clearly define when the task will be completed, and when it will end, such a contract must include markers or thresholds.The rules for the trial period for a contract with a set task are the same as for
- Contracts that are temporary, accidental, or occasional are used when the work due to be completed falls outside the scope of the company’s standard activities and is generally provided for work that will be completed in less than one month.
- Provision of services contracts, commonly referred to as ‘prestaciones’ contracts, can be established between a company and an individual contractor, and must involve the contractor working with a degree of technical and administrative autonomy.
Prestaciones contracts have a civil nature and are not subject to the same labor law provisions in Colombia. The contractor assumes all risks associated with the job.
The employer is not responsible to manage employee deductions under such contracts. Additionally, common benefits such as annual bonuses and paid vacations are not included.
Note that for all contracts that last at least one year, other than prestaciones contracts, the employee is entitled to a ‘13th salary’ bonus, which totals one full month of salary and is distributed in two parts, one being mid-year and the other in December.
Colombian law allows for vacations, leave and other absences
Employees can get 15 consecutive working days of vacation after one year of service to the same employer. Colombian employment law requires that employees take at least six days of vacation. However, they cannot carry over any vacations not taken to the next year. You must get permission from the company to carry over vacation.
Paternity and maternity leave
Female employees are entitled for 18 weeks of paid parental leave. The week prior to the due date is mandatory. Maternity leave will be extended for 18 weeks if the baby is premature. This includes the time between the due day and the birth date. For example, if a baby arrives one week early, maternity leaves will last 19 weeks. Maternity leave can be extended to 20 weeks for multiple births.
New fathers receive eight days of paternity pay, provided that the employee has contributed to the Social Security System. The employer will reimburse paternity pay.
Colombian employment law gives employees five days of leave for bereavement in the case of the death of a parent or in-law, grandparent sibling, child, spouse or partner. This provision does not apply to adoption parents or children.
The employee’s company assumes all costs related to bereavement leave.
Colombian employment law gives employees the right to half-day of personal leave to vote in national and local elections. The employee must show the employer their voter card upon their return to work. Failure to do so will result is a deduction from their salary.
Leave for military service
Employees who are called up for military service are subject to their employment contract being deemed suspended. Colombian employment law states that an employee must allow the employee to return to the same job within 30 calendar days of their service being completed.
Depending on the service, military service in Colombia can last one to two years.
Trade union leave
Colombian labor law provides that employees have the right to take personal leave to serve on a trade-union committee. They can also take leave for other purposes of the trade union, but must give adequate notice to their employer. Their absence should not be detrimental to the business.
Colombian employment law imposes statutory contributions
Colombian employment law requires that all employees whose work contract is governed under labor regulations must be associated with the integral social insurance system, which includes:
- General pension system
- Social security and health
- General system of professional risk
Contributions are determined by the employee’s monthly salary, and capped at 25 times the monthly minimum salary. Your contributions are determined by your monthly salary. If you earn more that 25 times the minimum salary, your contributions will still be based on this cut-off.
The minimum monthly salary for 2021 was 908,526 Colombian pesos (approximately US 239.27 as of September 20,21). This means that the maximum amount on which contributions can base is 22,713,150 Colombian pesos (approximately US 5,981.79).
Contributions total approximately 28.5% of an employee’s salary, of which roughly three-quarters is assumed by the employer and the remainder deducted from the employee’s salary. That means contributions totalling roughly 20.5% of an employee’s salary must be borne by the employer, while roughly 8% will be deducted from the pay an employee receives.
These contributions are summarized as follows:
Contributions to the pension system total 16% of an employee’s salary, of which 4% is deducted from the employee’s salary and the remaining 12% provided by the employer.
Contributions to the health system total 12.5% of an employee’s salary, of which 4% is deducted from the employee and the remaining 8.5% provided by the employer.
Contributions to professional risks vary from 0.522% to 6.96% of an employee’s salary, based on the nature of the role being undertaken, and are borne entirely by the employer.
Employees who earn more that four monthly minimum salaries (3,634,000 Colombian Pesos or approximately US $956.65) must contribute an additional 1% to the national pension solidarity fund.
In the meantime, anyone earning more that 16 minimum monthly salaries per year (14.536,000 Colombian Pesos or roughly US $3.804.24) must make an additional contribution of between 0.2% – 1%, depending on their salary.
Employers are required to pay a 9% payroll tax for employees whose salaries exceed 10 minimum monthly salaries (9.085,260 Colombian pesos per person, or approximately US 2,392.67)
An integral salary includes all mandatory benefits, contributions, such fringe benefits and overtime. It does not include the paid vacation allowance (which is 15 days) or the 13th bonus.
The minimum integral income in 2021 will be 11,810,839 Colombian pesos (approximately $3.109.43). Pension system contributions for such contracts are based on the lowest figure between 70% and 25 minimum monthly salaries (22.713,150 Colombian Pesos or approximately US $5.981.79)
This means that anyone earning more than 32,447.357 Colombian pesos per person in 2021 (approximately US 8,541.08) will have to pay a contribution. The contribution is based on 25 minimum monthly salary.
Biz Latin Hub can help you do business in Colombia
At Biz Latin Hub, our multilingual team of corporate support specialists has the knowledge and expertise to support you doing busines in Colombia. Our extensive range of services includes company formationAccounting, tax advisory, and more hiring & PEOWe can offer customized packages of integrated back-office services and be your single point for doing business in Colombia or any other 17 markets in Latin America and the Caribbean, where we have local teams.
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This is a quick snapshot of Colombia’s employment law.