Definitive Guide to Hiring in Colombia

Hiring in Colombia

Hiring employees compliantly in Colombia Republic means doing it yourself or using an Employer of Record like Global Expansion. You should be careful using independent contractor agreements in Colombia so that you don’t run afoul of employment laws. To hire an employee compliantly and offer them mandatory benefits and compliant agreements, you can:

(a) Establish your own new legal entity, banking, accounting and payroll service in Colombia or

(b) use an Employer of Record like Global Expansion who can handle all of the details for you.

Labor Laws in Colombia

Employment laws in Colombia are uniquely suited to the country’s way of life, and crucial to understand if you want to employ local talent in this country. Get the details on Colombia's employment laws and Colombia policies here.

Employee Probation Period

Annual Leave in Colombia

Holidays in Colombia

Maternity Leave Colombia

Paternity Leave Colombia

Sick Leave in Colombia

• A worker is entitled to sick leave for up to 180 days (6 months) in case of some non-occupational disease.

Working Hours in Colombia

• In general, Colombia has a 48 hour working week. 
• Depending on the business, people work five days for about 9.6 hours per day, typically Monday to Friday, or six days for eight hours a day, Monday to Saturday.

Overtime in Colombia

• Overtime is limited to 2 hours per day and 12 hours per week.
• 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.

Termination of Employment in Colombia

• An employer may terminate their employment relationship with an employee without incurring liability if any of the justified causes established by law exist, which are mostly based on misconduct or poor performance. 
• A disciplinary process should be conducted before any termination with cause. 
• Terminations without cause are also valid but will trigger severance obligations.
• In a dismissal not for cause no notice is required, but the employee will be entitled to compensation (indemnification) for unilateral termination
• There are special cases where it is not possible to terminate an employment agreement without the authorization of the Ministry of Labor or a Labor Judge, even with just cause:

• Employees who are pregnant or on maternity leave (this protection extends to a father/domestic partner who is an employee when the mother is unemployed and included as her beneficiary with the social security authorities)
• Employees who are on health leave or have restrictions that substantially limit them to comply with their labor duties
• Employees who are less than 3 years away from complying with the requirements to obtain a retirement pension

• Also, union leaders cannot not be terminated unless a labor judge authorizes it and only for the just causes established in Colombian Labor Code and the company's policies and/or procedures
• At least 15 days' written notice is required in cases of poor performance. 
• In cases of misconduct or termination without cause, no notice is required, and such terminations can be effective immediately.
• For employees with a fixed term agreement, written notice is required at least 30 days prior to the agreement’s expiration.

Notice Period in Colombia

• At least 15 days' written notice is required in cases of poor performance. 
• In cases of misconduct or termination without cause, no notice is required, and such terminations can be effective immediately.
• For employees with a fixed term agreement, written notice is required at least 30 days prior to the agreement’s expiration.

Severance in Colombia

• Unilateral termination without cause is lawful but will trigger severance obligations.
• For employees with an indefinite term agreement, such indemnification would be calculated as follows:

• For employees earning less than 10 minimum legal monthly wages (in 2020 COP$8,778,030), the compensation is 30 days of salary for the first year of service and 20 days of salary for each additional year of service (proportional to the fraction of a year)
• For employees earning 10 minimum legal wages or more, the compensation is 20 days of salary for the first year of service and 15 days of salary for each additional year of service (proportional to the fraction of a year)
• For employees with a fixed-term agreement, the severance would be equal to the salary owed to the employee until the term of the agreement expires.
• In no case can severance be less than 15 days of salary.

Colombia Salary and Wages

13th/14th Month Salary in Colombia

• Yes (Mandatory)
• There is a statutory requirement to pay the 13th month salary.
• 50% is paid in June and 50% is paid in December.
• Employees may receive an integral salary instead of the 13th month, that includes: fringe benefits and potential surcharges, such as overtime for evening hours, Sunday hours, public holiday hours, and extra-legal bonuses.

• All persons employed in Colombia must make contributions to the social security system, consisting of general and special contributions. Contributions are calculated based on an employee’s earnings.
• A voluntary regime is available to self-employed and unemployed individuals. Participants in this regime are subject to a special quota.
• The social security system provides benefits to the participants, or their dependents, in the event of occupational accidents, sickness, retirement, and death, and so on.
• Social security contribution rates are as follows:-

Immigration Colombia

• A Visitor Visa is granted to a foreigner who wants to visit Colombia several times or remain temporarily there without establishing himself or herself in Colombia. 
• The validity of this visa can extend up to two years.

Visitor Visa for temporary services

• The Visitor Visa for temporary services is issued to the foreigners who wish to enter the country in order to provide temporary services such as specialized technical assistance, with or without an employment contract. 
• The validity of this visa is 180 days, with multiple entries. An individual can request a visa for a shorter period if his or her activity in Colombia will be for a shorter period. 
• It can be renewable. 
• The relatives of a holder of this type of visa may apply for a beneficiary visa.

A Resident Visa 

• It will be granted to a foreigner who wants to enter and/or remain in Colombia to establish himself or herself permanently in Colombia or establish his or her domicile in Colombia. 
• This visa is granted for five years. 
• A foreigner who holds a Resident Visa and leaves Colombia for two or more continuous years loses his or her visa. 
• A foreigner can stay in Colombia for the entire term of the visa. 
• A Resident Visa holder can perform any legal activity, including activities under an employment relationship or civil contract to provide services to an individual or corporation domiciled in Colombia.
• A resident visa is granted to the following individuals: -
  1. Returning Colombian
  2. A father or mother of a Colombian national by birth
  3. Has held a migrant (M) visa category 1 to 3 visa continuously and uninterrupted for two years
  4. Has continuously and uninterruptedly held for five years a M visa in category 4 to 11, which includes retirement, work and student visas
  5. Investment of over 650 times the minimum monthly wage in Colombia.

Value Added Tax (VAT) in Colombia

• The standard VAT rate for Colombia is 19%, with a reduced rate for basic foodstuffs; health services and insurance, a nil VAT rate for some goods.
• Exports of goods or services; tourism services for non-residents; some financial services and insurance; some agriculture supplies; electricity and natural gas supplies; medicines are all exempt.

 Payments And Invoicing

• The tax year is the calendar year. 
• Each year, the Colombian government establishes deadlines for filing income tax returns through the issuance of an Official Decree. 
• The tax-filing dates for individuals are between August and October of each year, according to the last two digits of the Colombian tax identification number. 
• Income tax liability on local employment income is generally satisfied by employers’ withholding of tax based on gross salary. 
• However, income tax returns for 2019 must be filed by employees or self-employed professionals if their gross assets exceed UVT4,500 or if their annual gross income exceeds UVT1,400. 
• Nonresidents do not need to file tax returns if tax is withheld from all income received during the year at nonresident tax rates. 
• If nonresidents receive income from which tax is not withheld, they must file tax returns and meet the filing deadlines. 
• The annual tax rate for nonresidents required to file a return is 35%. 
• Individuals who are required to file tax returns must calculate and pay advance tax for the following tax year in accordance with the applicable rules under specific circumstances. 
• Married individuals are taxed separately, not jointly, on all types of income.

Payroll Accrual in Colombia

Country Accruals Additional Information

Family welfare fund    

9 percent of monthly payroll. It is important to clarify that employers who were subject to the income tax for equity CREE (for its acronym in Spanish. This tax was eliminated from FY2017), are not subject to this contribution for the employees whose monthly salary is lower than 10 monthly minimum wages (COP8,281,160, for FY19.)

Payroll Accruals Additional Information

Accrued Benefits in Colombia

Why use Global Expansion to hire in Colombia

Establishing a branch office or subsidiary in Colombia can be time-consuming, expensive and complex. With such a robust labor market in place, one must pay great attention to detail when structuring employment because Colombia labor laws are complex.

The company also has a responsibility to comply with specific employment practices dictated by Colombia law to maintain its good standing as an equal opportunity employer.

Global Expansion makes it easy for you to expand into Colombia. We'll help you hire your candidate of choice, handle HR matters and payroll, and ensure that you comply with local laws without the burden of setting up a foreign branch office or subsidiary. In addition, you'll have complete control and direction over your employees.

We enable you to stay in control of everything. Our Colombia Global Professional Employer Organization (PEO) and Employer of Record (EOR) solution provides you with peace of mind to focus on running your company and the security to enter new markets.