Colombia

Colombia PEO & Employer of Record

WeHG provides an International PEO and global Employer of Record service in Colombia to companies willing to enter the Colombian market or hire local/expat employees in this country.

Traditional approach requires establishing a subsidiary in Colombia.  However our solution allows you to start the operations in Colombia within days hence save time and money.  WeHG would hire candidates on your behalf while you maintain full operational control of their work. So legally they would be our employees, on our local payroll, 100% compliant but will work on your behalf. 

Colombia fast facts

Population, million: 50,3
Land area: 1,141,748 km² 
Capital: Bogota
Local currency: Peso (COP)

Colombia (officially the Republic of Colombia) is a sovereign state largely situated in the northwest of South America, with territories in Central America. Colombia shares a border to the northwest with Panama, to the east with Venezuela and Brazil and to the south with Ecuador and Peru. It shares its maritime limits with Costa Rica, Nicaragua, Honduras, Jamaica, Haiti and the Dominican Republic. It is a unitary, constitutional republic comprising thirty-two departments. The territory of what is now Colombia was originally inhabited by indigenous peoples, including the Muisca, Quimbaya and the Tairona.

Hiring, Negotiating and Doing Business in Colombia

Necessity of written employment contract

For an employment contract to exist, the following elements must be present:

  • The employee must perform the work personally.
  • The employee continues to be subordinate with respect to the employer.
  • A salary that remunerates the employee for his services.

No special formalities are required.

However, fixed-term employment agreements must be agreed in writing. Otherwise, it will be implied that the agreement is for an indefinite term.

In addition, any special clauses should be agreed in writing, such as the:

  • Probationary period.
  • Salary.
  • Causes for fair termination (other than those specified by law).

Different forms of engagement: employment, contracting, work with private entrepreneur

Under Colombian law, individuals can provide the following categories of services:

Services under an employment agreement. An employment agreement is a contract under which a person agrees to render their personal services to an employer (an individual or a company). It is characterised by the employee’s subordination to the employer, and their receipt of periodical payments in exchange for the provision of services.

Services provided by Temporary Employment Agencies (TEAs). Temporary Employment Agencies are companies that provide personnel on a temporary basis to companies to assist in the company’s development. Even though the user company benefits from the services provided through “mission employees”, those employees are not dependent on the company using the services and have no relationship of subordination with the company. The provider is truly independent and autonomous in the performance of their services.

Outsourced services. Companies can receive personal services from employees by means of outsourcing. Where this is the case, the outsourcing company and the company to which the services are outsourced will complete a service agreement. For all legal purposes, the company which carries out the outsourced services is the sole employer, and is therefore responsible for all legal labour obligations with the employees that provide their services. The company to which the services are outsourced is not allowed to give orders relating to the mode, time or quantity of the work either to the company from which the services are outsourced, or to its employees.

Services from independent contractors. A company can execute a service agreement with an individual who works as an independent contractor. However, it must be clearly established that the performance of the contract will be carried out with technical and administrative autonomy, under the account and risk of the contractor, and therefore without a relationship of dependence or subordination to the hiring company.

Colombia Employment Contract

Employment agreements

Although not required, best practice is to put a strong written labor contract in place in Colombia as this document provides evidence of the labor relationship and the terms and conditions agreed upon by the parties. Additionally, there are certain provisions that are valid only if set forth in writing, such as provisions on the probationary period and the duration of the contract for a fixed rather than an indefinite term. An offer letter and employment contract in Colombia should always state the salary and any compensation amounts in Colombian pesos rather than a foreign currency.

This information is provided as generally accepted information and is not intended as advisory services.

Colombia working hours

Working hours are limited to 48 hours per week (eight hours per day), for a maximum of six days per week.

However, with authorisation from the Ministry of Labour, an employee can work up to 12 hours of overtime per week, provided employees are permitted to rest during Saturday.

Working hours are divided into either:

  • Daytime work. Work performed between 6.00 am and 10.00 pm. Overtime work performed during daytime hours is compensated at a rate of 25% higher than the employee’s normal daytime salary. Daytime overtime work is compensated with an additional salary of 25% for every extra daytime hour worked.

Night-time work. Work performed between 10.00 pm and 6.00 am. Night-time work should be compensated at a rate 35% higher than the employee’s daytime rate. Overtime work performed during night time is compensated with a 75% increase on the value of the employee’s daytime hour rate.

Vacation leave in Colombia

The minimum holiday entitlement per year is 15 days.

Colombia Maternity Leave

Female employees are entitled to maternity leave for a total 14 weeks. Two of these weeks must be taken before the expected date of birth and the other 12 weeks after the child is born.

Nevertheless, the female employee can choose to use only one week prior to the expected date of birth, and have 13 weeks after the child is born.

If there is a multiple birth, the mother will be granted two additional weeks of maternity leave. In addition, for a premature birth, the mother will be granted 14 weeks leave from the estimated date of birth. Therefore the mother will have 14 weeks leave in addition to the time taken prior to the expected date of birth.

Colombian Severance Laws

Under a fixed-term contract, the employer should notify the employee 30 days before the termination of the contract, to avoid its automatic renewal on the same terms. Additionally, under some of the clauses for termination with just cause, the employer is obligated to give 15 days’ notice prior to the termination of the employment contract (Article 70 of Decree 2351 of 1965).

Every employment relationship allows the parties to terminate the labour agreement unilaterally without cause and prior notice). However, if an employer unilaterally terminates an employment agreement, they must begin a disciplinary action to guarantee the employee’s right of defence and due process. If this process is not performed, it can be concluded that the contract was terminated without just cause and that the employer must pay the corresponding compensation.

If an employee is dismissed and the employer does not pay the employee the salary or benefit sums owed in due time, the employer must pay an indemnity which corresponds to one day’s pay for every day of delayed payment (for a period of two years from the day on which the right accrued). If the sums due are not paid within 24 days, by the beginning of the 25 day, the employer will be obliged to pay the current banking interest (19.33% for 2014) in addition to the default indemnity, until the sum is fully paid.

Colombia Tax

The rate of taxation on employment is between 0% and 33% and depends directly on:

  • The amount of the salary.
  • Other earnings received by the employee, including all fringe benefits (except for severance and the interest on the severance).
  • Whether the employee is considered as a tax resident or not.

Pension contributions: the employer contributes 12% of his salary and the employee contributes 4%.

Healthcare: the employer contributes 8.5% of his salary and the employee contributes 4%. Healthcare contributions are made to the SGSS.

Risk: the employer contributes between 0.348% and 8.7% of the total amount of the employee’s salary depending on the exposed risk. Contributions are made to the General Professional Risks System.

Employees earning more than four minimum monthly legal wages (MMLW) must make additional contributions to the Pension System which ranges between 1% and 2% of the employee’s salary (Law 797 of 2003).

Health Insurance Benefits in Colombia

Entitlement to time off

An employee is entitled to time off in the case of illness or injury, if he presents a medical certificate to his employer.

Entitlement to paid time off

According to decree 2943 of December 2013, employees that suffer from illness receive 66.67% of their salary from their employer for the first two days of absence from work. From the third day onwards (for a period not exceeding 180 days) compensation is received directly from the General Health Social Security System (Sistema General de Seguridad Social (SGSS)) for the same percentage of the salary.

However, the Social Security Risk System (Aseguradora de Riesgos Profesionales (ARP)) (that is, a subdivision of the SGSS) must pay the employee 100% salary for the period of absence from work, where the illness/injury either:

  • Due to a work-associated accident.
  • Results from a work-associated disease.

Additional Benefits in Colombia

It is very common for employers to provide additional health insurance in Colombia.

Colombia Holidays

Sundays and national holidays are mandatory rest periods. Employees are generally not obliged to perform services on these days but can still receive salary. The public holidays in Colombia are as follows:

  • 1 January.
  • 6 January.
  • 19 March.
  • 1 May.
  • 29 June.
  • 20 July.
  • 7 August.
  • 15 August.
  • 12 October.
  • 1 November.
  • 11 November.
  • 8 December.
  • 25 December.
  • Thursday and Friday of Holy Week.
  • The Ascent of Jesus.
  • Corpus Christi.
  • Sacred Heart.
  • Five religious holidays.

Public holiday entitlement is in addition to annual leave. If the employer requests the employee to work on public holidays, it must pay 150% of the rate for an ordinary working hour.

Why Choose WeHireGlobally

WeHG takes care of all the onboarding hurdles, payroll, compensation and benefits, tax filing, and termination of employment. Our Employer of Record solution allows you to manage your overseas teams efficiently while minimizing cost and risk.

 

FAQ Colombia

  • Colombia working hours

    Working hours are limited to 48 hours per week (eight hours per day), for a maximum of six days per week.

  • Colombia Holidays

    • 1 January.
    • 6 January.
    • 19 March.
    • 1 May.
    • 29 June.
    • 20 July.
    • 7 August.
    • 15 August.
    • 12 October.
    • 1 November.
    • 11 November.
    • 8 December.
    • 25 December.
    • Thursday and Friday of Holy Week.
    • The Ascent of Jesus.
    • Corpus Christi.
    • Sacred Heart.
    • Five religious holidays.
  • Colombia Tax

    The rate of taxation on employment is between 0% and 33% and depends directly on:

    • The amount of the salary.
    • Other earnings received by the employee, including all fringe benefits (except for severance and the interest on the severance).
    • Whether the employee is considered as a tax resident or not.

    Pension contributions: the employer contributes 12% of his salary and the employee contributes 4%.

    Healthcare: the employer contributes 8.5% of his salary and the employee contributes 4%. Healthcare contributions are made to the SGSS.

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