- Overview: Colombia
- Global PEO and payroll
- Global HR Compliance
- Work permit for hiring expats via PEO
- Expand without a company set up
- Contractor vs. employee: which is better?
Global HR Compliance in Colombia
If you hire international workforce, or plan to hire, then Hiring and Firing Workforce in Colombia Guide below will help you understand the nuances of labor legislation in the country.
There are two main reasons for companies hiring foreign workforce:
- Expanding into foreign markets to sell company product or products there. In this case, companies hire sales representatives who would exclusively represent their product in the target market and sell it to their local client base.
- Hiring the right foreign talent with a unique expertise, often related to IT sphere that cannot be found in the home country or that costs less compared to local specialist with similar skills.
After you have found the right candidate, the question is how to hire and provide compensation to this person so you as a business remain 100% compliant when working with global workforce. Another thing to consider is whether you want to keep the talent long-term and how you can do that.
If you need to hire foreign workforce in Colombia so you can expand there, then our Global Employer of Record solution may be of help. We help you legally hire and reward your foreign workforce by making them employees via a global employment outsourcing service. This is simple as employ your in-house workforce with the only difference that workers can live anywhere in the world and Acumen International would be their legal employer on your behalf. This means we would bear all employment risks, not you. Also, we manage bonuses, vacations, sick leave and can rent the office and a car for your foreign sales representatives if that is what you need.
With our solution, you can test new foreign markets before deciding whether you are going to get established there. You gain flexibility and expand with reduced costs, and easily withdraw from the unattractive countries.
We are experts in global workforce employment in Colombia, and our goal is to become your single provider. Instead of working with numerous local staffing agencies and legal advisors, Acumen International can solve your global business challenges and save you time, costs, and resources.
Our team of English-speaking professionals frees you from working through language nuances. Acumen International works 24/7 and can assist you whenever you need, regardless of time zones. Our goal is to create tailored labor solutions for you that are managed legally and in full compliance with the local employment laws.
With our knowledge and deep understanding of local nuances, you easily satisfy your need for skilled professionals in your global industry. With our qualified local partners, you can trust that your global workforce satisfies all local tax, social security, and immigration requirements in Colombia.
See the guide below for a general overview of labor rules and regulations in Colombia. Or contact us if you need to employ workers in Colombia or would like to get more details.
Hiring and Firing Workforce in Colombia Guide
# Employment Agreements
An employment contract in Colombia is called Contrato de Trabajo. It outlines the obligations for both the employer and the employee during the period of their working relationship. The governing body of work in Colombia is the Ministry of Labor (Ministerio del Trabajo). According to Colombia’s Labor Code (Código Sustantivo de Trabajo) employment contracts can be:
Open-ended contracts - permanent contracts (Contrato a término indefinido) on a verbal or written basis where there is no stipulated end date. The employer pays benefits, paid breaks and contributions, and is liable for severance pay.
Temporary contracts – casual contracts (Contrato temporal) verbal or written contract for temporary or casual jobs. This type of contract cannot be for more than one month / 30 days.
Fixed-term contracts (Contrato a término fijo) where a time limit is specified on the contract. This type of contract may not be for more than three years and must always be in writing form.
Contract extensions (Prórrogo de contrato) enable a fixed-term contract to be extended by mutual consent. This is automatically enacted if neither party informs the other of their wish to terminate the agreement. Usually the employer informs the employee of their decision not to renew a contract and must do so by giving 30 days’ written notice. Contracts can be extended indefinitely.
#Employment Termination and Severance Pay (Dismissal)
In Colombia, if an employee decides to terminate the employment agreement due to an intolerable work environment created by the employer, or any just cause for the employee, established in the Substantive Labor Code, he/she would be entitled to receive the mandatory severance payment; however, the just cause would have to be declared by a labor judge. Pursuant to Colombian labor law, if the employee disagrees with the type of termination, and wants the employer to pay him/her the legal indemnification payment, he/she has to claim and prove those rights before a labor judge.
An employer may dismiss an employee without cause by paying an indemnification. However, if the contract is terminated with cause, the employer is not obliged to pay indemnification. The Labour Code establishes an exhaustive list of serious misconduct or situations that may be considered causes for termination: These causes are related to:
- serious indiscipline or negligence
- acts of violence or bad treatment
- the employee discloses technical or commercial secrets or discloses matters of a reserved nature
- systematic poor performance
- any serious violation of special obligations or prohibitions in accordance with the law or any fault agreed as such by the parties
- the employee acquiring the right to a pension
The employee and employer can terminate the employment contract at any time, on mutual agreement. The mutual agreement means a written agreement reached between the Employee and the Employer. Both parties must agree with the contract termination and reach an agreement on conditions related to the termination, like employment contract ending date, payment of possible compensations, etc. To avoid later disputes, the termination of the employment contract on mutual agreement must be fixed in writing. Through mutual agreement, the parties aim to prevent any legal dispute regarding the execution or termination of the employment agreements. In other cases, in Colombia, if an employer terminates the employment relationship for just cause or if the relationship is terminated by mutual consent, the employer is not legally obligated to pay the employee severance payment.
Notice of termination prior to a dismissal is not required except in two cases, as follows:
- notice of termination must be given 30 days prior to dismissal when a fixed-term contract is not to be extended.
- a 15-day notice of termination is required when the contract is to be terminated because the employee acquires the right to a pension.
In both cases it is possible to pay the equivalent days of salary in lieu.
The severance payment is required only for a dismissal without a cause. It is calculated according to the years of service, term of the contract and the employee’s salary.
For employees with a salary below 10 minimum monthly wages, the indemnification amount is 30 days of salary for the first year of service plus 20 additional days for each of the following years of service or proportionally by fraction. For employees with a salary above 10 minimum monthly wages, the indemnification amount is 20 days of salary for the first year of service plus 15 additional days for each of the following years of service or proportionally by fraction.
The indemnification amount corresponds to salaries for the time remaining until the completion of the term, or of the term determined by the duration of the duty or the contracted work, in which case the indemnification will not be less than 15 days.
The probation period must be agreed in writing. Its length varies depending on the type of contract agreed by the parties, but cannot exceed in any case two months. For fixed-term contracts or definite period ones (i.e. employment contracts for completing a specific task or the occurrence of a specific event) the trial period cannot exceed a one-fifth part of the term initially agreed. When considering the existence of successive employment contracts, the parties cannot agree to trial periods, but for the first contract.
Colombia has extensive overtime requirements, including overtime premiums for hours worked in excess of the agreed work schedule. Employees considered exempt from such provisions are the trust and management personnel. In order to work overtime, the employer must previously request authorization to the Ministry of Labor and employers must keep a written record of the overtime work rendered by employees. An employee may not be required to work more than 2 hours per day as overtime, or more than 12 hours in each week.
Regular length of working time shall not exceed 48 hours a week and 8 hours per day. Employees in Colombia must have at least 1 paid day off every 6 days (usually Sundays). The Colombian Labor Code allows employees to work 48 hours per week distributed over 5 days in order to also have all Saturdays as a day of rest. Special shifts are permitted according to the needs of companies.
All employees are entitled to 15 working days of paid rest for each year of services. It can also be paid proportionally to the time during which the employee worked. Employees must take at least 6 continuous business days of vacations each year. The rest may be accrued or compensated in payment.
If an employee cannot work due to illness or an accident, a medical authorization from a Colombian Social Security entity must be obtained in order for the employee to get paid for the days during which the employee could not attend work. The employer pays sick leave during the employee’s absence (for an indefinite period) but, as from the third day of sick leave, the employer can claim the payment back from the social security system.
Employers are obliged to grant all pregnant employees 18 weeks of paid leave. For multiple pregnancies, pregnant employees are entitled to 20 weeks. Any employee requesting this leave is required to provide a medical certificate confirming: the pregnancy of the employee; the expected date of childbirth and; an indication of the day in which the employee shall begin to enjoy the leave.
A male employee is given 8 business days of paid paternity leave when his spouse or significant other gives birth or he adopts a child. Employers may ask the Insurance Health Entity (Entidades Promotoras de Salud, known as EPS) for the reimbursement of the paternity leave pay. The employee must present the Birth Certificate for the employer to be able to request reimbursement of the salary paid during the leave and for granting paid paternity, which must be submitted to the EPS at least within 30 days after the date of birth.
Acumen International can help you fast-track your possibilities of entering and expanding your business in Colombia by providing you with our Employer of Record services. Our unique mix of PEO/EOR solutions will enable you to jumpstart your global operations almost immediately, cost-effectively and compliantly without any need to set up a legal entity first or afterwards.