The Labor Law Legislation in Colombia is regulated by the National Constitution and the Labor Code (Código Sustantivo del Trabajo).
The following 8 considerations regarding Colombian employment law should be examined carefully before undertaking business operations.
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Colombian Employment Law – Foreign Workers
Foreign workers are subject to the same rights and regulations as Colombian workers, barring the right to join a union. Foreign workers must enter into a formal written contract with an employer and after one month’s service in Colombia foreign employees are obligated to make contributions to the pension scheme.
Both the employer and employee must comply with the procedures required by the Colombian Ministry of Foreign Affairs relating to the entry of the foreign person into Colombia, and the supervision of the foreign person’s stay in Colombia.
Companies registered in Colombia may employ foreign workers if they have more than 10 employees, but foreigners may only make up 10% of the general staff levels, and 20% of specialist/managerial positions. It is possible to apply for special authorization to the Colombian authorities to exceed this level. To be able to work in Colombia, foreigners must obtain a suitable visa, depending on the type of work they undertake. Individuals or companies who are interested in working in Colombia are recommended to employee the legal services of a professional company to ensure the visa process runs smoothly.
There are four types of employment contract in Colombia:
- Fixed term. This type of contact can be up to three years and is extendable indefinitely. If the employer does not wish to renew the contract, one months’ notice must be given.
- Short term. Used for casual employment; this engagement can be for no more than one month. Employees will not receive benefits such as health or life insurance, bonuses, or dismissal pay.
- Undefined length. All employment contracts whether written or verbal will be held to be of this nature unless otherwise agreed. There is no defined length of the contract.
- For a specific task. This must be a formally agreed written contract setting out the specific task and length required. In the absence of such an agreement the employment relationship would automatically be one of undefined length.
The standard working week in Colombia is 48 hours, which may be distributed over 6 days by prior agreement. The employee and employer can agree for extra hours to be worked, but overtime must be paid to regular workers (senior managers and key decision makers in the company do not have to be paid overtime).
The minimum wage for every year is decided at the end of the previous year, it is usually adjusted in accordance to the annual inflation rate. The minimum monthly fixed wage for 2016 is COP $689,455, approximately USD $230.
There is a fixed term of 15 days per year.
Social Security and Pensions
The Institute of Social Insurance (ISS) oversees Colombia’s social security payments, to which employers must pay into a common fund. The pension system is run by private pension companies. Employees contribute 25% of the payments and employers the remaining 75%. To ensure the correct social security and pension payments to employees, many companies choose to outsource their financial services.
Employers must pay 12.5% of employee’s salaries to the correspondent healthcare security fund, these funds in Colombia are mainly private organizations. 8.5% is covered by the employer and 4% by the employee.
Maternity and Paternity Leave
The statutory minimum maternity in Colombia leave is 12 weeks, which may be commenced 2 weeks before birth. Fathers may take up to 8 paid days for paternity leave if they have contributed more than 100 weeks of payments to the social security system.
Biz Latin Hub can assist you doing business in Colombia
At Biz Latin Hub, our multilingual team of corporate support specialists has the knowledge and expertise to support you doing business in Colombia. Our comprehensive portfolio of services, including company formation, accounting, tax advisory, and hiring & PEO, means we can provide tailored packages of integrated back-office solutions and be your single point of contact for doing business in Colombia, or any of the other 17 markets around Latin America and the Caribbean where we have local teams in place.
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