Colombia is a country which possesses a wide range of attractive investment sectors for foreigners; some of these include medical marijuana and emerald mining. To be able to take advantage of these opportunities, smart investors set up a local company in Colombia in order to execute their business plans.
In Colombia, labour law is extremely focused on the protection of employment rights. Therefore, there are a lot of legislative requirements with which employers need to comply. This can make it very hard and time-consuming for employers to find out their rights, and the costs involved with hiring and firing.
In this article, we explain everything that you need to be aware of when you engage in hiring an employee in Colombia.
Total Cost of an Employee in Colombia – Important Key Factors for Hiring an Employee in Colombia
- All employment contracts are governed by Colombian Law, regardless of the nationality of the employees
- All employees are legally obligated to contribute to the Integral Social Security System
- There are additional payments that are considered to be a part of the base salary according to Colombian Labor Law
Ordinary or Integral Salary?
The Colombian Labour law describes two types of salary. These two types are:
- Ordinary Salary: Where salary and contributions are paid seperatly
- Integral Salary: Benefits are included in the monthly salary of an employee
The employee and employer have to agree on the type of salary to be paid.
What Will an Employee Cost in Colombia?
In Colombia, the minimum monthly wage is set by a Governmental Decree or it is an agreed amount between the Colombian Government and labour unions. In 2018, the minimum monthly wage for employees in Colombia was COP 781,242 (approx. USD$269 at the time of producing this article).
Besides the minimum monthly wage, there are other additional costs to be paid as part of the base salary of an employee in Colombia. This means that the employer is obligated to pay these costs under the Colombian Labour Law. These include:
- Contribution to the Social Security System (i.e pension, healthcare)
- A monthly state tax contribution to the Instituto Colombiano de Bienestar Familiar (ICBF), Servicio Nacional de Aprendizaje (SENA) and the Caja de Compensacion Familiar (CCF)
- Work clothes 3 times a year (to employees who earn less than twice the minimum wage)
- Transportation allowance (COP$88.211)
- 13th-month salary
Other Employee Costs in Colombia
According to Colombian Labour Law, employees have the right to take paid time off:
- Vacation time: 15 days paid vacation per year
- Maternity leave: Women have the right to temporarily stop working 18 weeks prior to giving birth. Additionally, the father of the child also has 8 paid days leave
- Sickness: When an employee can’t attend work due to sickness or an injury, they are obligated to present a medical certificate to the employer. Employers are obligated to pay 66.67% of the salary for the first two days of absence. When an employee cannot work after those 2 days, they will receive a compensation from the General Health Social Security System
Looking for More Information About Hiring an Employee in Colombia?
Are you interested in setting up a business in Colombia? Do you want to know more about hiring employees here? At Biz Latin Hub we have a team of professional and experienced lawyers, who are experienced in Colombian labour law and would be happy to support you. Don’t hesitate to contact our CEO, Craig Dempsey via [email protected] for more personalised information.
Watch this video to learn more about company formation in Colombia.