Labor laws are the core of work relationships in Colombia, as they establish the rights and duties of employees and business owners operating in the country. This legal framework incorporates the guidelines and parameters set out by the International Labor Organization (ILO).
Furthermore, the Colombian labor code enshrines aspects related to the types of employment contracts, hours of work, vacations and other rules concerned to work activities.
Being aware of labor laws in Colombia is crucial when incorporating your business in the country,
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Overview: labor laws in Colombia
The Colombian labor code is the most important regulatory framework regarding labor laws in the country. This code is vital to understand all aspects of work relationships in Colombia, such as:
- Probation period: Employers can establish a trial period for employees of up to 2 months, in which they can choose to terminate the contract without having to pay any compensation.
- Working hours: The standard working time period in Colombia is 48 hours, which can be distributed over 6 days by prior agreement. Likewise, overtime work is paid differently depending on whether it is day or night work.
- Internal work regulations: Internal regulations are a set of rules that determine the working conditions of employees.
- Termination of contracts: The employee can end the employment relationship through a resignation letter. On the other hand, the employer can terminate a contract with or without cause. If the contract is terminated with cause, the employee is entitled to the payment of all accumulated labor benefits. However, if the contract is terminated without cause, in addition to the accrued employment benefits, the employee is also entitled to severance pay.
What are the types of labor contracts in Colombia?
According to labor laws in Colombia, there are different types of employment contracts, such as:
- Fixed-term contract: the duration of the contract is known to both parties; it can be established in months or up to a maximum of three years.
- Indefinite term contract: There is no defined duration of the contract. All employment contracts, whether written or verbal, will be of this nature unless otherwise agreed.
- Service contract: there is no employment relationship between the signing parties. It is purely contractual. The provider receives fees instead of a salary and will have to pay their own social contributions and provide proof of payment every month. However, the provider does not have to adhere to a work schedule, as the services are provided independently.
Social security in Colombia
According to labor laws in Colombia, the main contributions to social security include:
- Health coverage: In some cases, employers must enrol employees in a health care provider (EPS) and pay a contribution equal to 8.5% of salary. The other 4% must be paid by the employee.
- Pension coverage: It covers the financial needs of the employee in case of disability, retirement or death. The employer is in charge of a contribution equal to 12% of the salary, the employee is in charge of the other 4%.
- Professional risks coverage (ARL): It covers expenses related to work accidents. The employer must make a contribution equal to 0.5% of the salary.
Social benefits in Colombia
Social benefits are essential to understand the labor laws in Colombia. These are benefits that must be paid by the employer in addition to the regular salary. Note that these are required by law.
- Vacations: There is a fixed term of 15 days of paid legal leave per year for employees with an indefinite contract.
- Premium (Prima): In Colombia, the 13th salary or bonus payment is known as “Prima”. This is an additional one-month payment that each company must pay employees in addition to their regular salary; half of this payment must be made in June and the other half in December.
- Severance: The employee is entitled to be paid a monthly salary for each year of work or proportionally to the fraction of the year worked.
- Interest over severance: Compensation interest is the gain on the value of the accumulated compensation payment made up to December 31, which corresponds to 12% of the regular salary.
- Transportation Allowance: It is only granted for salaries equal or under 2 minimum legal monthly wage (minimum salary in Colombia for 2020 is COP$877.803).
Get support from a legal expert to comply with labor laws in Colombia
Although Colombia is one of the most attractive destinations to do business in Latin America, there may arise some complexities when expanding your business in the country due to legal and cultural regulations.
At Biz Latin Hub, our multilingual team of lawyers and professional accountants has vast experience with labor laws in Colombia and other Latin American countries. Our team of specialists are equipped to deliver excellence and support you with all legal requirements when hiring staff in the country. Contact us today to receive personalized assistance.
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