Understanding Employee Rights and Labor Laws in Colombia: A Guide for Small Businesses

Businesses worldwide are increasingly relying on international talent sources because of the significant advantages and possibilities they offer. However, it is essential to comprehend and navigate the labor laws and employee rights in the country to maintain compliance and promote a positive work atmosphere. 

This guide aims to provide small businesses with an overview of key labor laws and employee rights in Colombia. 

1. Understanding Employment Contracts:

In Colombia, employment contracts can be classified into three main types: 

• Fixed-term Contracts: These are for a specific period, with a maximum duration of three years, renewable multiple times. 

• Indefinite-term Contracts: These have no specific end date and are used for long-term employment. 

• Temporary or Service Contracts: Used for short-term, specific tasks or projects. 

  
  

It's important to clearly define the terms and conditions in the contract to avoid any legal complications. 

2. Working Hours and Overtime 

The standard workweek in Colombia is 46 hours, typically spread over six days. Any work beyond this requires overtime pay, calculated at a higher rate: 

• Daytime Overtime: Paid at 25% of the regular hourly rate. 

• Nighttime Overtime: Paid at 75% of the regular hourly rate. 

Employers should keep accurate records of work hours to ensure compliance with these regulations. 

3. Minimum Wage 

As of 2024, the minimum wage in Colombia is COP 1,300,000 per month. Employers must also pay a mandatory transportation allowance for employees earning up to twice the minimum wage. This allowance is currently COP 162,000 per month. 

4. Employee Benefits 

Colombian labor law mandates several benefits for employees, including: 

• Health Insurance: Employers must contribute to the national health insurance system. 

• Pension Contributions: Both employers and employees contribute to the pension system. 

• Severance Pay: Employers must provide severance pay, which is equivalent to one month's salary per year of service. 

• Vacations: Employees are entitled to 15 paid vacation days per year. 

5. Social Security and Taxes 

Employers in Colombia are responsible for contributing to social security, which includes health, pension, and labor risks insurance. The contribution rates are as follows: 

• Pension: 16% of the employee's salary (12% by the employer and 4% by the employee). 

• Health: 12.5% of the employee's salary (8.5% by the employer and 4% by the employee). 

• Labor Risks: Rates vary based on the level of risk associated with the job, ranging from 0.348% to 8.7% of the employee's salary. 

  
  
  
  

6. Termination of Employment 

Termination of employment in Colombia must comply with specific regulations to avoid legal issues. Key considerations include: 

• Just Cause Termination: Employers can terminate an employee for just cause without severance. Just causes include serious misconduct or failure to fulfill contractual obligations. 

• Unjust Cause Termination: If termination is without just cause, the employer must pay severance based on the employee's length of service and salary. 

  
  

• Collective Bargaining: Employees have the right to form unions and engage in collective bargaining. 

7. Remote Work Considerations 

For businesses hiring remote talent in Colombia, it's essential to understand the implications of remote work laws: 

• Work-from-Home Policies: Employers should establish clear work-from-home policies, outlining expectations, work hours, and communication protocols. 

• Provision of Equipment: Employers may be required to provide necessary equipment and cover certain expenses for remote employees. 

8. Importance of Establishing a Business Entity 

To hire employees in Colombia legally, it's required to have a business entity in the country. Failing to establish a legal entity can lead to penalties and legal issues. This process can be complex and time-consuming for small businesses. 

Using a Global Employment partner (EOR), like Recruitable, is the best solution for small businesses.

An EOR handles all the complexities of employment, from compliance and payroll to benefits and termination, ensuring that your business remains compliant with local laws. Recruitable offers a comprehensive solution that covers all areas of employment, providing peace of mind and allowing you to focus on your business growth. 

Conclusion 

Hiring remote talent from Colombia offers numerous benefits for small businesses, but understanding and complying with local labor laws is essential. By familiarizing yourself with these regulations, you can ensure a smooth and legally compliant hiring process, fostering a positive and productive relationship with your Colombian employees.