Colombia
Before hiring
Before hiring employees in Colombia, there are a few important things you’ll need to know. Firstly, it’s important for employers to understand the unique income tax structure. Employee income is taxed in “units” and there’s a breakdown of units for each salary range.
As an employer in Colombia, it’s important to know that the probationary period differs between fixed-term contracts and indefinite contracts. For fixed-term, probation periods can be no longer than one fifth of the initially agreed employment term.
We know this might sound overwhelming—but it doesn’t have to be. A solution like Oyster eliminates the barriers for you. With Oyster, you can automate compliance across 180+ countries, easily managing HR and payroll—all in one, easy-to-use platform.
Get an overview of what you need to know when hiring in Colombia below.
At a Glance
CURRENCY
COP
OFFICIAL LANGUAGE
SPANISH
PAYROLL FREQUENCY
BI-WEEKLY / MONTHLY
EMPLOYER TAXES
25%
13th / 14th SALARY
Employees are entitled to a 13th salary equivalent to one month's salary.
Good to know
- In Colombia, employee income is taxed in "units.” One tax unit is equal to 35,607 COP.
- Employees are entitled to a 13th salary equivalent to one month's salary. This is generally split in two instalments and paid out half in June and half in December.
- Post-employment non-compete agreements are generally invalid and unenforceable in Colombia.
Employment in
Colombia
In Colombia, employees work eight hours daily, six days per week, and 48 hours weekly. However, the 8-hour daily limit does not apply to managerial and supervisory workers.
Overtime work is paid at 125% of the regular pay rate during the day and at 175% during the night. Overtime is limited to two hours per day and 12 hours per week.
In Colombia, the probationary period for fixed-term contracts is no longer than 1/5th of the initially agreed-upon employment term. For indefinite contracts, the probationary period is two months.
The notice period for dismissal of employees with fixed-term contracts is 30 days. But when the employee is dismissed for poor performance, the required notice is just 15 days. In the case of misconduct or dismissal with a just cause, no notice is required.
Post-employment non-compete agreements are generally invalid and unenforceable in Colombia.
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Paid time off
In Colombia, employees who have worked for at least a year are entitled to 15 consecutive paid days of annual leave.
Employees must take at least six annual leave days a year. Unused vacation days beyond this can be accumulated for a period of two years, based on prior agreement.
Employees are entitled to indefinite paid sick leave if they present a certificate authorizing their illness. Sick leave is paid at the rate of two thirds of an employee’s regular salary. It is paid by the employer for the first two days, and thereafter by the General Health Social Security System (Sistema General de Seguridad Social).
Employees are entitled to 18 weeks of fully paid maternity leave. This can be split into one week before and 17 weeks after birth.
Employees are also entitled to eight working days of fully paid paternity leave.
This is paid by the employer, who can claim payments back from social security.
Employer tax
In Colombia, an employer’s social contributions total 25% and include contributions to the pension fund, medical plan, labor risks, and family compensation funds.
Individual tax
The income tax structure in Colombia, including the breakdown of tax units, is as follows:
Income between 0-1,090 tax units: 0
Income between 1,090-1,700 tax units + 116 tax units: 19%
Income between 1,090-1,700 tax units + 116 tax units: 19%
Income between 1,700- 4,100 tax units + 788 tax units: 28%
Income between 4,100- 8,670 tax units + 788 tax units: 33%
Income between 8,670- 18,970 tax units + 2,296 tax units: 35%
Income between 18,970- 31,000 tax units + 5,901 tax units: 37%
Income above 31,000 tax units + 10,352 tax units: 39%
Employees also make social security contributions of 8%.
Termination of employment
For employees with fixed-term agreements, severance pay should be equal to the salary owed to them until the end of agreement period.
For employees with an indefinite term agreement, earning more than 10 minimum legal monthly wages (COP 8,778,030), severance pay is equal to 20 days of salary for the first year of service and 15 days of salary for each additional year of service (proportional to the fraction of a year).
Start hiring employees in
Colombia
Setting up a business entity everywhere you want to hire a new employee isn’t scalable—it takes too long and the legal fees are high. At the same time, understanding and adhering to the local labor laws and employee expectations can be complex and time consuming. And it’s hard to find reliable information on up-to-date employment information for all the countries where you’re considering hiring. Not to mention tracking down invoices and managing employee contracts over email and spreadsheets—that gets messy fast.
We can’t afford to take risks when it comes to compliance—we need to make sure we follow the local guidelines, especially when it comes to taxes and legalities.
With Oyster, you can manage HR and payroll, and automate compliance across 180+ countries—all in one, easy-to-use platform.
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