Colombia offers many advantages to companies looking to hire new employees. The country has a large pool of highly-skilled workers, and the cost of living is relatively low. However, there are a few things to keep in mind when hiring in Colombia. In this section we’ll provide you with the basics of what to prepare when onboarding talents in Colombia.
Employee Contract
Public and Provincial Holidays
Leave Information
Basic
Both verbal and written contracts are accepted in Colombia. There is no requirement that the contract should be written in a specific language, and employers can choose between Spanish or English.
Probation Period
In Colombia, the probation period is up to 2 months.
13th Month Pay
Paying a 13th month pay or popularly known as “Primas” is mandatory in Colombia. It is equivalent to an employee’s average monthly salary and is divided into two parts. The employer must pay the first half within the first two weeks or 15 days of June and the second half within the first two weeks or first 20 days of December.
Employee Benefits
Employers in Colombia may provide the following benefits to their employees:
- Life Insurance.
- Supplemental Health Insurance.
- Higher Pension Plans.
- Accident Insurance.
- Company Cars.
- Fuel Subsidy .
- Grocery Subsidy.
Workers are paid once a month. Usually, payments are made at the end of the month. However, some industries are slowly implementing bi-monthly cycles, which allows them to pay their employees every 15th and the last day of the month.
The minimum wage for employees is 1,300,606 COP, including a mandatory transportation allowance of 140,606.00 COP.
Employees working for more than the regular 40 hours a week should be paid as follows: Overtime compensation is structured as follows: work performed before midnight incurs a 25% increase above the regular hourly rate, night shifts (9:00 pm–6:00 am) command a 35% boost, and for Sundays and Public Holidays, the compensation rises to 75% above the regular hourly rate.
Employer Payroll Cost:
| Type of Contribution |
Contribution |
| Health and Medical System |
8.5% |
| Pension System |
12% |
| Professional Risk System |
0.522% – 6.96% |
| Payroll tax |
9% (only applies to employees whose monthly income is higher than ten minimum monthly wages) |
Employee Payroll Cost:
| Type of Contribution |
Contribution |
| Social Security |
4.00% – 5.00% |
| Health and Medical Plan |
4% |
Employee Income Tax
Colombia follows a progressive tax rate:
| Annual Taxable Income |
Tax Rate |
| Not over 1,090 |
0.00 |
| 1,090 – 1,700 |
19% |
| 1,700 – 4,100 |
28% |
| 4,100 – 8,670 |
33% |
| 8,670 – 18,970 |
35% |
| 18,970 – 31,000 |
37% |
| 31,000 and up |
39% |
VAT
Colombia’s VAT for 2022 is 19%. However, specific services and goods are taxed at 0% and 5%.
Employment contracts in Colombia may be canceled at any time with immediate effect. The organization must disclose the rationale or grounds for termination, which must be communicated in writing. Once the termination contract has been authenticated and acknowledged by both parties, it must be delivered to the appropriate government authorities.
Full-time employees in Colombia must serve 30 days of notice period. The period can be reduced to 15 days’ in case of termination due to poor performance.
Severance pay
| Situation |
Severance pay |
| Employees earning less than 10 minimum wage per month |
30 days of salary for the first year of service + 20 days of salary for each additional year of service |
| Employees earning 10 minimum wage per month or more |
20 days of salary for the first year of service + 15 days of salary for each additional year of service |
| Employees with a fixed-term agreement |
Regular monthly salary until the agreement expires |
| Project-based employees |
Regular salary until the end of the project, no less than 15 days of salary |
Foreigners hoping to work in Colombia must first obtain a job offer from a local employer before applying for a visa. There are several types of visas that must be obtained at the Ministerio de Relaciones Exteriores offices in Bogota, here are two of the most common:
- M Visa (Migrant Visa) – 3 Years – Renewable
- R Visa (Resident Visa) – 5 Years – Renewable