Employer Of Record in Colombia

We make it easy and painless to expand your business into Colombia. Forget about dealing with local regulations, confusing tax laws and international payroll management. We take care of all that so you don't have to.

Accelerate your growth into Colombia Compliantly and hassle-free

At Serviap Global we handle all employee onboarding, payroll, compliance, risk, mitigation and benefits, so you can focus on what matters most – your business.

How we can help you expand in Colombia

As your EOR in Colombia, we’d help you expand by hiring employees and running their payroll without establishing a local branch office or subsidiary. 

Your candidate is hired by a PEO in Colombia provider in accordance with local labor laws and can be onboarded in days instead of the months it typically takes. Shortly after, your new employee will be working for you, just like any other member of your team. 

Expand to Colombia with Serviap Global

Through our PEO and EOR services, you can hire qualified talent in your industry without the trouble of opening your own legal entity. 

In just a few days, you can easily and safely build a presence in Colombia, being sure that your staff will be hired in compliance with labor and tax regulations

Table of Contents

Quick Facts

Currency:
Colombian Peso (COP)

Capital:
Bogota

Payroll Cycle:
Bi-Weekly / Monthly

Language:
Spanish

Colombia Country Facts

Colombia is the third most business-friendly country in Latin America and is ranked 67 globally. This country has a consumer market of roughly 50 million, with rising incomes and demands. The overall economic and political stability, infrastructural development of the country has laid a solid foundation for foreign businesses to grow.

Facts to Consider Before Expanding Your Business

Before building your business expansion strategy, you need to know the economy, business laws, legal framework, and the working culture of Colombia. SERVIAP gives you high-level facts to understand the risks and opportunities of doing business in Colombia.

The Economy

Colombia has a pro-market economic system in which the prices of goods and services are determined in a free price system. The country is a member of the Andean Community (ANCOM), a free trade area with the objective of creating a customs union comprising the South American countries of Bolivia, Colombia, Ecuador, and Peru. Also includes 5 associate countries (Argentina, Brazil, Chile, Paraguay and Uruguay) members and 2 observer countries (Spain and Morocco). The service sector is the backbone of the Colombian economy with 57% of GDP, followed by manufacturing (27%) and agriculture (6%). Colombia exports petrol, coffee, coal and emeralds. Its trade is open, it has 15 major Fair-Trade Agreements in force.

The Importance of Small and Medium-Sized Companies

According to Colombian Confederation of Chambers of Commerce, there are 2.5 million SMEs in Colombia, and these account for roughly 80% of the country’s employment and 40% of its GDP.
Though traditionally, access to credit for SMEs is a challenging task, the banking sector in Colombia has taken a proactive interest in financing them. In 2017, half of the business lending went towards SMEs.
In December 2016, the government also brought about Tax Reforms which promoted competition in SMEs and benefitted them vis-a-vis larger firms.
 
Colombian Opportunities and Investments
Colombia provides adequate opportunities for foreign investors and entrepreneurial activity with its attractive sectors only expanding and multiplying as the economy continues to grow. Offering a safe and sustainable environment, with low corporate tax, worldwide free trade deals, and political stability for foreign investors that are looking for new opportunities abroad.
The economic and political stability is inspiring. It has allowed it to maintain steady and stable growth (growth that has never fallen below the 2% threshold since 2001, OECD 2017) and gradually create a business-friendly environment, despite internal security conflicts.
The country has an attractive emerging economy that relies in particular on abundant natural resources (coffee, oil, gold), a young, skilled and competitive workforce, a booming tourism sector and free trade agreements (including within the Pacific Alliance created in 2012 as well as with the European Union, the United States and South Korea).
Considering the geographical position of the country, it is a strategic and strong point between the different markets of the region but also with southeast Asia.
The peace agreement with the FARC (the oldest and largest guerrilla movement in Latin America) shows that Colombia wants to rid itself of the risks associated with drug trafficking and armed struggle, thus ensuring a secure environment for foreign companies and investors.
 
Characteristics of the Colombian population
  Colombia, like the other countries in the area, is a diverse region with varied and nuanced consumer behavior. To succeed in this market, SERVIAP will advise you about your customer, show you what your target audience wants, and adjust your strategy accordingly. Here are some key points:
Demographics As of 2020, Colombia is a country with a population of over 50 million potential customers and employees. Making it be the third-most populous country in Latin America, after Mexico and Brazil. Colombia experienced rapid population growth like most countries, but four decades of an armed conflict pushed millions of Colombians out of the country. However, a rebound economy in the 2000s improved the situation of living standards for Colombians in a traditional class stratified economy. This ethnically diverse country has a diverse cultural heritage from original people descending from the original native inhabitants, Spanish and European colonists, Africans originally brought to the country as slaves to 20th-century immigrants from Europe and the Middle East. Geography Colombia has a land size of 1,138,910 km2 (439,740 sq mi) and it is the 25th largest nation in the world and the fourth-largest country in South America (after Brazil, Argentina, and Peru). The geographical makeup of Colombia, with its treacherousness of the terrain and sheer variety of climates, made communication and travel very difficult and therefore helped foster regionalism. The population is not evenly distributed, and most of the people live in the mountainous western portion of the country as well as along the northern coastline, the highest number live in or near the capital city of Bogotá. The southern and eastern portions of the country are sparsely inhabited, consisting of tropical rainforest, and inland tropical plains that contain large estates or large livestock farms, oil and gas production facilities, small farming communities, and indigenous tribes with their territories. It has an abundance of non-renewable energy resources: petrol, coal, plenty of agricultural land and rivers which are now harnessing hydro-electric power. Its potential for hydroelectric power is the second highest in Latin America.

Consumer Preferences

Colombia has a land size of 1,138,910 km2 (439,740 sq mi) and it is the 25th largest nation in the world and the fourth-largest country in South America (after Brazil, Argentina, and Peru).
The geographical makeup of Colombia, with its treacherousness of the terrain and sheer variety of climates, made communication and travel very difficult and therefore helped foster regionalism.
The population is not evenly distributed, and most of the people live in the mountainous western portion of the country as well as along the northern coastline, the highest number live in or near the capital city of Bogotá.
 
The southern and eastern portions of the country are sparsely inhabited, consisting of tropical rainforest, and inland tropical plains that contain large estates or large livestock farms, oil and gas production facilities, small farming communities, and indigenous tribes with their territories.It has an abundance of non-renewable energy resources: petrol, coal, plenty of agricultural land and rivers which are now harnessing hydro-electric power. Its potential for hydroelectric power is the second highest in Latin America.

Economic Opportunities

Workforce and Laws After the pandemic, the Colombian unemployment rate has touched a high of 13%. Employment in Colombia is governed by the Labor Code, which applies to both domestic and international employers. When expanding to Colombia, make sure you have a local knowledge partner like SERVIAP to help you navigate the legal framework. Technological Ecosystem Colombians are educated, entrepreneurial and skilled – 62% of the Colombian population is part of the skilled workforce, and around 60% of the Columbian adults have entrepreneurial potential. Among universities, Business Administration and STEM are the key fields of study. The workers value tools and opportunities for growth and learning in their workplace the most. Technological ecosystem. Facilities for foreign investment In Colombia, the FDI is focused on infrastructure, agricultural industry, renewable energies and tourism and the government employs the same investment regulations on foreign investors that it does on national ones. Investments in Bogotá are particularly dynamic, with a focus on finance and communications, making it a leading business center in Latin America.

Colombian Culture

Like other countries in Latin America, Colombia has a traditional and family-oriented community. The Roman Catholic influence in the country has been a strong pillar for the society. Alongside, Colombian culture is a blend of its many and varied roots and there are many aspects to its customs and traditions that are unique to its shores. Music is a very important part of Colombian culture, with Cumbia and Vallenato enjoyed country wide. Shakira is famously from this Latin American country, as is Nobel Prize winner Gabriel Garcia Marquez, a famous figure in Colombian literature. Colombian art is often synonymous with Fernando Botero. It is common for a Colombia calendar to have up to 18 long weekends. Just like its neighbors, regional variations and traditions determine the culture of the people, and yet it offers a very rich potpourri of migrant heritage and history. When you go to Colombia, it is impossible not to be immersed in their dance, music and food.

General Highlights

Year 2022
Country Colombia
Capital Bogotá
Num. States / Province 32 Departments and 1 Capital District
Principal Cities Bogotá, Medellín, Cali, Barranquilla, Cartagena
Language Spanish
Local Currency Colombian Pesos (COP)
Major Religion Catholic
Date Format DD-MM-YYYY
Thousands Separator Format 999.999,00
Country Dial Code +57
Time Zone UTC -5
Population 48.25 Million
  Border Countries Northwest: Panama East: Venezuela and Brazil South: Peru and Ecuador
Continental surface 1,141,748 km²
Tax Year From the 1st of January to the 31st of December
VAT % 19%
Minimum Wage $ 877,802 COP
Tax Payer Identification Number Name in the country Single Tax Registration – RUT (Registro Unico Tributario)
Current President Iván Duque Márquez
Laws that Regulate Labor RelationshipsWhat you need to know about employing personal in Colombia
Laws that regulate labor relationships / Political Constitution of Colombia
Laws that regulate labor relationships Substantive Labor Code (CST)
Law 50 of 1990 (Amendment to the Substantive Labor Code
Law 100 of 1993 (Comprehensive Social Security System)
Law 1562 of 2012 (Occupational Risk System
Law 1610 of 2013 (Labor inspections and labor formalization agreements)
International conventions and treaties

Key Tax and Labor Authorities

Authorities
Tax and Labor Authorities / Comptroller General
Key Tax and Labor Authorities Public Ministry
Attorney General
Attorney General’s Office
Ministry of Finance and Public Credit
Ministry of Justice and Law
Ministry of Health and Social Protection

Labor Contracts

The employment contract is one by which a natural person undertakes to provide a personal service to another person, natural or legal, under the continued dependence or subordination of the second and through remuneration. All employers with at least ten workers must have 90% of the company’s workforce as Colombian citizens or residents. The remaining 10% may be foreigners with proper work permissions. National workers who perform the same functions as foreigners, in the same company or establishment, have the right to demand equal remuneration and conditions. The probationary period is the initial stage of the employment contract which is intended by the employer to assess the skills of the worker, and by the employer, the appropriateness of the conditions of work. The trial period must be stipulated in writing, and otherwise the services are understood to be regulated by the general rules of the employment contract. The trial period cannot exceed two months. In fixed-term employment contracts whose duration is less than one year, the trial period may not exceed one fifth of the term initially agreed upon for the contract. When successive employment contracts are concluded between the same employer and worker, the stipulation of the trial period is not valid, except for the first contract. During the trial period an employee may be terminated unilaterally at any time, without prior notice.

Types of Contracts

The labor relations may be for a fixed or indefinite period, a specific project, and/or may be subject to a part-time apprenticeship contract. In the absence of express stipulations to the contrary, labor contracts are assumed to be for an indeterminate period.
Indefinite Work Contract The contract of employment not stipulated to fixed term, or whose duration is not determined by the one of the work, or the nature of the contracted work, or does not refer to an occasional or transitory work, will be an indefinite term contract. The indefinite term contract will be valid if the causes that gave rise to it, and the matter of the work subsist. However, the worker may terminate it by written notice in advance not less than thirty (30) days, for the employer to replace him/her. Art. 47 CST
Temporary Work Contract This type of contract must be in writing and its duration cannot exceed three (3) years. Supports at least two modalities: the fixed-term contract less than one (1) year, which does not have a minimum term; and, the fixed term contract between one (1) and three (3) years that is renewable indefinitely. To terminate the contract, the employer must notify the employee no less than 30 days before the end of the contract term. Otherwise, the contract is assumed to be renewed. Work contracts of less than 30 days do not require any notice for termination. After these three (3) extensions, the renewal of the contract may not be less than one (1) year, in which case it may be renewed annually successively. Art 46 CST
Contract for Project or defined work The contract lasts as long as the commissioned work or job lasts. It is essential to expressly record the work or job in question. This type of contract is widely used in companies engaged in construction and should not be used for activities that frame a routine work. Art. 45 CST

Basic Requirements

The information that the contract must contain is established in the Article 10 of Work Code:
Name, nationality, age, gender, address of the worker and employer
If the work relationship is for work or time determined, by season, initial training or by time indeterminate and, if applicable, if it is subject to a trial period
The place or places where work should be provided
The duration of the day
The form and amount of the salary
Other working conditions, such as days of rest, vacations and other that agree the worker and the employer
According to the Substantive Labor Code, the three essential elements are: I.         Personal activity performed by the worker II.       Continued subordination or dependence of the worker on the employer III.     Remuneration of the service (salary) Art. 23 CST

Payroll

Salary The salary is the economic compensation received by the worker for their services to the employer. The salary is not only the ordinary, fixed or variable remuneration, but everything that the worker receives in cash or in kind as direct compensation for the service, whatever the form or denomination adopted, such as bonuses, value of the supplementary work or overtime, value of work on mandatory rest days, percentages on sales and commissions. (Art. 127 CST). The employer and the worker can freely agree on the salary in its various modalities as per unit of time, per work, or piecework and per task, etc., but always respecting the legal minimum wage or that fixed in the pacts, collective agreements, and judgments. arbitration (…) (Art. 132 CST).
Vacations The Ministry of Labor in Colombia defines work holidays as a paid rest period of 15 working days, continuous or consecutive, to which all workers who have worked during a calendar year are entitled. However, this vacation period of 15 working days, if the parties agree, may be divided, and the worker may take from six days at least a year and accumulate the remaining nine days for the following year (Article 190 of the CST) , for up to two years.(Art. 2.2.1.2.2.2 of Decree 1072 of 2015) Article 187 of the CST, determines: 1. The vacation period must be indicated by the employer at the latest within the following year, and they must be granted informally or at the
      Vacations request of the worker, without harming the service and the effectiveness of other staff members. 2.  The employer must inform the worker, fifteen (15) days in advance, of the date on which the vacation will be granted. 3.  Every employer must keep a special record of vacations, in which he will record the date on which he has entered the establishment each worker, the date on which he takes their annual leave and in which he terminates them, and the remuneration received by them.
        Christmas Bonus Every company must pay its employees as a service premium, a monthly salary for each year worked, or if the relationship is less than one year, the payment will be proportional to the time the worker has worked, whatever it may be. The service premium must be paid in two annual installments; the first by the last day of the month of June and the second during the first 20 days of the month of December, therefore, each payment corresponds to a semester. Art. 306 of the CST
                          Unemployment insurance and Interest They are a social benefit in charge of every employer, its purpose is a saving for the worker for: •          When they are unemployed •          To invest them in the payment of their studies, that of their spouse or partner or their children’s •          For purchase, improvement or release of liens from their home or from his/her spouse or permanent couple. The unemployment corresponds to one month of salary for each year worked or proportional to the time worked if it is lower. Interest on unemployment insurance A social benefit which is directly received by the worker without the intermediation of any third party and is not established for any specific destination, given that they are the financial recognition made by the employer for the withholding of money corresponding to unemployment payments during the year or in case of termination of the contract would be the time of service provision. ARTICLE 99. Regulated by Decree 1176 of 1991. The new special unemployment insurance scheme will have the following characteristics: 1.       On December 31 of each year, the unemployment insurance payment will be made, for the annuity or for the corresponding fraction, without prejudice to the one that must be made on a different date due to the termination of the employment contract. 2.       The employer will pay the worker the legal interests of 12% per annum or proportional per fraction, in the terms of the regulations in force on the traditional unemployment insurance scheme, with respect to the sum caused in the year or in the fraction that is definitively settled. 3.       The value settled by way of unemployment insurance will be recorded before February 15 of the following year, in individual account in the
Unemployment                              insurance and Interest name of the worker in the unemployment fund that he/she chooses. The employer who fails to meet the deadline must pay one day’s salary for each delay. 4.       If at the end of the employment relationship there are unemployment insurance balances in favor of the worker that have not been delivered to the Fund, the employer will pay them directly with the respective legal interests. 5.       Every worker may transfer their balance from a severance fund to another of the same nature. The Government will determine the procedure to be followed for this purpose. 6.       Unemployment Funds shall be administered by the companies whose creation is authorized, and whose characteristics shall be specified in the decrees issued by the National Government, in order to: A.      Guarantee a plurality of institutional alternatives for workers throughout the national territory; B.      Guarantee that most of the resources raised to be oriented towards the financing of productive activities. 7.       All the aspects that are not modified specifically by this Law, will continue to be regulated by the current regulations of the traditional regime relative to unemployment assistance.

Employers Contribution or Labor Cost

The employer contributions are the sums of money that the employer will be obliged to contribute to the state for having employees.
                                Social Security   Health EPS The contributions to health represent 12.5% of the value of the worker’s salary, of which the worker contributes the equivalent of 4% of their salary or income and the employer 8.5% of the worker’s salary.
      Occupational Risk Management ARL Occupational risks are the responsibility of the employer, where there is a class of risks: I.      0.522% II.   1.044% III. 2.436 IV. 4.350 V.   6.960
  Pension Contributions to pensions represent 16% of the value of the worker’s salary, of which the worker contributes the equivalent of 4% of their salary or income and the employer 12% of the worker’s salary.
    National Learning Service SENA It offers free training to millions of Colombians who benefit from technical, technological, and complementary programs that, focused on the economic, technological, and social development of the country, begin to increase the productive activities of companies and industry, to obtain better competitiveness and production. with globalized markets.
    Colombian Institute of Family Welfare ICBF It is the entity of the Colombian State that works for the prevention and comprehensive protection of childhood, adolescence and the well-being of families in Colombia, paying special attention to those in conditions of threat, non-observance or violation of their rights, Reaching more than 8 million Colombians with their programs, strategies and care services with 33 regional headquarters and 214 zonal centers throughout the country.
    Family Compensation Fund The Family Compensation Funds are a private, non-profit entity of economic redistribution and solidarity in nature. These were created to improve the quality of life of the families of Colombian workers, through the management and delivery of subsidies and services of a part of the social security contributions made by employers.

Workday, Holidays, Disabilities and Sick Days

ARTICLE 158. ORDINARY DAY. The ordinary working day is the one agreed upon by the parties, or in the absence of an agreement, the legal maximum of 48 hours per week. Night Shift by the mere fact of being night is remunerated with a surcharge of thirty-five percent (35%) on top of the value wages during the day. Extra or overtime work is the one that exceeds the ordinary working day, and in any case the one that exceeds the legal maximum. The maximum number of overtime hours that can be worked will be determined, which may not exceed twelve (12) per week, and the employer will be required to keep a daily record of supplementary work for each worker, specifying: their name. , age, sex, activity carried out, number of hours worked, indicating whether they are day or night, and the settlement of the corresponding over-remuneration. Extra-day work is remunerated with a surcharge of twenty-five percent (25%) on the value of ordinary day work. Extra-night work is remunerated with a surcharge of seventy-five percent (75%) on the value of ordinary day- work. The employer is obliged to give paid Sunday rest to all its workers. This break has a minimum duration of twenty-four (24) hours.
Type of Work Day Working hours per Day Over Time Sundays
  Day shift   06:00 AM – 9:00 PM 8 hour per day (48 hours a week)       Maximum 2 hours a day     75% extra is paid on ordinary salary and the
9:00 PM – 6:00 AM and 12 a week, 25% on worker can rest one day in
Night Shift (Paid 35% on day value / maximum work 36 hours a week) salary and night 75% on salary the week without deduction of salary or additional payment
Mixed Shift
All workers, both in the public and private sectors, have the right to paid rest on the following civil or religious holidays.
But the paid rest from January 6, March 19, June 29, August 15, October 12, November 1, Ascension of the Lord, Corpus Christi and Sacred Heart of Jesus when they do not fall on Monday will move to the following Monday on that day.

Public Holidays

Date Holiday Name
01/01 New Years
07/01 Wise men
25/03 San Jose Day
** Palm Sunday
** Holy Thursday
** Holy Friday
01/05 Labor Day
03/06 Ascension of the Lord
24/06 Corpus Christi
01/07 Sacred Heart of Jesus
20/07 Independece Day
07/08 Boyaca Battle
19/08 Virgen Mary
14/10 Day of race
04/11 All Saints
11/11 Cartagena Independence
08/12 Immaculate Conception´s Day
25/12 Christmas

 Employee Termination

The employment contract will end in the following cases:
 
On the employer’s side:
  1. Having suffered cheating on the part of the worker, by submitting false certificates for admission or tending to obtain an undue advantage.
  2. Any act of violence, insult, bad treatment or serious indiscipline incurred by the worker in their work, against the employer, their family members, the managerial staff or co-workers.
  3. Any serious act of violence, injury or bad treatment incurred by the worker outside the service, against the employer, the members of their family or their representatives and partners, workshop leaders, guards or wardens.
  4. Any material damage caused intentionally to buildings, works, machinery and raw materials, instruments and other objects related to work, and any serious negligence that endangers the safety of people or things.
  5. Any immoral or criminal act that the worker commits in the workshop, establishment, or place of work or in the performance of their work.
  6. Any serious breach of the obligations or special prohibitions that concern the worker in accordance with articles 58 and 60 of the Labor Code, or any serious fault classified as such in collective agreements or conventions, arbitration decisions, individual contracts, or regulations.
  7. The preventive detention of the worker for more than thirty (30) days, unless he is later acquitted; or the 19 correctional arrest that exceeds eight (8) days, or even for a shorter time, when the cause of the sanction is sufficient in itself to justify the termination of the contract.
  8. That the worker discloses technical or commercial secrets or discloses matters of a reserved nature, to the detriment of the company.
  9. The deficient performance at work in relation to the worker’s ability and average performance in similar tasks, when not corrected within a reasonable time despite the employer’s request.
  10. The systematic non-execution, without valid reasons, on the part of the worker, of the conventional or legal obligations.
  11. Any vice of the worker that disturbs the discipline of the establishment.
  12. The systematic reluctance of the worker to accept preventive, prophylactic or curative measures, prescribed by the employer’s doctor or by the authorities to avoid illnesses or accidents.
  13. The ineptitude of the worker to perform the work entrusted.
  14. The recognition to the worker of the pension of the retirement or disability being at the service of the company.
  15. Contagious or chronic illness of the worker, who does not have professional character, as well as any other illness or injury that makes him incapable for work, whose cure has not been possible for one hundred and eighty (180) days. The dismissal for this cause cannot be made until the expiration of said period and does not exempt the employer from the benefits and legal and conventional indemnities derived from the illness. In the cases of numerals 9 to 15 of this article, for the termination of the contract, the employer must give notice to the worker in advance not less than fifteen (15) days.
On the part of the worker:
  1. Having suffered cheating on the part of the employer, regarding working conditions.
  2. Any act of violence, ill treatment, or serious threat by the employer against the worker or members of their family, inside or outside the service, or inferred within the service by relatives, representatives, or dependents of the employer with the consent or the tolerance of this one.
  3. Any act of the employer or its representatives that induces the worker to commit an illegal act or contrary to their political or religious convictions.
  4. All the circumstances that the worker cannot foresee when concluding the contract, and that endanger their safety or health, and that the employer does not agree to modify.
  5. Any damage caused maliciously by the employer to the worker in the provision of the service.
  6. The systematic breach without valid reasons on the part of the employer, of its conventional or legal obligations.
  7. The employer’s requirement, without valid reasons, for the provision of a different service, or in places other than the one for which he was hired.
  8. Any serious violation of the obligations or prohibitions that concern the employer, in accordance with articles 57 and 59 of the Labor Code, or any serious fault classified as such in collective agreements or conventions, arbitration decisions, individual contracts or regulations.. The party that terminates the contract of employment unilaterally must inform the other, at the time of termination, the cause or reason for that determination. Subsequently, different grounds or reasons cannot be validly invoked. Art. 62 CST
Labor Termination Settlement
  1. If the contract was for the duration of the project, the time remaining for the completion of the work 20 without in any case less than 15 days.
  2. If the contract was a fixed term, the time remaining for the expiration of the agreed term.
  3. If the contract was for an indefinite term, there are several situations: A. Workers who earn less than 10 legal monthly minimum wages in force i. Up to one year of service = 30 days of salary ii. More than one years of service = 30 days of salary for the first year and 20 additional days for each year and proportionally by fraction of the year B. Workers with 10 or more minimum legal monthly salaries in force i. Up to one year of service = 20 days of salary ii. More than one year = 20 days of salary for the first year and 15 additional days for each year and proportionally by fraction of the year Ley 789 de 2002 y Decreto 2351

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