Cesantías (Statutory Severance Savings) in Colombia
If you are employed in Colombia, you have a legal right to cesantías, officially known as statutory severance savings. This benefit acts as a financial safety net during periods of unemployment or specific life events.
At first glance, the system may seem complex. However, once you understand how it works, the rules are clear and predictable. For employers, cesantías represent a mandatory payroll obligation that requires careful planning and compliance.
This guide explains how cesantías in Colombia work, how they are calculated, when they are paid, and how employees can access them.
What Are Cesantías in Colombia?
Cesantías are a mandatory employment benefit under Colombian labor law. The term comes from cesar, meaning “to stop working.” Their purpose is to provide financial support when an employee leaves a job or faces temporary unemployment.
In international terms, cesantías are best described as statutory severance savings. Employers fund them throughout the employment relationship, similar to social security or pension contributions.
All employees are entitled to cesantías, regardless of:
Contract type
Contract duration
Whether the contract ends early
How Do Cesantías Work?
The calculation rule is simple.
For every 12 months of employment, the employer must contribute the equivalent of one monthly salary to the employee’s cesantías.
If employment lasts less than a year, the amount is proportional.
Example
If an employee works 4 months, the employer must contribute:
4/12 of one monthly salary, plus
The corresponding interest on cesantías
This right applies even if the contract ends before completing the full term.
Interest on Cesantías
In addition to the principal amount, Colombian law requires employers to pay interest on cesantías.
The rate is fixed:
12% per year, or
1% per month
For example, if an employee works four months, the employer must pay 4% interest on the accrued cesantías.
Employers usually pay this interest directly to the employee, separate from the cesantías fund deposit.
Which Salary Elements Count for Cesantías?
Only income classified as salary applies.
Included:
Base salary
Fixed salary components
Excluded:
Housing allowances
Transportation allowances
Non-salary bonuses
Clear contract wording is essential. Misclassification may lead to audits or labor claims.
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When Are Cesantías Paid or Deposited?
The payment method depends on the contract structure.
- Contracts Ending Within the Same Calendar Year: If the contract starts and ends within the same year, cesantías are paid directly in the final settlement (liquidación).
- Indefinite or Ongoing Contracts: If the contract continues into the next year, then the employer deposits the cesantías into an authorized cesantías fund by February. The employer pays the interest separately, usually in January. The deposited funds continue to earn interest until withdrawal.
How Can Employees Withdraw Cesantías?
Employees may access their statutory severance savings in several situations.
Automatic Withdrawal
Employees may withdraw cesantías when:
Employment ends
A contract expires
Early Withdrawal While Employed
Early withdrawals are allowed for specific purposes:
Purchasing a home
Home improvements
Undergraduate or postgraduate education
Employees must present supporting documentation to the fund.
Leaving the Funds Invested
Employees may leave the funds untouched. The balance continues to earn interest. After August, funds usually move from short-term to long-term investment accounts automatically.
How Do Employees Receive the Money?
Employees must contact the cesantías fund holding their savings. This can usually be done online or in person.
The fund may request:
Bank account details
A termination certificate
Proof of housing or education expenses
Once approved, payment is typically processed within a few business days.
Why Cesantías Matter in Colombia
Cesantías provide financial protection to employees and stability to the labor market. For employers, they represent a core compliance obligation that must be integrated into payroll operations.
International companies often underestimate cesantías. However, errors can be costly
How Europortage Supports Cesantías Compliance
Managing cesantías (statutory severance savings in Colombia) requires local expertise and precise execution. Europortage supports companies with:
Payroll management
Cesantías and interest calculations
Employment contract compliance
Termination settlements
Our local teams ensure full compliance with Colombian labor law.
Contact Europortage to manage cesantías in Colombia with confidence and accuracy.
FAQ
Are cesantías mandatory in Colombia?
Yes. Cesantías are mandatory statutory severance savings under Colombian labor law. All employees are entitled to them, regardless of contract type or duration.
Who pays cesantías in Colombia?
The employer pays cesantías. Employees do not contribute. The employer must also pay the mandatory interest on cesantías.
How much are cesantías in Colombia?
Cesantías equal one month of salary for every year worked. If the employee works less than a year, the amount is calculated proportionally.
When must employers deposit cesantías?
Employers must deposit cesantías into an authorized fund by February of the following year. Interest must be paid directly to the employee, usually in January.
Can employees withdraw cesantías while still employed?
Yes. Employees may withdraw cesantías early for housing-related expenses or education costs. Supporting documentation is required.
Do allowances count toward cesantías?
No. Only income classified as salary counts. Non-salary benefits such as housing or transportation allowances are excluded.
What happens if an employer fails to pay cesantías?
Failure to pay or deposit cesantías may lead to labor claims, fines, and back payments. Authorities treat this as a serious compliance breach.
Are cesantías paid when employment ends?
Yes. If the contract ends before the annual deposit, cesantías must be paid directly in the final settlement (liquidación).
