Onboard, pay and manage employees in Colombia with Europortage
Europortage Colombia Employer of Record (EOR) solution makes it easy for you to hire your talent in Colombia
Our Colombia Employer of Record (EOR) Responsibilities:
✔️ Drafting locally compliant contracts
✔️Processing payroll accurately and on time
✔️ Providing an excellent employee experience
✔️Seamlessly handling global mobility
✔️ Paying your talent in local currency
Partner with an employer of record (EOR) is quite a game changer and can help you hire globally. The EOR will be the legal employer, which means they will handle employment contracts, onboarding process, compliance, benefits, payroll and more.
MINIMUM WAGE
For 2025, the Colombian national government set the minimum monthly salary at 1,423,500 COP pesos, effective January 1, 2025. In the following table we present the values to be paid monthly and daily, per hour and night shift:
| Amount | Description | |
|---|---|---|
| Monthly minimum wage | COP 1,423,500 | Normal working day: 48 hours per week / 8 hours per day. |
| Minimum daily wage | COP 47,450 | Ordinary daytime working hours: 8 hours a day |
| Min. hourly wage | COP 6,189 | Regular working hours from 6 a.m. to 9 p.m. |
| Minimum hourly nighttime wage | $9.478 | From 9 p.m. to 6 a.m. |
Payroll Frequency & Pay day
In Colombia there is no rule that regulates the frequency of payroll payments. Employment contracts stipulate the form and frequency of payroll payments.
If the payday falls on a Saturday, or Sunday, or on a Public Holiday, then the salary must be paid before.
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Payroll taxes
See below what are the employer costs in Colombia:
EPS - Healthcare contribution (8,5%)
EPS, also known as Entidades Promotoras de Salud is Colombia public health system. All legal residents in Colombia must register with EPS. Both employers and employees contribute towards this program.
Employers must provide this coverage for all permanent employees, and employer contributions equal 8.5% of an employee’s income.
AFP - Pension fund contribution (12%)
Employers are also required to pay pension fund contribution on a monthly basis.
ARL - Professional Risks Insurance (0,3% - 8,7%)
In addition, legal employers must pay Professional Risks Insurance. Contributions to professional risks insurance (known as ARL contribution) depends on the company’s risk classification.
SENA - Gov. Education Program (2%)
SENA, which stands for Servicio Nacional de Aprendizaje, is the institution in charge of professional training in Colombia. Servicio Nacional de Aprendizaje is financed by a mandatory contribution from organizations, amounting to 2% of the wage payroll.
ICBF - Family Health Services Tax (3%)
The ICBF is the organ in charge of the children and vulnerable young citizen protection. The employer must contribute to this fund for each employee hired
CCF - Employee Benefit Fund (4%)
Furthermore, the employer must contribute 4% of the employee’s base salary to the compensation fund.
Family Compensation Fund: entities that promote social policies and administer the family subsidy, in order to provide benefits to employees (Law 21 of 1982).
The company is free to choose the entity in which it will affiliate its workers.
Employee taxes
Residents of Colombia and individuals living abroad but earning income in Colombia are subject to tax on a monthly basis. Employees usually spend an average of 9% to 10% of their salaries on taxes and social security contributions.
Health care contribution (Salud Empleado) - 4%
Every employee whose work contract is governed by Colombian labour regulations must be affiliated to the integral social security system.
As such, for the mandatory health system, the employee should contribute 4%.
Pension fund contribution (Pensión Empleado) - 4%
In regards to the mandatory contribution to the pension system, the employee should contribute 4%.
Pension Solidarity Fund (Fondo de Solidaridad) - 1% to 2%
Employees who earn more than four minimum legal monthly salaries must contribute an additional 1% to cover the risks of workers with scarce resources. If the employee earn more than 16 minimum salaries, then the rate is 2%.
Income tax (Retención en la Fuente)
Employers in Colombia must withhold income tax (Retención en la Fuente) from their employees’ monthly salaries. This withholding works as an advance payment toward the employee’s annual tax obligation. The calculation is based on the employee’s monthly taxable income and follows a progressive tax scale.
Taxable income is determined after subtracting mandatory social security contributions (health and pension) and specific allowable deductions or exemptions from the gross salary. Common deductions and exemptions include:
Mandatory employee contributions to health and pension
Limited deductions for dependents
Limited deductions for mortgage loan interest
Limited voluntary contributions to pension funds
Limited voluntary contributions to health savings accounts
A general exemption equivalent to 25% of gross labor income (up to legal caps)
Monthly income tax withholding is calculated using a table based on Unidad de Valor Tributario (UVT) values. As taxable income crosses higher UVT thresholds, the corresponding marginal tax rate increases.
Retención en la Fuente Table for 2025 (Using Updated UVT Ranges)
| Taxable Income (UVT) | Approx. COP Range (2025) | Withholding Rate |
|---|---|---|
| 0 – 95 UVT | $0 – $4,731,000 | 0% (no withholding applied) |
| >95 – 150 UVT | >$4,731,000 – $7,470,000 | 19% on income exceeding 95 UVT |
| >150 – 360 UVT | >$7,470,000 – $17,928,000 | 28% on income exceeding 150 UVT |
| >360 – 640 UVT | >$17,928,000 – $31,872,000 | 33% on income exceeding 360 UVT |
| >640 – 945 UVT | >$31,872,000 – $47,060,000 | 35% on income exceeding 640 UVT |
| >945 – 2,300 UVT | >$47,060,000 – $114,538,000 | 37% on income exceeding 945 UVT |
| >2,300 UVT | >$114,538,000 | 39% on income exceeding 2,300 UVT |
Working hours
Article 161 of the CST, as amended by Article 2 of Law 2101 of 2021, states that the maximum duration of the ordinary workday is forty-two (42) hours per week, which may be distributed by mutual agreement between the parties in 5 or 6 days per week, always guaranteeing a day of rest.
Law 2101 of 2021 reduced the maximum working day from 48 to 42 hours per week. The gradual reduction began on July 15, 2023 and will end on July 15, 2026.
Learn more about Working hours in Colombia.
Overtime
Overtime is paid at 1.25 times the normal wage, while overtime on public holidays is paid at 1.75 times.
Mandatory benefits
Colombia has a well-defined legal framework that protects workers and ensures fair compensation beyond base salary. Because of this, employers operating in Colombia must understand both mandatory benefits required by law.
13th month salary (Prima de servicios)
13th-month salary is a mandatory benefit in Colombia.
The legal employer must pay the 13th month salary in two installments: the first half paid within the first 15 days of June and the other half paid within the first 20 days of December.
These will be pro-rated when a full year has not been worked.
Optional benefits
Employee mandatory benefits and conditions are legal rights. Then employer are not allowed to make change to the employment terms. However, the can add extra common benefits to attract and retain talents.
Note that depending on the company CBA, some non-mandatory benefits can actually be mandatory.
Private Health Insurance
Colombia’s social security system covers health insurance under a government plan.
Medical assistance is one of the benefits most valued by professionals. Then, employer can offer premium quality care through private health insurance to attract and retain talents.
Employer can offer their own plan or provide employees with stipends to subscribe to their own private health plan.
Meal vouchers
Even if meal voucher is not a statutory benefits in Colombia, it is a really common benefits. In general, the benefit is offered as a card with a cash value that can be used in the company’s canteen or in partner restaurants. Also, it enables the employee to buy food in grocery stores and supermarket. Today, food vouchers exist on reloadable chip cards similar to debit cards.
Learn more about 🔗Benefits in Colombia
Annual leave & Public holidays
As most of countries, every company and employer in Colombia grant paid time off to their employees. Employees acquires the days at a rate of 1,25 day for each month of work totaling up to 15 days for the full year of work the first year.
Check our complete article: 🔗 PTO in Colombia.
Public holidays
Public holidays
| DATE | HOLIDAY NAME | STATUTORY HOLIDAY |
| 01/jan | New Year | Statutory |
| 08/jan | Three Kings Day | Statutory |
| 25/mar | St. Joseph’s Day | Statutory |
| 28/mar | Maundy Thursday | Statutory |
| 29/mar | Good Friday | Statutory |
| 01/mai | Labor Day | Statutory |
| 13/mai | Ascension Day | Statutory |
| 03/jun | Corpus Christi | Statutory |
| 10/jun | Sacred Heart Day | Statutory |
| 01/jul | St. Peter and St. Paul’s Day | Statutory |
| 20/jul | Independance Day | Statutory |
| 07/ago | Battle of Boyacá Day | Statutory |
| 19/ago | Assumption of the Virgin Mary | Statutory |
| 14/out | Columbus Day | Statutory |
| 04/nov | All Saints Day | Statutory |
| 11/nov | Cartagena Independence Day | Statutory |
| 08/dez | Immaculate Conception Day | Statutory |
| 25/dez | Christmas day | Statutory |
Sickness and disability leave
Employees in Colombia are entitled to maximum 180 days of sick leave.
During the leave period, the employee is entitled to receive:
- Two-thirds (67%) of their earnings for the first 90 days
- Half (50%) of their earnings for the remainder of the sick leave
In Colombia, the employer must cover the cost of the first two days of an employee’s sick leave. From the third day until the end of the leave, payments are handled by the Colombian health system.
To qualify for these benefits, applicants must provide a medical certificate from social security confirming their inability to work.
Paternity and maternity leave
Female pregnant employee are entitled to 18 weeks of maternity leave. During that time, they receive their regular wage.
Male employees are entitled to enjoy a paid paternity leave of two weeks when the child is born.
Learn more about 🔗 Parental leave in Colombia.
Termination Requirements
Termination in Colombia demands strict compliance.
The process starts with identifying the legal reason for termination. Employers must document the cause clearly and communicate it to the employee in a transparent way.
Additionally, companies must calculate and pay all mandatory items on the final payroll. Employers must also ensure social security contributions are paid up to the last day worked. The settlement must be delivered immediately to avoid sanctions.
Because mistakes often trigger UGPP investigations, businesses must handle terminations with precision.
Termination notice period
Unlike many countries, Colombia does not use a universal notice period for most dismissals.
Severance
Severance pay (cesantías) is a core benefit in Colombia. Employers must calculate and pay it at contract termination:
Employees earn one month of salary per year of service. The amount is proportional for incomplete years.
- Employers must also pay 12% annual interest on severance, proportional to time worked.
If termination happens without just cause, the employer owes an additional indemnity.
Severance is highly regulated, and mistakes often lead to fines or labor claims. Europortage ensures accurate calculations and full compliance.
Check our complete guide on end of employment in Colombia.
Frequently Asked Questions (FAQ)
What are my options to hire workers in Colombia?
Companies expanding to Colombia usually have four hiring options:
1. Hire and pay from HQ: The worker stays in Colombia but is paid directly by the parent company.
👉 Cons: This may seem easy, but it’s not compliant long-term. Payroll and taxes can’t be managed correctly if the worker isn’t a tax resident of the HQ country.
2. Engage independent contractors: Workers register locally as freelancers and invoice your company.
👉 Cons: This is not compliant for full-time or exclusive work. Misclassification can trigger audits, fines, and back payments.
3. Create a local entity: You establish a subsidiary or branch in Colombia, register with tax authorities, and manage payroll internally.
👉 Cons: Complex, expensive, and slow. You’ll need legal representation, accounting support, and continuous regulatory updates.
4. Partner with an Employer of Record (EOR) in Colombia: An EOR like Europortage legally employs your workers on your behalf. We handle payroll, taxes, and HR compliance.
👉 Cons: Slightly higher monthly costs than internal payroll—but full compliance and speed make it worthwhile.
How long does it take to set up a company in Colombia?
Opening a local entity often takes 8–12 weeks.
You must:
- Register the company.
- Obtain the NIT (tax ID).
- Register with social security and pension entities.
- Set up payroll.
- Comply with monthly filings.
Because HR and payroll compliance in Colombia is complex, most foreign companies choose EOR services to avoid delays and risks.
Can I employ people as independent contractors in Colombia?
Yes, but only in very specific cases.
If the contractor:
Works full time,
Reports to a manager,
Follows a schedule,
Uses your tools,
Colombian law can reclassify them as employees.
This may lead to:
Back payments of severance and social benefits,
Social security debts,
Fines from the UGPP,
Legal claims for wrongful classification.
If you need long-term, full-time workers, hiring through Europortage as EOR is safer.
What does HR compliance mean in Colombia?
HR compliance involves respecting all labor, payroll, and social security regulations, including:
Maximum working hours and overtime rules
Mandatory benefits (health, pension, severance, bonus)
Payroll frequency and reporting
Vacation and leave entitlements
Termination procedures and severance calculations
Colombia has strict inspections from the Ministry of Labor and the UGPP.
Non-compliance leads to financial penalties, audits, and potential litigation.
How much does it cost to employ someone in Colombia
Employer costs vary from 30% to 51% above gross salary, including:
Health contribution (8.5%)
Pension contribution (12%)
Occupational hazard insurance (ARL)
Family compensation fund (4%)
Sena + ICBF contributions for large employers
Severance (cesantías)
Interest on severance
Service bonus (prima)
Colombia is cost-competitive, but compliance requires precise calculations.
What does “Employer of Record” mean in Colombia?
An EOR becomes the legal employer of your workers in Colombia.
Europortage:
Issues employment contracts compliant with Colombian law.
Runs payroll and manages taxes.
Registers employees with health, pension, and risk entities.
Manages benefits, leave, and onboarding.
Ensures full labor compliance.
You manage the employee’s day-to-day work.
Europortage manages everything legal and administrative.
Who pays and files employees’ taxes and social security in Colombia?
Europortage handles all employer obligations, including:
Health contributions
Pension contributions
ARL risk insurance
Family compensation funds
Withholding income tax
Mandatory payroll reports
Your role:
Transfer payroll funds before the cutoff date and manage performance and workload.
How does Europortage ensure compliance as an EOR in Colombia?
Europortage works with local legal experts and payroll specialists.
We ensure:
Compliant contracts
Correct onboarding
Accurate payroll and benefit calculations
Proper tax and social security filings
Updated processes aligned with local law
Protection against misclassification
Secure handling of employee data
We stay ahead of legal changes so you stay compliant automatically.
What are my legal responsibilities when using Europortage as EOR?
Your responsibilities include:
Managing the employee’s tasks, goals, and performance
Providing work tools and support
Respecting Colombian workplace guidelines (remote or on-site)
Funding payroll before the processing cutoff
Europortage handles everything else.
Do employees get all their rights and benefits under an EOR in Colombia?
Absolutely.
Employees hired through Europortage receive full statutory rights, including:
Health and pension contributions
Occupational risk coverage
Severance fund
Severance interest
Service bonus
Paid vacation
Paid leave
Protection under Colombian labor law
This ensures employees feel safe, supported, and fully compliant.
How to hire in Colombia
Employer of record
Partner with a Colombia employer of record (EOR) is quite a game changer and can help you hire globally. The EOR will be the legal employer, which means they will handle employment contracts, onboarding process, compliance, benefits, payroll and more.
Independent contractor
This solution might seem a good fit to reduce the cost of setting up an entity or hiring a full-time employee. Engaging a contractor can be a winning strategy in some cases and will depend of your business strategy and goals. For instance, it is a great solution when you need a talent for a short-term project.
Entity Setup
Establish a legal entity in a specific country will allow your business to operate legally in the country, hire, pay and manage your talents there.