Colombia Employer of record (EOR)
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Colombia Employer of record (EOR)
Europortage Colombia Employer of Record (EOR) solution makes it easy for you to hire your talent in Colombia.
An employer of record is a third party that act as the legal employer in the country, so you can hire your talent without having to setup a legal entity.
The employer of record (EOR) has extenseive knowledge and local expertise and takes care of all Colombia compliance aspects of employment, including payroll management, taxes, statutory employee benefits, employment contracts, severance pay and more.
The employer of record is responsible for:
✔️ Drafting local compliant contracts
✔️Process payroll accurately and on time
✔️ Provide the best employee experience
✔️Seamlessly handle global mobility
✔️ Pay 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.
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.
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 percent of their salaries on taxes and social security contributions.
Health care contribution (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 (4%)
In regards to the mandatory contribution to the pension system, the employee should contribute 4%.
Pension Solidarity Fund (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%.
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.
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.
Private Health Insurance Plans
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.
Minimum wage
For 2024, the Colombian national government set the minimum monthly salary at Ps. 1,300,000 pesos, effective January 1, 2024.
In the following table we present the values to be paid monthly and daily, per hour and night shift:
| Amount | Description | |
|---|---|---|
| Monthly minimum wage | $1.300.00 | Normal working day: 48 hours per week / 8 hours per day. |
| Minimum daily wage | $43.333 | Ordinary daytime working hours: 8 hours a day |
| Min. hourly wage | $5.416 | 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
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.
Payday
Employees are usually paid on the 15th and 30th of the month.
Payment requirements
Salary payment must be done on a local bank account.
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.
Overtime
Overtime is paid at 1.25 times the normal wage, while overtime on public holidays is paid at 1.75 times.
Annual leave & Public holidays
According to Article 186 of the CST, “workers who have rendered their services for one year are entitled to 15 consecutive working days of paid vacation”.
| 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.
In Colombia, employment contracts may be terminated by any of the parties at any moment with immediate effects and without it being necessary to mention the reasons that led to the termination.
Termination notice period
There is no minimum required notice period in Colombia.
Severance
Severance pay is required only for dismissal without just cause.
The amount of the severance payment differs in several factors such as seniority, type of contract and amount of the salary.
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.
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.
Use an Employer of record in Mexico
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.