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Hiring a Workforce
Labor Regulations
Labor regulation in Colombia complies with the guidelines set out by the International Labor Organization (ILO). The following information contains the most important aspects of Colombian regulations that must be taken into account when hiring personnel.
There are different types of contracts used by companies to hire personnel:
- Indefinite term contracts: a labor contract shall have indefinite duration, unless agreed otherwise It may be verbal or written.
- Fixed term contracts: these must always be stipulated in writing.
- Duration of the work contracts: these must always be stipulated in writing.
- Occasional, Casual or Temporary: This type of contract is celebrated for tasks are not part of the regular activities of a company and its term is of less than one month.
In Colombia, there is a Minimum Monthly Legal Wage (or SMMMLV for its acronym in Spanish) agreed annually between the government and labor unions or set by a governmental decree. For the year 2018, this monthly wage is equivalent to COP 781.242 or approximately USD 260 (USD 1 = COP 3,000).
In Colombia, the ordinary work day comprises of a maximum 8 hours a day and up to 48 hours a week, which can be distributed from Monday to Friday or from Monday to Saturday. The day shift runs from 6:00 a.m. to 9:00 p.m. and the night shift from 9:00 p.m. to 6:00 a.m.
For the night shift, companies must pay a 35% surcharge on top of the day-shift hourly wage. For overtime, the following rule applies: for the day shift, a 25% surcharge must be paid per extra hour; if there is a night shift, a 75% surcharge must be paid per extra hour on top of the day shift hourly wage. (In either case, it must be taken into consideration that overtime must not exceed 2 hours per day or a total 12 hours per week). Overtime is only applicable to positions not belonging to management, directors or high-ranking officials.
Finally, when hiring workers, the company must take into consideration other labor-related costs generated:
- Contributions to the Social Security System (pensions, healthcare, and work-related risks).
- Benefits including but not limited to severance payment assistance, interests on severance payments, annual bonus (1 month per every year worked), contribution for transportation, work clothes and footwear, and family benefits.
- State tax contributions (payments to the Family Welfare Institute Instituto de Bienestar Familiar, the National Learning Service Servicio Nacional de Aprendizaje, and the Family Compensation Fund Caja de Compensacion Familiar).
- For employees earning up to 10 monthly legal minimum wages (i.e. USD 2,604 at the exchange rate of COP 3,000 per USD 1), there is an exemption from payments to the SENA, ICBF and social security in health.
