Hiring a workforce in Colombia
1. LABOR CODE
Colombian labor laws follow all the guidelines established by the International Labor Organization (ILO). Below, you will find the most important points to consider when hiring in Colombia.
Types of employment contracts
There are different types of contracts to enter into a work relationship between employees and a company:
- Indefinite-term contract: this is the most commonly used type as it is understood to be the nature of the agreement between the company and the employee unless otherwise stated. These contracts can be verbal or written.
- C Fixed-term contract: This contract type must always be in writing and its term must not exceed three years.
- Contract for the duration of a specific project or task: This contract type must always be in writing.
- Occasional, accidental, or transitory contract: This contract type is used for the execution of tasks other than regular company activities with a maximum duration of one month.
In Colombia there is a Legal Minimum Wage in Force (SMLMV) that is agreed upon annually between the government, employee labor unions, and employer unions, or is established by a governmental decree. The SMLMV for 2020 is COP 877,803 (approximately USD 225; USD 1 = COP 3,900).
In Colombia, the ordinary working day is a maximum of eight (8) hours a day and up to 48 hours per week. These hours may be distributed from Monday to Friday or Monday to Saturday. The day shift is from 6:00 a.m. to 9:00 p.m. and the night shift is from 9:00 p.m. to 6:00 am.
Companies must pay a 35% premium over the day shift hourly wage to night shift workers. Overtime must be paid as follows: for each hour of overtime during the day shift, employees must be paid 25% more than for a regular day shift hour; for each hour of overtime during the night shift, employees must be paid 75% more than for a regular day shift hourly wage. It should be taken into consideration that in any case daily overtime should not exceed two (2) hours for each day worked or 12 hours of overtime per week. These hours do not apply to positions of trust or those related to company management.
Finally, when hiring employees, companies must take into consideration other costs that are generated by virtue of the work relationship:
- Contributions to the social security system (Pension, health, and professional risks).
- Social benefits (Severance pay, interest on severance pay, service bonuses, transport and work footwear and clothing allowance, and family allowance).
- Quasi-fiscal contributions (payments to the Family Welfare Institute [ICBF, as per its acronym in Spanish], National Learning Service [SENA, as per its acronym in Spanish], and Family Compensation Fund).
For workers who earn less than ten (10) legal monthly minimum wages in force (i.e., USD 2,250 converted at a rate of COP 3,900 per USD 1) there is an exemption from SENA, ICBF, and health social security payments.
For more information on Colombian labor laws, please refer to chapter 5 of the Legal Guide for doing business in Colombia below: