Colombia is one of Latin America’s fastest-growing destinations for hiring. Its strong IT sector, young workforce, and innovation hubs such as Bogotá and Medellín make it a top choice for international employers.
If you hire directly, you must establish a legal entity, register with the Chamber of Commerce, complete tax registration with DIAN (Dirección de Impuestos y Aduanas Nacionales), and comply with the Labour Code. You also need to handle payroll contributions and ensure compliance with strict rules on contracts, benefits, and terminations.
An Employer of Record (EOR) service takes these tasks off your plate. You can hire quickly and compliantly without setting up an entity, while the EOR ensures every step is compliant.
Colombia: Employment laws at a glance
Currency | Minimum monthly salary | Working hours |
Overtime +25% daytime, +35% night; max 2 hours per day, 12 hours per week | Employer taxes | Public holidays |
Note: Some of the parameters (working hours, overtime limits) are more nuanced, and this table simplifies them. For more details, explore our Colombia employment laws guide.
What are the key considerations and challenges when hiring in Colombia?
When hiring in Colombia, companies face three major hurdles:
- Compliance: Employers must provide mandatory benefits like cesantías (severance) and prima de servicios (biannual bonus), follow strict termination rules, and contribute to social security, health, and welfare funds. Failure to comply can trigger fines and liabilities.
- Entity setup: Incorporation usually takes 4–6 weeks, but can stretch to 16 weeks or more with additional approvals (bank accounts, capital, etc.).
- Misclassification: Companies hiring from the US or UK may find Colombia’s misclassification rules significantly different. Failing to understand the legal distinctions between employees and contractors under Colombian law can result in legal risks, penalties, and back payments of social security contributions.
These challenges can stall your hiring and growth. But an EOR helps you avoid these hassles.
What is an EOR in Colombia?
An Employer of Record (EOR) is a partner that becomes the legal employer for your company in Colombia. It handles payroll, contracts, statutory benefits, and tax/social security contributions under the Colombian Labour Code (Código Sustantivo del Trabajo) while you manage the employee’s daily role and performance.
You avoid entity setup and complex obligations, such as cesantías, prima de servicios, and strict termination rules. Compliance is assured, and both setup and onboarding are fast and straightforward.
Typical hiring timeline:
- With an EOR: Typically 1–2 business days for local hires, longer if visas are required.
- With an entity: 6–8 weeks or more for incorporation, registrations, and payroll setup.
EOR vs entity: Cost savings and benefits
If your company wants to hire directly in Colombia, it can take months to set up and register. It also involves significant upfront costs. By hiring through an EOR, you sidestep these expenses entirely.
An EOR enables you to compliantly onboard talent in Colombia in days, without the burden of entity management or payroll administration.
Expense type | Direct entity cost | With EOR |
Company registration and notary fees | $1,000–$3,000 | No setup cost |
Legal and accounting advisory (setup) | $2,000–$5,000 | Included in flat fee |
Chamber of Commerce registration | $500–$1,000 annually | Included in flat fee |
Ongoing accounting and payroll vendor fees | $300–$600 per month | Included in flat fee |
Key legal risks you avoid when using an EOR: Beyond cost considerations, an EOR shields you from risks like contractor misclassification, tax penalties (from payroll errors), and employment disputes. This makes every step of the hiring process efficient, effortless, and stress-free.
Step-by-step: How Employer of Record (EOR) services simplify hiring in Colombia
Hiring in Colombia involves detailed requirements, encompassing contracts, payroll, and terminations. Let’s look at each stage of the process and see how an EOR simplifies it.
Step 1: Contracts and compliance
When hiring employees in Colombia, as per the Colombian Labour Code (Código Sustantivo del Trabajo), all employment contracts must be drafted in Spanish and include mandatory clauses covering probation, working hours, leave entitlements, confidentiality, non-compete agreements, and termination terms.
Colombian contract essentials (as per CST- Código Sustantivo del Trabajo)
Probationary period
| Termination notice
| Severance pay |
Contracts that fail to meet these requirements may be challenged and could expose employers to fines or disputes.
EOR helps you onboard faster: Your EOR can automatically localize employee agreements in compliance with Colombian law and language requirements, ensuring compliance from day one.
Watch how an EOR helps you onboard in minutes
Step 2: Payroll and compensation
Payroll cycle | Bi-weekly/monthly | |
Employer social security | ~16.5% | |
Tax year | Jan 1–Dec 31. Employers must file reports monthly | |
13th/14th salary | Colombia requires two mandatory “service bonuses”, each equal to half a month’s salary, paid in June and December. | |
Once you and your new hire have both signed the employment agreement, it’s time to set up payroll. Running payroll in Colombia means registering with DIAN, withholding income tax, and remitting monthly employer and employee contributions.
What are employer costs and mandatory benefits in Colombia?
Employer contributions add ~30% on top of gross salary, covering:
- Pension: 12%
- Health: 8.5%
- Labor risks: 0.52–6.96%
- Family Compensation Funds: 4%
- Family Welfare (ICBF): 3%
- SENA (integral salary only): 2%
Note: SENA (Servicio Nacional de Aprendizaje) is a national training and apprenticeship institution. Employers contribute to SENA as part of payroll taxes to fund worker education and skill development.
For a detailed breakdown, read our guide on employee benefits in Colombia or use our employee cost calculator to see the exact monthly cost of hiring in Colombia.
EOR simplifies payroll: An EOR will pay your Colombian employees in Colombian pesos (COP), withhold legally required taxes, and ensure you make all mandatory employee benefits, reducing administrative burdens while ensuring accurate and timely payroll.
Step 3: Managing leave, benefits, and holidays
Once you onboard an employee, you will have to track vacation accruals, register staff for health and pension, manage maternity/paternity leave, sick leave, and deposit cesantías (severance) into funds (OECD).
Annual leave | Public holidays | Sick leave
|
Maternity leave 18 weeks, fully paid | Paternity leave 2 weeks | Parental leave No separate entitlement beyond maternity/paternity |
An EOR ensures compliance: The EOR manages all statutory benefits and leave entitlements in Colombia. It automates cesantías deposits, administers maternity, paternity, and sick leave, and gives you the option to add perks like insurance or allowances to boost retention and employee satisfaction.
Step 4: Hiring foreign talent (Work visas)
When hiring foreign workers in Colombia, employers must act as visa sponsors through the Colombian Ministry of Foreign Affairs. Common work visa categories include:
- V-type visas: short-term stays or assignments.
- M-type visas: work permits for contracts longer than 3 months, valid up to 3 years.
- R-type visas: residency visas for long-term employment.
Visa sponsorship often takes weeks and requires detailed filings with Migración Colombia. Mistakes further delay onboarding or put the company at risk of non-compliance.
EOR simplifies Colombia work permits: The EOR sponsors the visa on your behalf, manages all paperwork, and ensures immigration compliance. As a result, you hire foreign talent quickly and effortlessly.
Step 6: Termination
Colombia does not recognize “at-will” employment. Employers must prove “just cause” for dismissal, provide termination letters in Spanish, and calculate severance (cesantías) plus accrued benefits. You may owe severance even in most just-cause cases, and wrongful terminations can lead to lawsuits or Ministry of Labor intervention.
An EOR makes terminations smoother: The EOR manages the entire exit process, from calculating severance and leave balances to filing paperwork in Spanish, ensuring every termination is compliant and legally defensible. This keeps your company agile and competitive by reducing bureaucratic hurdles.
Essentially, EOR services in Colombia handle every compliance touchpoint — from drafting contracts and running payroll to managing benefits, visas, and lawful terminations. Compared to other hiring models like staffing agencies, direct contractor agreements, or PEO vs EOR, an Employer of Record provides the most compliance assurance for long-term, scalable hiring in Colombia
But not all EOR providers operate with the same expertise, and you must choose this partner with care.
Key considerations when choosing an EOR in Colombia
Expanding into Colombia comes with both opportunities and complexities. The country’s dynamic workforce, mandatory benefits, and evolving labor regulations mean that employers must carefully evaluate EOR partners before hiring. The right partner should combine deep knowledge of Colombian employment law with seamless payroll and HR integration.
Employment in Colombia: Recap of key terms
- DIAN: This is Colombia’s national tax authority. Employers must register here to handle payroll tax withholdings and contributions.
- CST: The Colombian Labour Code, which governs employment contracts, benefits, terminations, and employer obligations.
- Cesantías: Mandatory severance funds that employers must deposit annually into a worker’s account. They are paid out when the worker leaves employment or in special cases like education or home purchase.
- Prima de servicios: This is a statutory bonus equal to one month’s salary, paid in two installments (June and December).
Multiplier combines global reach with local expertise. From compliant contracts and payroll to managing statutory benefits and terminations, the platform ensures you remain fully compliant with Colombian law while scaling your workforce quickly and cost-effectively.
Why choose Multiplier EOR in Colombia?
“At Trustwell, we’ve had an excellent experience partnering with Multiplier to support our global hiring and workforce management. The platform makes it simple to onboard employees quickly, manage payroll across multiple countries, and stay compliant with local regulations — all within an intuitive, user-friendly system. It has significantly reduced the complexity of managing our international operations.”
David. G, G2 Review
Expanding into Colombia can feel overwhelming given the compliance rules, registration requirements, and payroll contributions you must manage. Multiplier removes these barriers and helps you focus on building your team.
Here’s how Multiplier makes hiring in Colombia seamless for you:
- Hire quickly: Onboard employees in a matter of days instead of waiting months for entity setup. This speed gives you a competitive advantage in attracting top Colombian talent before your competitors.
- Stay compliant by design: Multiplier ensures automated contributions to cesantías, prima de servicios, pensions, and social security. You don’t have to worry about missed filings or penalties — everything is taken care of.
- Save costs and resources: You pay a single flat monthly fee per employee. There are no hidden vendor charges, no surprise legal bills, and no ongoing maintenance costs of an entity.
- Manage everything in one platform: From contracts in Spanish to payroll in COP, benefits, and leave tracking, everything is centralized. You get full visibility and control without juggling multiple vendors.
- Offer better employee experiences: Multiplier allows you to provide competitive benefits, locally tailored packages, and seamless onboarding experiences that help you attract and retain talent in Colombia.
Book a demo with Multiplier today and see how easily you can hire, pay, and manage employees in Colombia without the headaches of entity setup.
FAQs
Is it legal to use an EOR in Colombia?
Yes, hiring through an EOR is fully legal and allows companies to employ without setting up a local entity.
What employer costs does an EOR cover in Colombia?
It covers social security, pensions, health, labor risk, parafiscal funds, bonuses, severance, and statutory benefits.
Can an EOR in Colombia hire both locals and foreigners?
Yes, an EOR can legally employ local Colombian nationals and foreign workers (with proper work permits) under the same framework.
What types of leave and benefits are mandatory in Colombia?
Employees are entitled to paid annual leave (15 working days yearly), maternity leave (18 weeks), paid public holidays, “prima de servicios” (biannual bonus), severance, and social security benefits.
