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Starting a Business In Colombia

Employment Law/ Labor Laws In Colombia

The Republic of Colombia is located in South America, with Brazil, Ecuador, and Panama as their neighbors. Among its neighbors and other countries in Latin America, it is one of the notable economies, with most of the GDP flowing from popular industries such as textile, food processing, chemicals, shipbuilding, fashion, etc. 

Most reports place Colombia in the upper-middle economy segment with a moderate cost of living, hinting towards an affordable hiring alternative to many countries. A high literacy rate of 95.64% adds to the abundant talent availability. 

For evident reasons, international and mid-sized businesses have always liked hiring talents from Colombia. As a result, the government has improved its rules to accommodate and provide a friendly business environment. It has allowed Colombia to achieve the 67th position in the ease of doing business rankings. 

This guide briefly highlights the primary rules and regulations, which can help employers cut down the labor law learning curve while complying with it professionally. 

Who Is Covered by the Colombian Labor Law?

The labor code in Colombia protects its citizens and foreign nationals when certain conditions are met. By default, every resident Colombian working in a national or an international company is covered by Colombian labor law. Foreign companies that hire employees from the mentioned country must follow the applicable labor code.

Foreign residents can enjoy the same rights as Colombian employees when employed by a company registered in Colombia. The Ministry of Foreign Affairs moderates the process. 

The only exception to the labor code in Colombia is when an international company employs a citizen and the employment contract is executed outside the country’s jurisdiction. 

Employment Contract

Colombia enforces the requirement of an employment contract that records all the terms and conditions in compliance with the labor code in Colombia. Primarily there are three types of employment contracts. 

  • Fixed-term contract: It is an employment contract with a predetermined expiry date. The termination date is mutually agreed upon and known by both parties. Such agreements have termination dates starting from a few months to three years. 
  • Indefinite term contract: Such contracts have no pre-determined service expiry or termination date. 
  • Service contract: These contracts are based on the deliverables of specific results or services within a particular tenure. A service contract does not promote employment, and the contractor is reimbursed with a service charge instead of a salary. In such agreements, employers are exempt from contributing to social security or other taxes. 

Key Provisions of the Act

The labor regulations in Colombia are primarily derived from the Código Sustantivo del Trabajo, 1951. It is commonly termed the Substantive Labor Code, which was last amended in 2021. The labor code in Colombia also encompasses multiple laws, like the Decree 2943 of 2013, Decree 1406 of 1999, Law 50 of 1990, Law 1822 of 2017, Law 1846 of 2017, and Law 2101 of 2021. 

Working hours

  • The Colombian labor law enforces 8 hours a day and 48-hour work week as a maximum, excluding overtime. 
  • Employers can raise the maximum weekly work hour to 56 hours, including overtime, depending on the nature of employment. 
  • For successive shifts throughout the day, employers must ensure that each shift is equal to or less than 6 hours. 
  • Companies are allowed to break down the working hours into flexible shifts. These shifts should be more than 4 hours for continuous work.  
  • Per the labor regulations in Colombia, overtime work should be less than 2 hours daily and 12 hours weekly. 

Holiday entitlements

Working citizens covered by the labor act rules in Colombia are entitled to certain leaves, rests, and holidays, as underlined below. 

  • Rest breaks during work
    1. Employers must provide at least two rest breaks. These breaks are not added to the working time. 
    2. Companies that employ more than 50 workers must allow 2 hours of a rest break every day. 
  • Employing companies must provide 24 hours of continuous rest every week. Employees can negotiate and get an additional rest day on Saturday. 
  • Sunday is a mandatory paid rest period. However, an employer can determine a different rest day based on their agreement with the employee. 
  • Employees are entitled to 15 days of consecutive holiday after a year of continuous employment. 
  • Private companies must provide 15 days of consecutive holidays for every six months of continuous employment. 

Under the labor act rules in Colombia, employees are entitled to 18 public holidays, as listed below.

    1. New year’s day, 1st January
    2. Epiphany, 6th January
    3. St. Joseph’s Day, 19th March
    4. Holy Thursday, the date announced by the government.
    5. Good Friday, as announced by the government
    6. Labor day, 1st May
    7. Ascension of the Lord, as announced by the government
    8. Corpus Chisti, as announced by the government
    9. Sacred Heart of Jesus, as announced by the government
    10. St. Peter and St Paul, 29th June
    11. Independence day, 20th July
    12. Battle of Boyaca, 7th August
    13. Assumption of Mary, 15th August
    14. Columbus day, 12th October
    15. All Saint’s day, 1st November
    16. Independence of Cartagena, 11th November
    17. Feast of Immaculate Conception, 8th December
    18. Christmas, 25th December

Leave schemes

Employees are allowed to take up specific leave schemes under particular circumstances. 

Maternity leave

  • The Colombian paid maternity leave for covered employees is 18 weeks under normal circumstances. 
  • The compensation for maternity leave is equal to the negotiated monthly salary. 
  • Pregnant employees can start maternity leave one week before the expected delivery date. The total postpartum break is 17 weeks in such cases. 
  • The maternity leave can be extended to another two weeks during multiple births. 
  • Premature delivery allows a mother to take two additional weeks of maternity leave on top of 17 weeks of postpartum leave. 
  • Female employees are also guaranteed two rest breaks of 30 minutes each for breastfeeding every day during work. 

Paternity leave

  • A working father is allowed 2 weeks of paid paternity leave in case of childbirth.
  • The remuneration is covered by the Employee’s Health Insurance Company.

Shared parental leave

  • Parents working in the same company can distribute their leave’s last six weeks. 
  • The first 12 weeks of the paid maternity leave are non-transferable. 
  • The remuneration in the shared parental leave is calculated on the payment of the employee who has taken the break. 
  • Parents must provide corresponding proof before opting for shared parental leave. 

Bereavement leave

  • Employees are entitled to a five-day bereavement leave in the event of a relative’s death.

Paid leave

  • Employees can enjoy 15 days of consecutive off after serving a company for a year. 

Minimum wage

  • Per the latest provisions and changes, the minimum wage as of January 2023 is COL$ 1,300,606.00

Pension Fund

The pension fund is divided systematically into several mandatory and non-mandatory schemes. The governing bodies and the rules for each category vary per the labor regulations in Colombia. 

  • State pension: It is a mandatory pension scheme for every working employee covered by the labor code in Colombia.
    1. The General Pension System, or the Sistema General de pensiones (SGP), is the governing body for the state pension.
    2. Employers must ensure that their employees are affiliated with the SGP.  
    3. Employers must deduct 4% from an employee’s monthly remuneration and pay it to the SGP.
    4. In case the salary of an employee is higher than four times the sanctioned minimum wage, employers must deduct an additional 1% or 2% from the paycheck. 
    5. SGP contributions are non-taxable by the government.
  • Supplementary pension: Employees are allowed to have supplementary pensions.
    1. Per the Legislative Act 01 of 2005, an employee can select supplementary pension plans that the General Pension System regulates. 
    2. Employers are exempted from withholding and paying the premium from an employee’s salary. 
    3. Employees can also opt for savings account schemes, where the money is debited after retirement.

Payroll Tax

The employer contribution in Colombia varies between 21.02 to 27.46% depending on several factors. A breakdown of various tax slabs has been provided below. 

  • 12% for pension fund
  • 8.5% for medical plan
  • 0.52% to 6.96% for labor risks, slab varies per the determined risk level of a job
  • 4% for Family Compensation Funds
  • 3% for Family Welfare (ICBF)
  • 2% National Apprenticeship Service or the SENA

On the other hand, employees must pay 8 to 9% monthly for pension and medical plans. A breakdown has been provided per the income slab and taxed caps. 

Tax Slab

Tax Unit (1 Tax unit equals to COL$ 36,308)


0 to 1,090


1,090 to 1,700


1,700 to 4,100


4,100 to 8,670


8,670 to 18,970


18,970 to 31,000




The labor code in Colombia has no provisions stating the need for a payslip. However, with strict regulations on dismissal, severance pays, and payroll taxes, providing a payslip to an employee before the salary is issued is always a good practice. A payslip should encompass all the mentioned components, at minimum. 

  • Salary date and invoice number
  • Basic salary
  • Overtime pay
  • Benefits and allowances, if any
  • Deductions per the labor regulations in Colombia

Trial period

  • An employing company can hire employees in Colombia on a probationary or trial period of up to 2 months. 

Dismissal Rules

  • Employees can terminate their contract with a company through a resignation letter at any time. 
  • Employers can unilaterally terminate their employees’ contracts with or without a cause. However, an employer must provide a notice period during termination from the company’s end. 
  • In fixed-term contracts, the employing company must have a notice period of 30 days before contract termination. 

During a termination from an employer’s end, the company is held liable to pay the severance fees to their employees. 

Severance pay

The severance payment structure is broadly divided into three categories corresponding to the employment contract types used in Colombia. 

  • Fixed-term contract
    1. Employers must pay a severance fee for dismissal before the agreed termination date ends. 
    2. The severance pay is calculated as the amount due until the agreed termination date. 
  • Service contract without a termination date
  1. Employers can terminate the mentioned employment contract before completing the contracted service. 
  2. The severance pay in such cases is calculated based on the expected tenure required to complete the deemed service. 
  3. The employing company must ensure that the severance pay should be equal to or more than 15 days of payment, at minimum. 
  • Indefinite term contract
    1. The severance pay is based on the employee’s work experience and employment tenure. 
    2. Employees who are remunerated with a salary less than ten times the enforced minimum wage shall be rewarded with 30 days of pay for the first year of service and an additional 20 days’ salary for every following year. 
    3. Employees who earn more than or equal to ten times the enforced minimum wage shall be rewarded with 20 days of salary. 
    4. Employees who have served for more than ten years, since 27th December 2002, should be remunerated with 45 days of salary for the first employment year and an additional 30 days of compensation for each succeeding year. 
    5. Employees who have worked for more than ten years, from 1st January 1991, must be reinstated in the company with the same designation. However, if such a case is not possible, employers must pay 45 days of salary for the first employment year and an additional 30 days from each employment year.

Data protection and employee privacy

Companies can conduct background checks in Colombia and store data in the company databases. However, according to the labor act regulations in Colombia, information such as medical records, personal finance, and other personal information is restrictive. Employers must acquire written or signed consent from their employees or applicants before procuring the required data. 


The Colombian labor law has introduced several sanctions to ensure an excellent work-life balance for its citizens while providing more transparency to employers. The labor regulations in Colombia moderate every aspect of employment. Therefore, non-compliance can lead to certain repercussions.

Non-compliance to mentioned laws is a punishable offense. The scale of non-compliance usually determines fines or other penalties like license suspensions. Employers can be fined between one to a hundred times the applicable minimum wage in Colombia. 

Compliance Strategies for Employers

There are various ways of complying with the labor regulations in Colombia, which are listed below: 

  • Hiring an in-house HR team: Companies can hire an HR team with in-depth knowledge of Colombian labor law. The HR team can moderate the payments, working hours, holidays, leaves, etc. while complying with the Substantive labor code. 
  • Dedicated HR agencies: Several third-party HR agencies in Colombia can perform the same tasks as an in-house HR team. Companies on a tight budget can hire such agencies, as the cost of maintaining an in-house HR team is far higher than hiring a dedicated HR team. 
  • Employer of Records (EOR): Employer of Records (EOR) solution is a growing concept that allows businesses to comply with the Colombian labor law for minimal cost. Here, employers have better control, as the platform enables business owners to set pre-determined parameters to comply with the labor regulations in Colombia. These parameters are pre-placed with respect to the latest changes in labor laws. Therefore the requirement of an HR team, in-house or outsourced, is negated. 

How Can Multiplier Help?

Multiplier is a SaaS-based Employer of Record solution (EOR) that allows employers to comply with labor regulations in 150+ countries. It provides a centralized platform, enabling the employing company to set up remuneration, work hours, rest breaks, holiday entitlements, etc. One can set and moderate these parameters while abiding by the labor code in the target country. 

Labor code compliance is one of the many features. Customers of Multiplier often enjoy features like payroll management, one-click payments in multiple currencies, support for conducting background checks, and more. In short, Multiplier is the one-stop solution for businesses looking to test new markets and hire affordable talents worldwide.

Frequently Asked Questions

According to the labor act rules in Colombia, an employee must be given a leave if they can present a medical certificate to the employing company.

Employers must pay 66.67% (2/3rd) of the employee’s daily salary for the first and second days. The General Health Social Security System (SGSS) pays the rest from the third day of absence. However, the payments from the SGSS will cease after the 180th day of absence.

No such provisions enforced by the labor code in Colombia state any statutory rights for employees who have served continuously.

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