Employer of Record in Colombia: A Complete Guide for 2026

Introduction

An employer of record in Colombia is a locally registered company that legally employs workers on your behalf, so foreign companies can hire Colombian talent without incorporating a local SAS entity or managing six-agency social contribution enrolments directly.

Colombia is one of Latin America's strongest nearshore markets: over 165,000 tech professionals across Bogotá, Medellín, and Cali, time-zone alignment with the US East Coast (GMT-5), and competitive employment costs at 40 to 70% below US rates for equivalent tech talent.

The compliance stack, however, is specific. Ley 2101 of 2021 introduced a gradual workweek reduction that reaches 42 hours from July 15, 2026. Ley 2466 of 2025 made indefinite-term contracts the legal default, tightened contractor classification rules, moved the night shift start to 7 p.m., and began phasing Sunday premiums to 100% by July 2027.

Every hire also triggers six separate social contribution registrations (EPS, AFP, ARL, SENA, ICBF, Caja de Compensación) before the first payslip clears.

This guide covers how an EOR works in Colombia, employment laws, payroll obligations, employer costs, visa types, and what hiring through an EOR actually involves in 2026.

Key takeaways

• Skuad's EOR starts at $249/month per employee, covering employment contracts, payroll, and six-agency social security enrolment
• No SAS incorporation required. Skuad acts as the legal employer across 160+ countries, so your company can hire in Colombia without entity setup
• Onboarding takes one to two weeks once the employee provides their cédula, EPS and AFP affiliations, bank details, and a signed contract
• 42-hour workweek takes full effect from July 15, 2026 under Ley 2101 of 2021, with no salary reduction
• Total employer cost runs 30 to 36% above gross salary when social security (20.5%), parafiscales (up to 9%), ARL, and statutory benefits are included

Hire in Colombia without SAS incorporation. Book a demo

Calculate your Colombia employer costs

How does an EOR work in Colombia?

An employer of record (EOR) in Colombia acts as the legal employer of your workforce, handling entity registration, employment contracts, payroll, social security contributions, and statutory benefits, while your company retains day-to-day management of the employee's work.

Standing up a foreign-owned SAS (Sociedad por Acciones Simplificada) or sucursal in Colombia takes eight to sixteen weeks across Cámara de Comercio registration, DIAN NIT/RUT issuance, Banco de la República foreign-investment registration, and multi-agency employer enrolments, before the first payroll clears. An EOR removes that dependency entirely.

Skuad acts as the legal employer across 160+ countries, supporting your company's hiring without local entity incorporation:

• Acts as the legal employer, so your company can hire in Colombia without SAS setup
• Helps draft employment contracts aligned with Colombian labor law, including Ley 2466 requirements for indefinite-term contracts
• Supports payroll processing in COP with statutory deduction workflows facilitated inside the platform
• Handles six-agency social contribution enrolments (EPS, AFP, ARL, SENA, ICBF, Caja de Compensación)
• Helps administer statutory benefits: prima de servicios, cesantías, interest on cesantías, vacation, and dotación
• Assists with visa and work permit application workflows for foreign hires through Skuad's immigration platform
• Assists with termination and offboarding workflows in line with CST and Ley 2466 requirements

Hire and pay employees in Colombia without SAS incorporation. See how Skuad works

Colombia at a glance

Population: 53.9 Million

Currency: COP Colombian Peso

Capital: Bogotá

Languages frequently used: Spanish

GDP: $418.82 Billion

Employment in Colombia

Different sources provide a comprehensive view of the Labor Code of Colombia. While the Constitution of Colombia lays out the core principles and obligations of employment, the main source of employment resources is the Colombian Labor Code.

The Colombian Labor Code lays out elaborate details associated with employment in the country. This includes benefits, the conditions of employment, social security, as well as the rights and duties of employees.

Yet another source of labor-related regulations is the decrees of the Colombian Ministry of Labor, as well as the case law of Labor Courts. 

Put together, all these sources form a comprehensive view of the Colombian labor and employment system. The 1990s were a period when the Colombian labor scene changed significantly, but since then, the code has been fairly consistent.

Some of the provisions of Employment Laws to note before hiring in Colombia are as follows:

Colombia's employment framework, indefinite-term contracts as the legal default under Ley 2466 de 2025, mandatory six-agency social contribution enrolments, and Código Sustantivo del Trabajo obligations, create significant administrative overhead for foreign companies hiring without a local entity.

Skuad helps foreign companies navigate the employment lifecycle across 160+ countries from a single platform, supporting contract management, onboarding workflows, and ongoing employment administration without requiring local entity setup.

See how Skuad supports employment management across 160+ countries

Contractors vs full-time employees

Colombia has a host of different higher education institutions that provide training in everything from engineering to the arts. Several Colombian students also choose to gain their educational stripes in other countries of South America. 

All these factors lead to the development of a highly trained young section in Colombian Society. These educated youth are constantly on the lookout for new opportunities, and your company can benefit from this.

Just as in the rest of the world, in Colombia, too, remote work has been the major form of work in the past few months. The internet and communication infrastructure in Colombia have always been robust enough to handle this upsurge in remote work. 

The internet is available in all corners of the country, and access to it is not an issue either for companies or for individuals.

Colombia does not officially recognize many types of employment. However, the employment contract can be for a definite duration or an indefinite duration. Both definite-duration and indefinite-duration contracts in Colombia are protected under nearly the same laws and covenants. 

The contract must be developed in such a way that the nature of employment and the type of employment are clear.

Skuad supports both hiring models from a single platform:

EOR for full-time employees

• Acts as the legal employer across 160+ countries, supporting hiring without local entity incorporation
• Helps draft employment contracts aligned with local labor law requirements across supported markets
• Supports payroll processing in 70+ currencies, with statutory deduction workflows facilitated inside the platform
• Helps administer statutory employee benefits and leave entitlements across supported geographies
• Assists with termination and offboarding workflows in line with local statutory requirements

AOR for contractors

• Helps onboard contractors using locally-prepared agreement templates across supported markets
• Supports invoice generation, approval workflows, and payouts in 70+ currencies
• Helps identify worker classification risk before it triggers retroactive employee status
• Provides IP, confidentiality, and non-compete clause templates for contractor agreements
• Helps centralise contractor records, agreements, and payment history alongside full-time employees in a single dashboard

Full-time or contractor, Skuad supports both. See pricing

Scope of negotiating terms

The scope of negotiation in a Colombian employment contract depends squarely on the type of role that you are applying for. Several employees and labor associations in the country tend to negotiate on behalf of a large number of workers. 

Trade unions and associations are very powerful and have significant sway in negotiations. If you belong to the manufacturing sector or any other sector that involves hiring workers en masse, you might have to negotiate with such associations.

When it comes to individual hiring, the scope of negotiation depends on the seniority of roles. For junior roles, the margin of negotiation will be small. However, for senior roles, candidates are not available in the kind of volume they are for junior ones. 

After a long recruitment process, companies generally listen to the demands of the candidates and try to find a middle ground between their requirements and the capabilities of the candidate. 

Hiring in Colombia

Hiring in Colombia is similar to other countries. Internet platforms are extensively used to hire candidates at all levels in Colombia. 

Additionally, there are also several job platforms specific to Colombia and Latin America that have come up over the years. LinkedIn is also active in Colombia, though it is not used as much as in several other countries.

• The first step toward hiring candidates is to create a job description. This needs to be done in conjunction with the team that has a vacancy. 
• Once the job description has been drafted, it is posted on the company’s website, job portals, and other job sites. 
• Depending on the requirements of the job, the HR team will receive a volume of applications that they will then have to sift through.
• After the initial screening, the shortlisted candidates need to go through several rounds of interviews. This process might also include written exams if the volume of candidates is high. 
• After the final selection, the HR team needs to conduct a thorough background check of the candidates to ensure their integrity.

A drawback of hiring online is that the HR team may be inundated with several applications that they might not be able to analyze in time. 

Background verification is a standard step in compliant hiring across most markets, and getting it wrong before contracts are signed creates risk that's harder to unwind after onboarding begins.

Skuad's background checks platform helps support the pre-hire verification workflow as part of the broader onboarding process:

• Helps verify candidate identity, employment history, and education credentials before contracts are signed
• Integrates background verification into the onboarding workflow alongside employment contracts and payroll setup, so the full process runs through one platform
• Supports verification across multiple markets, helping foreign companies maintain consistent pre-hire standards across different hiring locations

How to hire through an EOR in Colombia: Step-by-step process

Hiring through an EOR in Colombia follows four stages: choosing the employment model, selecting the provider, contracting and onboarding, and running payroll.

Probation and termination

There are no specific laws concerning probation in Colombia, but the usual duration ranges from a month to a year. The process and method of termination are significantly more fluid in Colombia than in other countries, especially when it comes to individual termination. 

There is generally no notice period required for termination, and the only case in which it might be required will be in definite-term contracts. In other cases, termination can take immediate effect. There is generally no reason required for termination unless a fair value has been challenged in a court of law.

Two main causes lead to the termination of employees in Colombia:

1. Legal reasons for termination include the death of an employee or other factors, such as a change in laws and regulations that make termination compulsory.
2. Fair causes include reasons associated with the conduct of an employee and the employee’s behavior at the workplace. Termination without a fair cause is generally not practiced and can be challenged in the courts. It may also lead to the reinstatement of the employee.

Colombia's termination framework carries significant financial exposure. Article 64 CST severance calculations, the UGPP's five-year audit window, and multi-agency contribution settlement obligations that accumulate when offboarding is handled incorrectly.

Skuad's Shield compliance platform helps support termination workflows across supported markets:

• Helps surface country-specific statutory requirements, notice obligations, just-cause documentation, and severance calculation methodology, before the termination process begins
• Assists with generating termination documentation aligned with local labor law requirements
• Helps flag compliance risk during the offboarding process, including contribution settlement obligations
• Supports audit-ready record-keeping for regulatory inspection cycles

See how Skuad Shield supports termination compliance workflows

EOR solution

Standing up a foreign-owned SAS or sucursal in Colombia typically takes eight to sixteen weeks across Cámara de Comercio registration, DIAN NIT/RUT issuance, Banco de la República foreign-investment registration, and multi-agency employer enrolments, before the first payroll clears.

Skuad helps remove that dependency. As the EOR, Skuad acts as the legal employer across 160+ countries, supporting your company's hiring without local entity incorporation:

• Acts as the legal employer across 160+ countries, supporting hiring without local entity setup
• Helps draft employment contracts aligned with local labor law requirements across supported markets
• Supports payroll processing in 70+ currencies with statutory deduction workflows facilitated inside the platform
• Helps administer statutory employee benefits and leave entitlements for employees across supported geographies
• Assists with visa and work permit application workflows for foreign hires through Skuad's immigration platform
• Assists with termination and offboarding workflows in line with local statutory requirements

See the full Skuad Colombia hiring guide

What visa types are available for working in Colombia?

Colombia uses three visa categories for foreign nationals: Visitor (Type V), Migrant (Type M), and Resident (Type R). For employment purposes, the Migrant work visa (Type M) is the standard pathway, and it requires employer sponsorship.

Work permit

There are no separate work permits required if you are looking to migrate to Colombia for professional reasons. All you need is a migrant work visa as described above. To apply for the work visa, you will need to be sponsored by your employer and furnish proof of employment. 

Skuad helps support visa and work-permit workflows across supported markets through its Global Immigration platform:

• Helps support work visa application workflows across supported markets
• Assists with coordinating documentation and consulate handovers for foreign hires
• Helps track work authorisation issuance and registration deadlines
• Assists with tracking dependent visa pathways where applicable
• Helps centralise visa expiry dates, renewals, and immigration processing inside one dashboard

Payroll and taxes in Colombia

Setting up payroll in Colombia can be a rather tricky task. This is primarily because the labor regulations in Colombia are dynamic, and the existing labor regulations can be rather hard to navigate. 

Several parts of the payroll are statutory requirements as per the Colombian Labor Code. These requirements count towards the compensation of the employee, and hence, the payroll development must be carried out with full knowledge and cognizance of these regulations.

This is another one of the many reasons to have an EOR partner in a country such as Colombia. 

Payroll details

What Are the Employer Tax Obligations in Colombia?

Employers in Colombia pay a base social security contribution of 20.5% of gross salary (health 8.5% + pension 12%), plus parafiscales and ARL, bringing total employer contributions to approximately 30 to 36% above gross salary.

Employee taxation

Bonus

Each year, a 15-day semi-annual bonus (prima de servicios) is paid on the last day of June and the 20th of December.

Incorporation: How to set up a subsidiary in Colombia

Setting up a subsidiary in Colombia can be a complex and long-winded process. There are several steps involved in setting up a subsidiary in Colombia.

The first step is to accumulate and collate the documents required to set up the subsidiary. The list of documents includes:

1. The certificate of incorporation of the parent company in its host country
2. The power of attorney you have granted to the legal counsel
3. The parent company's bylaws, as well as the resolution of the company that lays out the details of the subsidiary setting up in Colombia.

Next, you need to formalize the public deed. You will need to pay the notary fees, which is a percentage of your capital, and get your legal representative in Colombia to sign the deed. 

You also need to present letters of acceptance from the branch representatives that the parent company has appointed in Colombia.

All the above documents will now be presented to the National Taxes and Customs Directorate of Colombia for your registration to complete. This step will also lead to the generation of your tax identification number, which will be essential in complying with government taxation regulations in the country.

Next, you will need to approach the Chamber of Commerce to register the company ledger with it. The ledgers must include the accounts journal of the subsidiary as well as the general ledger.

To incorporate a subsidiary in Colombia, you must have a bank account in Colombia. There is no restriction on the bank that you can open your account with, but the account needs to be in the country.

Finally, apart from the initial investment that you make in the subsidiary, all additional investment from foreign sources needs to be registered with the Central Bank of Colombia. 

How do you choose an EOR in Colombia?

Choosing an EOR in Colombia comes down to four factors: Colombia-specific compliance depth, pricing transparency, onboarding speed, and prestaciones sociales administration.

Not every EOR provider handles Colombia the same way. The differences that matter:

Customer story: How PureRED hired across six countries, including Colombia, with Skuad

PureRED, a 200+ employee marketing and advertising firm, needed to onboard staff compliantly across six countries, including Colombia, each with distinct labor codes and payroll obligations. 

Managing localised contracts, multi-currency payroll, and statutory compliance across jurisdictions simultaneously was creating significant operational overhead. 

Skuad's EOR platform supported the full onboarding cycle across all six markets, with 65 employees brought onto a unified HR and payroll dashboard.

"Skuad made our team expansion possible, handling the complex onboarding and payroll processes across six different countries with ease. Their local expertise ensured our compliance, letting us focus on what we do best-serving our clients." - Brian Butcher, EVP Corporate Development, PureRED

Read the full case study

What is the difference between a PEO and an EOR in Colombia?

A Professional Employer Organization (PEO) in Colombia co-employs staff alongside your company but requires you to already have a registered Colombian entity. An EOR acts as the sole legal employer and carries full compliance, payroll, and liability obligations, with no local entity required from the client.

PEO vs EOR in Colombia

Employer of Record in Colombia: Hire without SAS incorporation

Colombia's employment framework is one of the most structured in Latin America, and in 2026, it shifted further with the 42-hour workweek, updated night work definitions, and tighter contractor classification rules. 

For foreign companies, managing these obligations without a local entity means getting a lot of moving parts right before the first payslip runs.

Skuad helps support the full hiring lifecycle across 160+ countries from a single platform, with employment contracts, payroll in 70+ currencies, statutory benefit administration, and termination support, so your team can focus on building the Colombia operation rather than managing compliance overhead.

Companies across nearshore software, BPO, fintech, and healthcare use Skuad to access the Colombian talent market without SAS incorporation or local HR infrastructure.

Start hiring in Colombia without SAS incorporation. Book a demo

What are the risks of hiring in Colombia without an EOR?

Hiring in Colombia without an EOR or a properly set up local entity exposes foreign companies to contractor misclassification penalties, missed social contribution enrolments, and incorrect calculation of prestaciones sociales, all of which carry financial and legal consequences under Colombian law.

The three highest-risk areas:

• Contractor misclassification under Ley 2466: Colombia's primacía de la realidad doctrine reclassifies contractor relationships as employment when subordination exists. Reclassification triggers retroactive payment of all prestaciones sociales (prima, cesantías, vacation, social security), plus UGPP fines and potential court-ordered reinstatement.
• Missed agency enrolments: Every employee must be registered with six agencies (EPS, AFP, ARL, SENA, ICBF, Caja de Compensación) before the first payslip. Missing any registration exposes the employer to UGPP penalties and denies the employee access to healthcare and pension.
• Incorrect prestaciones calculation: Prima de servicios, cesantías, interest on cesantías, and vacation accrual must be calculated on the correct salary base. Errors compound over the UGPP's five-year audit window and can result in back-payment obligations plus fines.

FAQs

1. What is an employer of record in Colombia?

An employer of record in Colombia is a locally registered company that legally employs workers on behalf of a foreign company. The EOR handles employment contracts, payroll, monthly PILA filing, six-agency social security enrolments, and statutory benefits like prima de servicios and cesantías. The client company retains full day-to-day management of the employee's work, responsibilities, and performance.

2. How much does an employer of record in Colombia cost?

EOR fees in Colombia range from USD 199 to USD 600 per employee per month depending on the provider. Skuad's EOR starts at $249/month per employee. On top of the EOR fee, employer-side contributions including pension, health, ARL, parafiscales, and statutory benefits like prima and cesantías add approximately 30 to 36% above gross salary. Article 114-1 exemptions reduce this to 20 to 25% for employees earning under 10 SMMLV.

3. Can a foreign company hire in Colombia without setting up a local entity?

Yes. An EOR acts as the legal employer in Colombia, handling entity registration, employment contracts, monthly PILA contributions, and statutory benefits including prima de servicios and cesantías. The client company retains day-to-day management of the employee's work without needing to incorporate a SAS or sucursal. This is the standard approach for companies testing the Colombian market or hiring small teams.

4. What is the difference between an EOR and a PEO in Colombia?

An EOR acts as the sole legal employer and carries full compliance, payroll, and liability obligations, with no local entity required from the client. A PEO co-employs staff alongside the client company but requires the client to already have a registered Colombian entity such as a SAS or sucursal. For companies without a local presence, an EOR is the standard path.

5. Does an EOR protect sensitive and confidential information?

A reputable EOR should maintain data protection practices aligned with Ley 1581 de 2012, Colombia's personal data protection law, and international standards such as SOC 2 and ISO 27001. Skuad's platform is SOC 2 Type II certified and handles employee records, payroll data, and personal information under strict access controls and encryption protocols. Always verify your provider's certifications during evaluation.

6. How quickly can an EOR onboard an employee in Colombia?

Most EOR providers onboard employees in Colombia within one to two weeks. The process starts once the candidate provides their cédula de ciudadanía or passport, selects an EPS and AFP provider, shares bank account details, and signs the employment contract. The EOR then registers the employee across all six social contribution agencies before the first payslip clears.