A mix of different industries, such as manufacturing, mining, oil, and information technology characterizes the economy of Colombia. The Colombian economy is expected to grow by 1.5%. The government of Colombia has implemented various economic reforms to improve competitiveness, streamline bureaucracy, and attract investments.
To hire in Colombia, there are a few important aspects that you need to be aware of. The Colombian Peso (COP, $) is currently the official currency of this country. Those looking to hire in Colombia should know all the rules and regulations related to the minimum wage and the current payroll cycle. As many as 99.5% of the residents of this country speak Spanish, making it the official language of Colombia.
Over the recent years, Colombia has been making substantial progress in improving its business environment, and many consider it a promising destination for businesses to operate. If you, too, are among them and wish to venture into a business exploration in this foreign land, then understanding the nuances is of utmost importance.
Labor Laws In Colombia
The Codigo Sustantivo del Trabajo, 1951, commonly known as the Substantive Labor Code, lays down a comprehensive set of rules and regulations that establishes the relationship between an employer and employee in Colombia.
Some of the key aspects of the Substantive Labor Code include
Minimum Wage
- Colombia establishes a national minimum wage, which is periodically adjusted and reviewed.
- The minimum wage in Colombia is COP1.160.000 per month.
Working Hours
- The Substantive Labor Code states that the official working hours in Colombia are 47 hours per week.
- In the upcoming years, the working hours will be as follows:
Overtime Pay
Overtime pay is required for work beyond the standard hours. It includes,
- Daytime Regular Days - 25% of the regular compensation
- Nighttime Regular Days - 35% above the standard rate during the night
- Public Holidays -
- Day shift overtime + 100%
- Night shift overtime + 150%
Probation Period
- For fixed-term contracts, the probation period in Colombia is one-fifth of the contract's entire duration, which should not exceed two months.
- For indefinite-term contracts, the probation period in Colombia is two months.
Notice Period
- There is no statutory notice period during or after the probation period.
- During probation, either party can terminate the labor agreement without prior notice and pay for the damages caused to the other party.
- Employers are required to give a 15-day notice period before terminating the contract. In addition, employers with an established fixed-term agreement with their employees must provide a written notice at least 30 days before the contract expires.
Payroll and Taxes in Colombia
Managing tax and payroll in Colombia involves compliance with specific regulations outlined by the country’s tax authorities. Here is an overview of Colombia's key aspects of payroll and taxes.=
Payroll Cycle
- The payroll frequency in Colombia is monthly, which is usually the last working day of the month.
Social Security Contributions
- As per Colombian law, every employee and employer must contribute to the social security system covering labor risks and health and pension insurance.
- EPS premiums constitute approximately 12.5% of an individual's or a family's monthly income.
Tax Considerations
- A progressive tax rate of 0% -39% is levied on employment income. However, employment income that is less than 1,090 UVT is exempted from the income tax.
13th Month Day
- Also known as the Prima de Servicios in Spanish, the 13th-month pay is a mandatory payment every employer must pay once a year.
- It is equivalent to one month’s salary.
- It is usually paid in two installments - one on the last day of June and the other within the first 20 days of December.
Employee Benefits in Colombia
Employee benefits in Colombia are an essential part of the overall compensation package provided by employees. So, if you are considering hiring in this region, you must be aware of some of the key aspects of these statutory benefits in Colombia. Those include,
Annual Leave
- Every employee in Colombia is eligible for a total number of 15 days of paid leave.
Sick Leave
- Employees in Colombia are entitled to 180 days of paid sick leave, provided they have verification from a Colombian social security authority.
- For the first 90 days, employees get two-thirds of their salary. The employer pays for the first two days. After that, the salary drops to 50%, and the employer recovers it from social security.
- If the illness or injury is work-related, the employer covers 100% of wages during incapacity.
Maternity Leave
- According to Colombian labor laws, female employees are eligible for 18 weeks of paid maternity leave.
- They can take it one week before the due date and 17 weeks after childbirth.
Paternity Leave
- Article 236 Labor Code states employees are entitled to 14 days of paternity leave in Colombia.
- It is 100% paid by the employers and later reimbursed by Social Security (EPS).
Adoption Leave
- Employers must grant a total number of six weeks of paid adoption leave to every employee.
Compassionate Leave
- Five days of paid compassionate leave is granted to every employee.
- It is granted to parents, children, siblings, grandparents, grandchildren, spouses or permanent partners, and in-laws.
Voting Leave
- Employees get a half-day paid leave as voting leaves on providing a voting certificate.
Carry Forward of Leaves
- Carry forward of leaves in Colombia is allowed based on the employee and employer’s discretion.
- Employees must take at least six of the annual vacation (15 days).
Public Holidays
| Date |
Occasion |
| January 1 |
New Year’s Day |
| January 8 |
Adoration of the Magi |
| March 25 |
St. Joseph’s Day |
| March 28 |
Maundy Thursday |
| March 29 |
Good Friday |
| May 1 |
Labor Day/ May Day |
| May 13 |
Ascension |
| June 3 |
Corpus Christi |
| June 10 |
Sacred Heart |
| July 1 |
Feast of Saint Peter and Saint Paul |
| July 20 |
Independence Day |
| August 7 |
Battle of Boyacá Day |
| August 19 |
Assumption of Mary |
| October 14 |
Columbus Day |
| November 4 |
All Saints’ Day |
| November 11 |
Independence of Cartagena |
| December 8 |
Feast of the Immaculate Conception |
| 25 December |
Christmas Day |
Cost of Hiring an Employee in Colombia
While Colombia is undoubtedly a budding spot for international organizations, when you calculate the cost of hiring in Colombia, you need to be aware of the various factors that come into play. This includes initial costs, employment liabilities, and operational overhead.
Establishing a Subsidiary vs. Employer of Record (EOR) in Colombia
| Parameters |
Establishing a Subsidiary |
Partnering with Skuad |
| Initial Cost |
Involves significant initial costs, which include registration fees, legal fees, and office setup. |
Companies can start hiring without setting up an entity, for a nominal, flat fee. |
| Duration for setup |
The process may extend over several weeks or months, due to legal and regulatory prerequisites. |
Allows for a quicker setup since Skuad infrastructure is already in place |
| Employment Liabilities |
The subsidiary bears employment liabilities, including local laws, and others. |
Skuad takes on employment liabilities, thereby reducing risk. |
| Operational Overhead |
Comes alongside ongoing operational costs, such as legal and accounting staff and administrative expenses. |
Results in lower operational costs, as Skuad manages all employment responsibilities. |
| Flexibility |
Usually, it demands a long-term commitment. |
Offers optimum flexibility to scale up and scale down the number of hires. |
| Local Compliance |
Directly responsible for compliance with local laws and regulations, requiring continuous monitoring and adherence. |
Skuad oversees all regulatory intricacies and ensures complete compliance with local laws. |
| Parameters |
Partnering with Skuad |
Establishing a Subsidiary |
| Initial Cost |
Companies can start hiring without setting up an entity, for a nominal, flat fee. |
Involves significant initial costs, which include registration fees, legal fees, and office setup. |
| Duration for setup |
Allows for a quicker setup since Skuad infrastructure is already in place |
The process may extend over several weeks or months, due to legal and regulatory prerequisites. |
| Employment Liabilities |
Skuad takes on employment liabilities, thereby reducing risk. |
The subsidiary bears employment liabilities, including local laws, and others. |
| Operational Overhead |
Results in lower operational costs, as Skuad manages all employment responsibilities. |
Comes alongside ongoing operational costs, such as legal and accounting staff and administrative expenses. |
| Flexibility |
Offers optimum flexibility to scale up and scale down the number of hires. |
Usually, it demands a long-term commitment. |
| Local Compliance |
Skuad oversees all regulatory intricacies and ensures complete compliance with local laws. |
Directly responsible for compliance with local laws and regulations, requiring continuous monitoring and adherence. |
Top Job Listing Sites in Colombia
- Computrabajo - It is one of the largest job portals in Colombia, with over 100+ employees, and caters to various industries and job categories.
- Elempleo - Elempleo is a prominent job portal in Colombia that connects employees and job seekers. It includes robust features like job searching, company reviews, and salary information.
- LinkedIn - This platform is also widely used in Colombia for professional networking and job searching. Employers often post job vacancies, and users can directly apply via this platform.
- Buscojobs Colombia - One of the most notable features of this platform is the job test, which allows users to find a job that aligns with their professional, social, and psychological interests.
- Indeed - Indeed is a global search engine widely used in Colombia. It consolidates job postings from diverse sources, encompassing company websites and job boards.
Compliance Risks of Hiring Employees in Colombia
If you wish to hire in Colombia, you must be aware of various compliance risks to ensure adherence to local laws and regulations. Failure to adhere to regulations may result in legal repercussions, monetary fines, and harm to the reputation of the company. Below are some of the key points that are noteworthy in this aspect.
- Labor Contracts - Employment contracts should include essential information such as salary, working conditions, benefits, and termination procedures. Not complying may lead to significant fines and severe legal repercussions.
- Minimum Wage Compliance - Employers must ensure their employees receive at least the legal minimum wage. Without the same, you might have to bear fines and penalties.
- Termination Procedures - Proper adherence to the termination procedures, which include notice periods and severance pay calculations, is also essential to avoid legal challenges.
- Overtime and Working Hours - Overtime pay must be provided to every employee for work beyond standard hours, and working hours should not exceed legal limits.
How to Hire Talent in Colombia
Below are three strategic approaches you can follow to hire in Colombia. Choosing among these three approaches concerns your company's specific needs, budget, and long-term strategy.
Option 1: Establish a Subsidiary
- Overview - This involves setting up a legal entity or subsidiary in Colombia, registering with authorities, and complying with local regulations.
- Pros: Provides maximum control over operations, strategy, and decision-making.
- Cons: High initial costs and an extremely time-consuming process. Moreover, the parent company assumes full responsibility for compliance, legal and administrative matters.
Option 2: Hire as a Contractor
- Overview - Companies can engage talent as independent contractors or freelancers.
- Pros - Potentially lower costs compared to setting up a subsidiary. Hiring as a contractor also allows for great flexibility for swift scaling based on project needs.
- Cons - Less control over contractors' daily activities and work schedules. This approach is usually unsuitable for roles requiring long-term commitment and integration. Misclassification is a huge risk when working with contractors.
Option 3: Partner with an Employer of Record (EOR) - Skuad
- Overview - By partnering with an EOR such as Skuad, you can easily hire in Colombia without establishing a subsidiary in Colombia.
- Pros- Allows for a faster and more straightforward setup. Skuad takes care of all the compliance responsibilities on your behalf so you can focus on growing your global footprint.
Hiring Trends in Colombia in 2025
One of the most notable hiring trends in Colombia is the shift towards remote work and flexible arrangements, with employers adopting hybrid work models to attract and retain talent. In addition, there has also been an increase in the demand for digital skills such as data analysis and software development, and enterprises globally have started to rely on technology increasingly.
Furthermore, recruitment in Colombia is also characterized by the rapid use of Artificial Intelligence (AI) in hiring processes, such as automated screening and candidate matching, which has become more prevalent.
Hiring in Colombia, made hassle-free with Skuad
Navigating the intricacies of the hiring processes in Colombia can be extremely challenging. But what if, instead of spending your valuable time and resources in this endeavor, you can utilize them in areas that drive growth?
With Skuad, you can easily streamline your hiring, payroll, and HR operations. Trusted by global leaders, Skuad is the number one choice for companies to employ talent across borders.
Book a demo today to explore employment in Colombia with Skuad!
FAQs
How do I hire employees in Colombia?
One way of hiring employees in Colombia is by setting up a local legal entity. However, this can be extremely time-consuming and costly. Therefore, companies are now looking for more sustainable solutions, including partnering with an EOR, such as Skuad. It allows for a quicker setup and ensures full compliance to local labor laws in Colombia.
What are the employment laws in Colombia?
Colombia has comprehensive employment laws and regulations governing employers and employees' relationships. These laws cover various aspects of employment, including working hours, minimum wage, benefits, and termination. For example, according to the Substantive Labor Code, every employee in Colombia is eligible for a total number of 15 days of paid leave.
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