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With a mixture of emerging and booming economies,
political uncertainty and extreme contrasts in business customs,
the Americas can never be categorized as one homogeneous
whole.
Colombia provides a gateway for companies to expand into Central
and South American states. But when you operate in multiple
countries and start to hire your employees, you must be aware to be
fully compliant with the local labor regulations as well as your
internal HR and payroll policies. Here we take a look at how HR
& Payroll works in Colombia.
Social security system
Colombia has a mandatory social
security system, which provides benefits for retirement,
healthcare, and labor risks.
Both the employers and the employees
are required to make contributions towards social security. Total
payroll contributions:
Employer: up to 31% of salary,
including the payroll taxes
Employee: up to 10% of salary
Hiring/Retrenchment Issues
Employment contracts can be verbal or
written, as well as of fixed or indefinite duration. Employers can
also enter into collective bargaining agreements with
employees.
Employers may require employees to
serve a trial period, not exceeding 2 months.
The employer and the employee can
both terminate the employment contract without notice.
Employees dismissed without a lawful
cause are entitled to a severance payment ranging from 15 days for
employees under indefinite term contract, depending on their salary
and tenure of service. Employees under a definite contract have the
right to receive compensation according to the time it takes to
finish the agreed period.
Foreign Personnel
Foreigners are required to hold a
valid work visa to live and work in Colombia.
Entry of foreigners with technical,
professional or intellectual qualifications and experience that can
contribute to the development of economic, scientific, cultural or
educational activities that benefit Colombia is facilitated.
In general, the foreigners have to
comply the same obligations like the Colombian workers in relation
with the HR& Payroll matters
Work Permits
Decree 834, 2013 issued by the
Ministry of Foreign Affairs must be reviewed to determine which
visa or permit must be obtained. This law consolidates visas in the
following categories: Business (NE), Temporary (TE) and Resident
(RE).
Temporary Visa TP-4 (employee)
authorizes the entry and permanency in the country of a
foreign employee that has a labor contract
with a personal or legal entity
domiciled in Colombia.
Paid leave
Employees are entitled to receive a
paid annual vacation time of 15 days for each year of service.
Employees are also entitled to 14
weeks of paid maternity leave, 8 days of paid paternity leave, and
5 days of paid bereavement leave.
Currently, the Colombian Congress is preparing a law to extend
those paid leaves.
Payroll Cycle
Employees are paid either monthly or
biweekly basis.
The monthly minimum wage is COP $
689.455 (Approx. 230 USD) effective from 1 January 2016 until the
31st of December of 2016.
Night-time work is payable at a rate
of at-least 35% above the normal pay rate.
Overtime during daytime working hours
is payable at a rate of at-least 25% above the normal pay rate,
while overtime during night-time working hours is payable at a rate
of at-least 75% above the normal pay rate.
If an employee works for 2 Sundays in
a calendar month, he/she is entitled to an extra pay of at-least
75% of the normal pay rate or a compensatory day off in the
subsequent week. An employee who has worked for 3 Sundays in a
calendar month is entitled to both an extra pay of at-least 75% of
the normal pay rate as well as a compensatory day off in the
subsequent week.
HR Legislation
Employment in Colombia is primarily
governed by the Labor Code which applies to all employers and
employees in Colombia, regardless of their nationality. The Code
governs the terms and conditions of employment, such as the form
and duration of the employment contracts, probation periods, wages,
working hours, holidays and leaves, termination of employment, and
collective bargaining.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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