Colombia can offer great opportunities for companies to expand their operations into Central and South America but the process for hiring an employee in Colombia is complex. You must stay aware of all the steps and rules to remain fully compliant with local labour laws that cover the onboarding process.

Onboarding process

The first step in the process is for an employment contract to be created by the employee. This is a written contract that will outline the position for the new employee. Colombia has a mandatory social security system and the next step, once an employee is hired, is enrolment in the social security system so that the employee is provided with benefits. The employee must choose from nine different options for their health insurance plan and pick from five different pension entities. The new employee must also be enrolled by the employer in a labour risk entity for professional risk and worker's insurance. Lastly, the employer will enrol the new employee in the welfare entity. Foreign employees require a valid work visa and there are other mandatory registrations for these types of employees.

The complexity of onboarding begins with these enrolments because all the registrations must be completed on the same day as the employee begins their employment with the company. The documents must also be signed in person and on paper with no digital signatures allowed for submitting the forms to the social security office.

Local legislation Resolution #2346 of 2007 states that three days prior to the start date of employment, every employee must also have a mandatory medical exam with a doctor that is provided by the company.

Payroll rules in Colombia

Employees in Colombia are paid either monthly or twice a month depending on the company. In Colombia, the legal minimum monthly wage for 2019 is set at $828.116 Colombian Pesos. There are 13 pay periods in Colombia, with the 13th salary paid as a bonus no later than the last day of June and the other half has to be paid no later than 20th of December. The legal bonus is paid proportionally to the time worked.

There is another type of salary call the integral salary. Integral monthly minimum wage for 2019 is $10.765.508 Colombian Pesos including fringe benefits. Employees who receives integral salary, do not receive 13th salary. This method of salary payment, in addition of rewarding regular labour, compensates the value of fringe benefits, surcharges, benefits for night work, Sunday working, public holiday working, 13th salary and extra-legal bonuses.

The breakdown of benefit contributions for the regular salary is:

Benefit Employee contribution Employer contribution
Pension 4% 12%
Health care 4% 8.5%
Labour risk 0% .5%-6.9%
Welfare 0% 4%

Some companies offer extra benefits such a life insurance, increased health insurance services, dental insurance, meal ticket stipends, savings and investment plans, education, and other possible benefits.

Paid leave

Employees are entitled to 15 days of paid vacation per year once they have competed one year of service but companies can award more days to employees in their contracts. There are 13 national public holidays and five religious holidays in Colombia per year. Employees are entitled to 18 weeks of paid maternity leave, eight working days of paid paternity leave and five working days of paid bereavement leave. For sick leave, employees must provide documentation from a doctor that states when the sick leave is taken.

Managing your employees

The process of onboarding new employees can be complex and time consuming. Every process must be completed before the employee starts work to stay compliant with local law. If everything is not completed and reported to the correct government entities, there can be penalties. TMF Colombia has the HR experts to provide all the onboarding services as well as HR and payroll needs for your company and new employees. We will work with you throughout every step of the onboarding process. Talk to us.

Find out where Colombia ranks in terms of complexity when it comes to hiring and paying employees in our Global Business Complexity Index.

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.