Hiring Colombian employees

Do you want to know how to hire them without bearing the costs? Read this article.

Low wages and modest annual leave requirements make Colombia an attractive hiring destination for international companies looking to grow their remote teams. With an average weekly working time of 48 hours, employees in Colombia are used to working more than employees in other countries and are generally known for their good work ethic.

Working time

An employee’s standard working week should not exceed 48 hours, i.e. eight hours per day over a six-day workweek. Every employee must have one day off per week which is usually Sunday but may be shifted to another day if detailed in the employment contract.

Overtime

Overtime work must not exceed two hours per day, i.e. twelve hours per week, and must be paid at a rate of at least 125% for daytime work and 175% for work at night or on public holidays.

Payroll

Colombian law distinguishes between three different types of payment: minimum wage, ordinary salary (payments higher than the minimum wage which do not include any additional payments such as bonuses or other) and integrated salary (fixed monthly salary which is higher than ten times the minimum wage and set at a rate 30% higher than usual, thus including all additional payments such as bonuses).

Minimum Wage

In 2021, the national minimum wage in Colombia is set at COP 908,526 per month (not including transportation allowance).

Sick Pay

If an employee is unable to work because of sickness or injury, the employer is obligated to provide sick pay equal to the employee’s usual wages for the first two days of absence. Starting with the third day of sick leave, sick pay is covered by Social Security at a rate of 66.67%. However, payments are limited to 180 days.

Bonuses

Except for those earning an integrated salary, employees in Colombia are entitled to a 13th salary (Prima de Servicios) which is to be paid out in two installments, one in June and the other one in December.

Taxes and Social Security Contribution

Employees and employers in Colombia are subject to the following tax and social security contribution rates (as of 2021):

EMPLOYER
31% corporate tax rate
19% VAT (standard rate)

EMPLOYEE
Individual income tax rates range from: 19% to 39% *

SOCIAL SECURITY
Around 30% of employee salary, of which:

• 8.5% health insurance
• 12% pension plan
• 9% diverse social security funds (certain contributions only apply to income exceeding ten times the minimum wage)
• Plus 0.522% to 6.96% for coverage against professional risks.

Please note that social security contributions for integrated salaries are calculated based on 70% of the employee’s income.

8% – 9% of employee salary, of which:

• 4% health insurance
• 4% pension plan (additional 1% on monthly income exceeding COP 3,634,000)

Employee Benefits

Leave such as annual leave, maternity, paternity, etc.
30 days of salary during the first year and 20 days of salary for every year thereafter, for termination of the contract without just cause.

Hiring in Colombia?

Not sure if you should start with a contractor or go ahead and hire a full-time teammate in Colombia? ROOTS EOR makes things easier for you! being able to hire employees in Colombia without having to bear the cost. Contact Us