Employer of Record in Colombia: how to hire compliantly without an entity.
Employ full-time employees in Colombia without setting up an entity. Locally compliant contracts, monthly payroll, statutory benefits, taxes. Below: what the law actually requires, in plain English.
- Country
- Colombia
- ISO code
- CO
- Region
- South America
- Phone code
- +57
- Employ Latam coverage
- Full EOR + contractor payments
Last updated July 2026
Overview
Overview: hiring in Colombia
Colombia is one of the most active hiring markets in Latin America. The country has a large, educated workforce, strong English proficiency in tech and finance roles, and a time zone (COT, UTC-5) that overlaps well with North American business hours. Those factors make it a practical first stop for companies expanding into the region.
Employment in Colombia is governed by the Código Sustantivo del Trabajo (CST) and enforced by the Ministry of Labor. The rules are detailed. Contracts, payroll contributions, and termination procedures all carry specific obligations. Getting them wrong creates liability.
An EOR lets you hire in Colombia without setting up a local entity. Employ Latam handles the locally compliant employment contract, statutory contributions, and payroll in Colombian pesos. You manage the work.
Colombia at a glance
| Currency | Colombian peso (COP) |
| Working week | Monday to Friday (Saturday common in some sectors) |
| Standard workday | 8 hours; maximum 47 hours per week (reducing to 42 hours by 2026 under current labor reform) |
| Probation period | Up to 2 months (must be in writing) |
| Notice period | 30 days written notice for indefinite contracts, or pay in lieu |
| 13th-month salary | Yes. One additional month's salary paid by December 20, prorated for partial years |
| Payroll cycle | Monthly |
What to know before you hire
Colombia's employer cost goes beyond base salary. Social security contributions alone add roughly 25 to 40 percent on top of what you pay the employee, depending on the role's risk classification and company size. Key employer-side contributions include:
- Health (EPS): 8.5% of salary
- Pension: 12% of salary
- Work risk insurance (ARL): 0.522% to 8.7%, based on job risk class
- Family compensation fund: 4% of payroll for companies with more than 50 employees
Employees also receive a prima de servicios (service bonus) equal to one month's salary per year, paid in two installments: half in June, half in December. This is separate from the 13th-month salary and is a statutory requirement.
Termination rules differ depending on whether there is just cause. Without cause, you owe an indemnity. With documented just cause, no severance applies. Notice periods and severance calculations follow fixed formulas under the CST.
For foreign nationals, Colombia requires a work visa (Tipo V) sponsored by the employer. Processing typically takes one to two months. The employee also needs a cédula de extranjería and a RUT tax ID before payroll can run.
Employ Latam gets locally compliant contracts in place and employees onboarded in 72 hours for standard hires. Pricing starts from $349 per employee per month.
Employment contracts and worker types
Colombia's labor code, the Código Sustantivo del Trabajo (CST), defines an employment relationship through three elements: personal service, subordination, and remuneration. If all three are present, the law treats the arrangement as employment regardless of what the contract calls it.
Contract types at a glance
| Contract type | Typical use | Max duration | Probation allowed |
|---|---|---|---|
| Indefinite-term | Ongoing roles; default if nothing is specified | No limit | Up to 2 months (written) |
| Fixed-term | Project-based or seasonal work | 3 years including renewals | Up to 2 months (written) |
| Specific work or task | Work tied to a defined deliverable | Until the work is complete | Up to 2 months (written) |
| Part-time | Reduced hours under any of the above structures | Follows underlying contract type | Up to 2 months (written) |
A few things worth knowing:
- Fixed-term contracts must be in writing. For terms under one year, you can renew up to three times at the same length, then extend once more for up to one year. After that, the contract converts to indefinite.
- Indefinite contracts are presumed when nothing is written down. That is not a problem, but it does mean you have fewer options if you want to end the relationship without severance.
- Probation periods must be written to be valid. Verbal agreements on probation do not hold up.
Contractors vs. employees
Misclassification is a real risk in Colombia. If a contractor works set hours, follows your instructions, and uses your tools, a labor inspector or court may reclassify them as an employee. That triggers back-payment of social security, benefits, and severance from day one.
Genuine independent contractors (trabajadores independientes) invoice for services, set their own schedule, and take on commercial risk. If that does not describe your arrangement, hire an employee.
What must be in writing
Colombian law requires written contracts for:
- Fixed-term agreements
- Probation periods
- Integral salary arrangements (where the salary absorbs all benefits into one figure, permitted above 13x the monthly minimum wage)
- Non-salary payments or benefit exclusions
For indefinite roles, a written contract is not legally required but is strongly recommended. It removes ambiguity about start date, role, and compensation structure.
Working hours
The standard workweek is moving toward 42 hours under a phased reform that began in 2023. Overtime rules and night-shift surcharges (which now apply from 7 p.m.) are part of the same reform. Any contract you sign today should reflect the current limit, not the old 47-hour figure.
Payroll, taxes, and the 13th-month salary
Colombia pays salaries monthly. Payroll runs in Colombian pesos (COP), and employers must handle contributions to several funds before the employee sees a single peso.
Contribution rates
| Contribution | Employer rate | Employee rate |
|---|---|---|
| Health (EPS) | 8.5% | 4% |
| Pension (AFP) | 12% | 4% |
| Work risk insurance (ARL) | 0.522% to 8.7% | 0% |
| Family compensation fund (Caja) | 4% | 0% |
| ICBF | 3% | 0% |
| SENA | 2% | 0% |
| Solidarity pension fund | 1% to 2% (high earners) | 1% (above threshold) |
ARL rate depends on the occupational risk class assigned to the role. Desk work sits near the floor; industrial or field roles climb toward the ceiling.
Total employer cost on top of gross salary typically lands between 25% and 40%, depending on risk class and headcount. That range matters when you are building a hiring budget.
How payroll contributions work in practice
The employer collects employee deductions (4% health, 4% pension) directly from gross salary and remits them alongside the employer share. Income tax withholding follows a progressive schedule tied to UVT thresholds set by DIAN each year. The employer calculates and withholds monthly.
The 13th-month salary (prima de servicios)
Colombia does not have a single December bonus. Instead, workers receive a service bonus equal to one month's salary per year, split into two payments:
- Half by June 30
- Half by December 20
Both payments are prorated if the employee has not worked the full six-month period. This is a statutory obligation, not a discretionary bonus. Budget for it from day one.
There is no FGTS-style severance fund as in Brazil. Severance (cesantías) is calculated separately: one month's salary per year of service, deposited annually into a government-managed fund by February 14.
What this means for your budget
For a Colombian employee earning COP 5,000,000 per month, the employer's statutory cost is roughly COP 6,250,000 to COP 7,000,000 per month once contributions, prima, and cesantías are factored in. Run the numbers before you make an offer.
Employ Latam handles contribution calculations, statutory remittances, and payroll runs in COP. Pricing starts from $349 per employee per month.
Mandatory benefits, vacation, and parental leave
Colombian labor law sets a clear floor for what every employee must receive. These are not optional. As the employer of record, Employ Latam handles all statutory contributions and ensures benefits are paid correctly and on time.
Leave entitlements
| Leave type | Entitlement | Paid by |
|---|---|---|
| Annual leave | 15 working days per year after 12 months of service; prorated for partial years | Employer |
| Sick leave | Days 1 to 2 paid by employer; from day 3 up to 180 days paid by the health insurer (EPS) | Employer (days 1-2), EPS (day 3+) |
| Maternity leave | 18 weeks at 100% salary | Social security (EPS), reimbursed to employer |
| Paternity leave | 2 weeks at 100% salary | Social security (EPS), reimbursed to employer |
| Public holidays | 18 days per year; if worked, paid at double rate or compensatory rest given | Employer |
Social contributions that fund these benefits
Benefits do not appear out of thin air. Employer contributions to Colombia's social security system are what make sick pay and parental leave work. The headline rates:
- Health (EPS): 8.5% of salary
- Pension: 12% of salary
- Work risk insurance (ARL): 0.522% to 8.7% depending on job risk class
Total employer burden typically lands between 25% and 40% of base salary. Employ Latam calculates and remits all of these on your behalf.
Prima de servicios (service bonus)
This is Colombia's equivalent of a 13th-month payment, but split in two. Employees receive one month's salary per year, paid in two installments: half by June 30 and half by December 20. It applies from the first day of employment and is prorated if the employee has not yet completed a full year.
What this means for your hiring budget
When you set a salary, factor in the full cost of employment. A worker earning COP 5,000,000 per month costs meaningfully more once contributions, prima, and vacation accrual are included. Employ Latam provides a full cost breakdown before you make an offer, so there are no surprises.
Pricing for Colombia starts from $349 per employee per month.
Severance, termination, and notice periods
Colombia's labor code draws a hard line between termination with just cause and termination without cause. Getting this wrong is expensive. Severance is calculated on base salary, and the amounts vary by tenure and pay level.
Notice periods
For indefinite-term contracts, the employer must give 30 days written notice before termination, or pay 30 days' salary in lieu of notice. Fixed-term contracts do not auto-terminate: if you want to end one, you must notify the employee at least 30 days before the expiry date. Miss that window and the contract renews automatically.
Severance (indemnización)
Severance applies only to terminations without just cause. Colombia splits the calculation by salary level, using a threshold of 10 times the monthly minimum wage (approximately COP 13 million in 2024).
| Tenure | Notice period | Severance owed (without cause, salary below threshold) | Severance owed (without cause, salary above threshold) |
|---|---|---|---|
| Under 1 year | 30 days | 30 days' salary | 20 days' salary |
| 1 to 3 years | 30 days | 30 days + 20 days per additional year | 20 days + 15 days per additional year |
| 3 to 5 years | 30 days | 30 days + 20 days per additional year | 20 days + 15 days per additional year |
| 5+ years | 30 days | 30 days + 20 days per additional year | 20 days + 15 days per additional year |
Partial years are prorated. The base rate resets at year one: you pay the flat amount for the first year, then the per-year rate applies to each additional year beyond that.
Just cause termination
Just cause includes documented misconduct, repeated policy violations, or serious breach of contract obligations. No severance is owed in these cases, but the burden of proof sits with the employer. Documentation matters: written warnings, disciplinary records, and a clear process. An employee who successfully challenges a just cause termination can win reinstatement or additional compensation.
What Colombia does not have
Colombia does not have a severance fund like Brazil's FGTS. Instead, employees receive a prima de servicios (service bonus) of one month's salary per year, paid in two installments: half in June, half in December. This is separate from termination indemnity and is owed regardless of how employment ends.
How Employ Latam handles this
When you terminate a worker through us, we calculate the exact indemnity owed, process final payroll in Colombian pesos, and handle the statutory contributions through the last day of employment. You get a clear cost figure before you act.
Pricing starts from $349 per employee per month.
Recent regulatory changes
Colombia's labor framework has shifted meaningfully over the past two years. The changes affect working hours, overtime pay, night-shift surcharges, and leave entitlements. If you're hiring in Colombia now or planning to, these updates affect payroll costs and contract terms directly.
Key changes: July 2024 to mid-2026
| Date | Change | Impact on employers |
|---|---|---|
| July 2024 | Ordinary working week reduced from 46 to 44 hours under Law 2101/2021's phased schedule | Hours beyond 44 per week now attract overtime pay; payroll models need updating |
| July 2025 | Working week drops again to 42 hours (next phase of Law 2101/2021) | Further compression of the standard week; any hours between 42 and 44 shift into overtime |
| January 2025 | Night-shift surcharge window extended: night hours now begin at 7:00 p.m. instead of 9:00 p.m. | Workers on evening shifts earn the 35% night surcharge for two additional hours each day |
| February 2025 | National minimum wage set at COP 1,423,500/month (approximately USD 340), a 9.5% increase over 2024 | Base for social security contributions, severance indemnity thresholds, and minimum salary checks all rise proportionally |
| Ongoing 2024–2025 | Broader labor reform bill debated in Congress; provisions on fixed-term contract limits, remote work rights, and enhanced parental leave under active legislative review | Final text not yet enacted; employers should monitor Ministry of Labor announcements before structuring new long-term contracts |
What this means in practice
The hour reductions under Law 2101/2021 are the most operationally significant change. A worker previously scheduled for 46 hours per week is now entitled to overtime for hours beyond 42 (from July 2025). That is four hours per week per worker that shift from straight pay to overtime rates, which run 25% above base for daytime and 75% above base for Sunday or holiday work.
The extended night-surcharge window compounds this for roles with evening coverage. Call centers, logistics operations, and any team running shifts past 7:00 p.m. will see higher labor costs without any change to headcount.
The minimum wage increase flows through to every statutory calculation: social security contributions, the severance indemnity threshold (currently 10x the minimum wage per month), and the prima de servicios. Budget accordingly.
Key actions for employers:
- Audit current shift schedules against the 42-hour standard before July 2025
- Recalculate overtime and night-surcharge exposure for evening roles
- Update payroll models to reflect the new minimum wage base
- Hold off on long-duration fixed-term structures until the broader reform bill is finalized
Employ Latam tracks these changes and applies them to payroll and contracts automatically. You do not need to monitor Ministry of Labor bulletins yourself.
Frequently asked questions
- Do I need a local entity to hire employees in Colombia?
- No. An employer of record like Employ Latam acts as the legal employer in Colombia, so you can hire without registering a local company. The EOR handles the employment contract, payroll in Colombian pesos, and statutory contributions. You retain full control over the day-to-day work and the employee relationship.
- What is the most common employment contract in Colombia?
- The indefinite-term contract is the default and the most widely used. It offers no fixed end date and continues until one party ends it lawfully. Most full-time hires in Colombia are on indefinite contracts, and if you do not specify a type in writing, Colombian law presumes this is what you intended.
- What is the total employer cost on top of gross salary in Colombia?
- Employer contributions to health, pension, ARL, and family funds add roughly 25% to 40% on top of gross salary, depending on the role's risk class. You also need to budget for the prima de servicios (one month's salary per year, paid in two installments) and annual cesantías deposits. A desk-based hire at the lower risk class sits closer to 25%; roles with higher occupational risk push toward 40%.
- How long is paid maternity leave in Colombia?
- Maternity leave in Colombia is 18 weeks at 100% of the employee's salary. The cost is covered by the health insurer (EPS), not directly by the employer, though the employer typically advances the payment and is reimbursed. The employee must have made the required EPS contributions during pregnancy to qualify for the full benefit.
- How much severance is owed for terminating an employee without cause in Colombia?
- It depends on the employee's salary and how long they have worked for you. For employees earning below 10 times the monthly minimum wage, the formula is 30 days' salary for the first year, plus 20 days' salary for each additional year. For higher earners above that threshold, it is 20 days for the first year plus 15 days per additional year. Partial years are prorated in both cases.
- What is the most important recent labor law change for employers hiring in Colombia?
- The phased reduction of the standard working week under Law 2101/2021 is the most operationally significant change. From July 2025, the ordinary week drops to 42 hours, meaning any hours worked beyond that threshold must be compensated as overtime. Combined with the extended night-surcharge window (now starting at 7:00 p.m.) and the 9.5% minimum wage increase in 2025, employers should expect a measurable rise in per-worker labor costs compared to two years ago.
We handle the contract, payroll, taxes, and benefits in Colombia so you can hire that person this month.
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We'll send a fully-loaded cost breakdown for the role within a few hours, then draft a locally compliant employment contract. Most Colombia hires can start within 1 to 3 business days once docs are in.
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