Employer of Record in Colombia: how to hire compliantly without an entity.
Employ Latam is an employer of record in Colombia. We become the legal employer for your hire, so you can employ full-time staff there 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
Colombia is one of the larger hiring markets Employ Latam covers in Latin America. It has a structured labor code, mandatory benefits that go beyond base salary, and a wage floor that adjusts each year by government decree. Hiring here works well through an EOR because the compliance layer, statutory bonuses, contribution schedules, and termination rules are detailed and change frequently.
Employ Latam employs the worker on your behalf through a locally compliant contract. We handle payroll, statutory contributions, and the mandatory benefits below. You manage the day-to-day work.
Colombia at a glance
| Item | Detail |
|---|---|
| Currency | Colombian peso (COP) |
| Working week | 42 hours per week (standard as of July 2026) |
| Standard workday | Flexible within statutory limits; can range 4 to 9 hours daily as long as the weekly total is respected |
| Probation period | Up to 2 months (limited to one-fifth of the term for fixed contracts under 1 year) |
| Notice period | No general statutory notice for employer-initiated termination; fixed-term non-renewal generally needs at least 30 days; employee resignation on an indefinite contract requires 30 calendar days |
| 13th-month salary | Mandatory: prima de servicios equal to 30 days' salary per year, paid in two installments (by June 30 and December 20) |
| Payroll cycle | Monthly or more frequent; salary must be paid in periods no longer than one month |
What makes Colombia distinct
- Two statutory bonuses, not one. The prima de servicios (30 days' pay a year) sits alongside cesantías, an annualized severance-style fund equal to one month's salary per year of service, deposited with the employee's chosen fund by February 15. Interest of 12% annually accrues on the cesantías balance.
- Employer contributions run about 16.5% of gross pay, covering pension (12%), family compensation fund (4%), and work-risk insurance (around 0.522% for standard-risk roles). Health, SENA, and ICBF employer charges may be exempt for lower-paid employees at qualifying employers.
- Maternity leave is 18 weeks, paternity leave is 2 weeks, and annual leave is 15 working days per year.
- Termination without just cause requires statutory compensation, calculated by salary level and tenure, separate from accrued benefits.
- Working hours are capped at 42 per week as of mid-2026, completing a phased reduction from previous limits.
Cost planning
Employer costs go well beyond gross salary. Budget for the 16.5% statutory contribution base, prima de servicios, cesantías plus interest, paid leave, and any negotiated allowances like transport or connectivity support. A monthly employer service fee from Employ Latam covers contract administration, payroll runs, and compliance monitoring on top of these statutory costs.
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.
Hiring a contractor in Colombia
Many teams start with a contractor in Colombia before they hire an employee. We draft the contractor agreement, collect the contractor's local tax ID, pay them in local currency or USD, and withhold tax where Colombia requires it. You approve invoices and pay one USD invoice.
Contractor or employee
Before you start, we review the role and tell you whether it looks more like a contractor or an employee. How Colombia law draws the line is covered above.
When to convert
A contractor who works only for you, keeps set hours and uses your tools is effectively an employee under most Latin American labor law. We can move them onto an employment contract with us: same person, same pay.
Contractor payments from $29 per contractor per month.
Payroll, taxes, and the 13th-month salary
Payroll in Colombia runs on a monthly cycle, paid in equal periods no longer than a month, with salary, allowances, and deductions itemized in each payslip. The 2026 monthly minimum wage is COP 1,750,905, and eligible employees earning up to two minimum wages also receive a monthly transport (or connectivity, for qualifying teleworkers) allowance of COP 249,095. Employer and employee contributions are calculated on a contribution base generally bounded between one and twenty-five monthly minimum wages, which at the 2026 floor is COP 1,750,905 to COP 43,772,625.
There is no true "13th-month salary" line item in Colombian law. Instead, employees receive the prima de servicios: thirty days of salary per year, paid in two instalments, half by June 30 and half by December 20, prorated for shorter service. Employers also accrue cesantías (severance savings), one month of salary per year of service, deposited into the employee's chosen fund by February 15 of the following year, plus 12% annual interest on the cesantías balance, paid directly to the employee in January.
Employer and employee contributions
| Contribution | Employer rate | Employee rate |
|---|---|---|
| Pension | 12% | 4% |
| Health | 8.5% (exemption may apply for qualifying employers on employees earning under 10 minimum wages) | 4% |
| Family compensation fund (Caja) | 4% | 0% |
| SENA | 2% (exemption may apply) | 0% |
| ICBF | 3% (exemption may apply) | 0% |
| Work-risk insurance (ARL, class I example) | 0.522% (varies by risk classification, statutory range applies) | 0% |
| Income tax withholding | n/a | Progressive, 0% to 39%, no withholding below approximately COP 4,975,530/month under the 2026 UVT table |
Employee pension and health deductions (4% and 4%) are taken from gross pay. Employer contributions are additional costs on top of gross salary and are not deducted from the employee. Higher earners may also owe a solidarity pension surcharge, and qualifying employers can be exempt from the health, SENA, and ICBF shares for employees earning under ten monthly minimum wages, though the family compensation contribution still applies regardless.
Corporate income tax is 35%, and VAT is 19%, though these apply to the client's Colombian entity activity rather than to an EOR employment relationship directly. The top personal income tax rate for employees is 39%.
A quick cost example: a COP 5,000,000 monthly salary, ordinary employment, and a 0.522% work-risk rate produces employer pension of COP 600,000, family compensation of COP 200,000, and work-risk insurance of COP 26,100, a subtotal of roughly COP 5,826,100 to COP 6,501,100 depending on exemption eligibility, before adding prima, cesantías, cesantías interest, leave liabilities, and any agreed benefits.
Mandatory benefits, vacation, and parental leave
Colombia's benefits package is one of the more structured in the region. On top of the base salary, employers owe two statutory bonuses (prima de servicios and cesantías), paid leave for a range of situations, and employer contributions to pension, health, and family compensation funds. Get the components right before you quote a total cost to a client.
Prima de servicios. Thirty days of salary per year, paid in two instalments: half by June 30 and half by December 20, proportionate for shorter service. It's separate from the twelve ordinary monthly salaries and is not optional.
Cesantías. One month of salary per year of service, accrued and calculated at year end, then deposited into the employee's chosen severance fund by February 15 of the following year. The employer also owes 12% annual interest on the cesantías balance, paid in January, calculated on the balance, not as a flat percentage of annual salary.
Employer contributions. Employer pension contributions run at 12% of the contribution base, plus family compensation fund contributions at 4%, plus occupational risk insurance at a rate set by the employee's risk classification (0.522% is a common rate for low-risk office work). SENA and ICBF charges (2% and 3%) can apply on top, though qualifying employers may be exempt for employees earning under ten monthly minimum wages. Employees contribute 4% to pension and 4% to health from gross pay; higher earners may owe an added solidarity contribution.
Working hours. The statutory work week is 42 hours. Overtime carries a 25% premium during the day and a higher premium at night. Work on the mandatory rest day or a public holiday carries its own premium, phased upward through 2027.
Leave entitlements
| Leave type | Entitlement | Paid by |
|---|---|---|
| Annual leave | 15 working days per year of service | Employer |
| Sick leave | Employer covers first 2 days; EPS covers from day 3, at two-thirds of pay through day 90, then half through day 180 | Employer (days 1-2), EPS (from day 3) |
| Maternity leave | 18 weeks (1 before birth, 17 after; extensions for multiple births or a child with a disability) | EPS, via employer administration |
| Paternity leave | 2 weeks | EPS, via employer administration |
| Public holidays | 18 days per year | Employer |
Annual leave must be scheduled with at least fifteen days' notice, and at least six consecutive working days must be taken each year without carryover. The remaining days can generally be carried over by agreement, and up to half the leave can be paid out in cash if the employee requests it in writing. Unused leave is settled proportionately at termination.
Beyond the table, Colombian law also requires paid bereavement leave (five working days for qualifying relatives), paid nursing breaks for mothers returning to work, and paid leave for specific events like urgent medical appointments or serious domestic emergencies. Some of these are easy to miss if you're used to a simpler leave policy elsewhere in the region.
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, Colombian law sets no general notice period for employer-initiated termination; a dismissal without just cause is compensated through the severance indemnity instead. 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 17.5 million in 2026).
| 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 2025 labor reform (Law 2466) reshaped several core employment rules, and a series of phased provisions kept taking effect through 2026. If you're hiring in Colombia now, the rules in force today are meaningfully different from what they were two years ago. Employ Latam tracks these changes and keeps contracts and payroll aligned as each phase lands.
The most consequential shifts:
- Working hours dropped in stages. The ordinary work week reached its final level of 42 hours on 15 July 2026, down from the pre-reform 48-hour standard, with no reduction in salary or benefits.
- Night work and holiday premiums increased. Night hours now start at 7 p.m. instead of 9 p.m., and rest-day/holiday premiums are on a phased path from 75% to 100%, sitting at 90% since 1 July 2026.
- Fixed-term contracts got a hard cap. Renewals can no longer run indefinitely; the total term is capped at four years, with the clock starting from 25 June 2025 for contracts already active.
- Resignation now requires notice. Employees ending an indefinite contract must give 30 calendar days' notice, a new requirement that didn't exist before the reform.
- Disciplinary process got formalized. Written allegations, evidence access, a response window, and a proportionality standard are now required before sanctions.
- Minimum wage was set provisionally. After the original 2026 wage decree was suspended, Decree 159 fixed the monthly minimum at COP 1,750,905 while litigation continues.
| Date | Change | Impact on employers |
|---|---|---|
| Jun 2025 | Labor reform (Law 2466) enacted; fixed-term four-year cap begins counting | Existing fixed-term contracts need renewal tracking against the new limit |
| Jul 2025 | Apprenticeship reclassified as special fixed-term contract (up to 3 years) | SENA-quota apprentices must follow new pay-phase rules, not ordinary hire terms |
| Dec 2025 | Night work redefined to start at 7 p.m. | Payroll systems must recalculate night-premium windows |
| Jan 2026 | Disciplinary procedure rules take effect; 12-month update window opens for work rules | Internal policies and dismissal procedures need documented rewrites |
| Feb 2026 | Decree 159 sets provisional minimum wage at COP 1,750,905 | Payroll base, contribution ceilings, and transport allowance recalculated |
| Mar 2026 | Telework connectivity allowance rule takes effect | Remote employees earning under 2x minimum wage get a connectivity payment instead of transport support |
| Jul 2026 | Ordinary work week reduced to 42 hours; rest-day/holiday premium rises to 90% | Overtime thresholds and holiday pay calculations shift; scheduling needs review |
| Sep 2026 | Paternity leave expansion (to 12 weeks) passes first legislative debate | Not yet law; monitor but do not apply as current entitlement |
| Sep 2026 | Colpensiones reaffirms Law 100 pension framework remains operative | 2024 pension reform stays suspended; no change to current 12%/4% split |
Employers with existing Colombian staff should confirm work rules were updated within the reform's 12-month compliance window, and that payroll reflects the current 42-hour week and 90% holiday premium.
Frequently asked questions
- Do I need a local entity to hire employees in Colombia?
- No. Employ Latam employs the worker through our own locally compliant entity in Colombia, so you don't need to register a company there. We manage the employment contract, payroll, statutory contributions, and mandatory benefits, while you direct the day-to-day work and manage performance.
- 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 costs include pension (12%), family compensation fund (4%), work-risk insurance (rate depends on job classification), and possibly health, SENA, and ICBF unless the employer qualifies for an exemption. On top of these, employers must also budget separately for the prima de servicios (30 days of salary a year) and cesantías (one month per year of service, plus 12% interest), which are not contribution percentages but separate statutory benefits owed directly to the employee.
- How long is paid maternity leave in Colombia, and who pays for it?
- Maternity leave in Colombia is 18 weeks: one week before birth and seventeen after, with extensions for premature birth, multiple births, or a child with a disability. The employer administers the leave and pays the salary, but is generally reimbursed by the employee's EPS (health fund) once eligibility and contribution history are confirmed. Employ Latam handles the paperwork and EPS coordination so the employee gets paid on schedule.
- 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 significant recent labor law change for employers in Colombia?
- The 2025 labor reform's phased reduction of the standard work week to 42 hours, completed 15 July 2026, is the change with the broadest payroll impact. It applies to all employees without reducing salary or benefits, and it works alongside a rising rest-day and holiday-work premium that reached 90% the same month. Employers should confirm their scheduling and overtime calculations reflect both changes.
We handle the contract, payroll, taxes, and benefits in Colombia so you can hire that person this month.
Statutory figures for Colombia, each traced to a named source with its reference year. Sourced from OECD, the World Bank, the ILO, ISSA and national statutes.
Latest reference period: 2026
Figures are statutory reference values maintained internally and refreshed against primary sources. They are a starting point for planning, not legal advice — we confirm the exact numbers for your role before you hire.
What changed in Colombia
Checked against official sources on .
No rule changes recorded since we began logging them.
What a hire in Colombia costs
Employers in Colombia pay statutory contributions of 16.5% on top of gross salary. At the average monthly wage of COP 2,022,657, that adds COP 333,738 a month.
| Salary | Gross per month | Employer contributions | Total per month | Total per year |
|---|---|---|---|---|
| Minimum wage | COP 1,750,905 | COP 288,899 | COP 2,039,804 | COP 24,477,652 |
| Average monthly wage | COP 2,022,657 | COP 333,738 | COP 2,356,396 | COP 28,276,747 |
Employer contribution rate: PwC Worldwide Tax Summaries, as of Jan 2026
Minimum wage: National government, as of Sept 2026
Average monthly wage: ILOSTAT, as of Jan 2025
Amounts in COP. Totals per year are twelve monthly salaries plus contributions.
What the contributions pay for
- Pension12%
- Caja de compensacion familiar4%
- ARL occupational risk (class I)0.52%
Components: PwC Worldwide Tax Summaries, as of Jan 2026
On top of this: the 13th salary where the law requires one, paid leave, and notice and severance if the employment ends (all in the tables above), plus our employer of record fee, from $349 per employee per month. Every quote we send breaks each of these out for the actual role.
Found someone in Colombia? Let's employ them.
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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