Payment of travel expenses – Article 130 of the Colombian Labor Code

Abstract:
Most companies incur travel expenses on a regular basis. The Colombian Labor Code differentiates between permanent and occasional travel expenses. To avoid heavy fines by the watchdog Pension and Parafiscal Management Unit (UGPP) it is important to understand the differences and to know how to treat the different types of expenses.

First of all, there are practices in which employers disguise part of the salary as travel expenses ignoring that they constitute part of an employee’s salary. It is important to recognize those practices to avoid sanctions imposed by the UGPP.

Article 130 of the Colombian Labor Code states:

1. Permanent travel expenses constitute a salary intended to provide the worker with accommodation and other expenses while traveling; but not for the sole purpose of providing means of transportation or representation expenses.
2. Whenever they are paid, the value of each of these expenses must be specified.
3. Occasional travel expenses do not constitute a salary in any case. Occasional travel expenses are those that are only paid for an extraordinary, unusual or infrequent occurrence.”

Because occasional expenses will never constitute a salary they will not be taken into account for the calculation of social benefits, social security and parafiscal charges. However, if such “extraordinary occasion” were to occur every month, they will be considered permanent travel expenses.

Therefore, to understand this permanent nature of the travel expenses, it is necessary to refer to the nature of the work or activity performed, its duration and quality, and the number of times the employee must travel. For this, the different kinds of travel expenses must be distinguished:

Tips to understand the Colombian Labor Code

Alimentation: The food that the employee consumes during working hours.
Accommodation: All the expenses corresponding to staying in a different place outside of their home, typically in a hotel.
Transport: This can be cash money and/or gasoline used by the worker to travel to the place where the customers, workshops or operation sites are located. This should not be confused with the regular transportation allowance employees receive as part of their salary.
Representation expenses: The money an employee needs to execute his or her work activities, for example, when the employee needs to invite a client to lunch to complete the negotiation of a contract.

Labor Code Colombia

Travel expenses should be supported by a receipt or invoice in
the name of the company.

Therefore having in mind the different elements that make up the travel expenses, we can look into the question which elements constitute a salary factor and which do not, since that changes how they have to be treated when it comes to social benefits and social security.

Part of the salary: frequent alimentation and accommodation.
Not part of the salary: transport and representation expenses.

Note: It is not sufficient to pay an employee money (cheque / cash / transfer) stating the simple reason ‘travel expenses’. Instead, it is necessary to correctly classify the payment and state its nature (alimentation, accommodation, transport and representation expenses) since not doing so may lead to the conclusion that the whole amount constitutes a salary factor. It’s also important that wherever possible, travel expenses be supported by a receipt or invoice in the name of the company.

Finally as part of the Ongresso accounting service we support you in correctly applying these rules and ensure your compliance. Please let us know if you have any questions, we’re happy to help!

Other Blogs

  • 8 min read

    November 19, 2022

  • 7 min read

    October 14, 2022

  • 6 min read

    October 6, 2022

  • 6 min read

    September 13, 2022