The Colombian Labor Code (Código Sustantivo del Trabajo), which specifies the rights and obligations of employers and employees, is the primary source of the country’s labor law system. It covers a variety of topics, including hiring procedures, working hours, pay, benefits, and collective bargaining.

The principle of favorability, which states that labor rules be read in favor of the employee in cases of uncertainty or ambiguity, is one of the fundamental tenets of Colombian labor law. This underlines the importance of comprehending and abiding the law in order to avoid any potential legal problems.

Furthermore, employers need to be aware of the various employment contracts that are available. This include fixed-term, indefinite, and project-based contracts. Each form entails a distinct set of rights and responsibilities for both parties. Understanding the minimum salary standards, overtime rules, and required benefits, such as social security contributions, health insurance, and pension plans, is also crucial.

Colombian labor law violations can have serious repercussions, such as legal issues, penalties, and reputational harm. Therefore, it is essential for growing businesses to contact with local specialists who can help them through the complexities of the labor law landscape.

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Different forms of employment contracts are recognized under Colombian labor law, each with their own rights and obligations:

1. Fixed-term Contracts

These agreements are appropriate for particular projects or temporary roles because they have set durations. Companies must provide all start and end dates, as well as any renewal or termination requirements.

• Duration: For temporary or seasonal work, particular projects, or the replacement of missing staff, fixed-term contracts may be employed. Depending on the nature of the task, the contract’s duration can last from a few days to a maximum of three years.
• Written Agreement: Fixed-term agreements must be made in writing and must include both the employer’s and the employee’s signatures. The contract’s start and finish dates, the type of the work to be done, the pay rate, and all other relevant terms and conditions should be expressly stated in the document.
• Renewal and Termination: It is possible to extend a fixed-term contract with the consent of both parties. Nevertheless, depending on how long the initial contract is, there are restrictions on how often a contract can be renewed. If the business wants to keep the employee on after the maximum permitted renewals, they must offer an indefinite-term contract. Additionally, either party may stop the agreement before to the expiration date under specific conditions, such as consent from both parties, justification, or legal grounds.

2. Indefinite Contracts

These agreements offer stability and security for both companies and employees and have no set duration. Unless the position requires a fixed-term contract, they are the standard type of employment contract in Colombia.

• Duration: Indefinite contracts, as their name implies, have no set end date and can last as long as either the company or the employee chooses to end it.
• Written Agreement: Contrary to fixed-term agreements, indefinite contracts do not have to be in writing. Therefore, having a formal agreement outlining the terms and conditions of employment is strongly advised.
• Termination: Both the employer and the employee have the right to terminate an indefinite contract under certain circumstances. Termination may occur due to consent from both parties, good cause, or legal requirements. Depending on the length of the employment, if the employer initiates the termination, they must give notice or pay severance.
• Collective Bargaining Agreements: Some companies and unions have concluded collective agreements for specific industries or sectors. For workers on indefinite contracts, these agreements may grant them additional rights and benefits, such as increased pay, reduced hours, or particular working circumstances.

3. Project-Based Contracts

Employers sometimes recruit workers particularly for a project’s duration, with an end date for the employment agreement.

• Nature of Work: In most cases, project-based contracts are utilized for short-term or specialized work that is well-defined and has a set start and end date. These agreements are frequently used for jobs including building projects, planning events, developing software, and consulting assignments.
• Written Agreement: Project-based contracts should be established in writing and include information on the particular project or job, the scope of the work, the start and end dates, the deliverables, and any other pertinent terms and conditions. Employer and the service provider (contractor), both have to sign the contract.
  
• Independent Contractor Status: The worker is often an independent contractor rather than an employee in project-based contracts. As a result, the independent contractor is in charge of taking care of their own taxes, social security contributions, and other necessary requirements.
• Payment: Instead of earning a set salary, project-based contractors are typically paid on a fee or project basis. The contract should explicitly state the payment terms and conditions, including the sum, frequency, and mode of payment.

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To guarantee that workers receive fair compensation, Colombia has legislation in place. For the purpose of abiding by labor regulations and preserving good employee relations, it is essential to comprehend minimum wage requirements and pay methods.

The Colombian government determines the minimum salary each year while taking inflation and economic conditions into account. Employers are required to make sure that employees’ pay is at least as high as the minimum wage requirement. Employees are entitled to overtime pay, which is generally paid at a higher rate than during regular working hours.

Working Hours & Breaks

• The current Labour Code permits a maximum of 48 hours a week spread over five or six days. However there must be at least one paid day off every week. Starting on July 15, 2023, the maximum working time will gradually decrease annually. This means that the employees will work 47 hours per week in 2023, 46 hours per week in 2024, 44 hours per week in 2025, and 42 hours per week in 2026.
• Additionally, employees should get a break during regular working hours; this time is not included as work time.

Paid Time Off

• After working for a year, employees are entitled to 15 days of paid vacation.
• Besides that, yearly leave includes the right to take advantage of required public holidays.
• When an employee misses work due to illness, they are entitled to 100% of their regular pay for the first two days. The social security system pays them two thirds of their wage starting on the third day and continuing for up to 90 days. After that, the social security system pays them 50% of their wages up to 180 days.
• Generally beginning one week before the due date and ending 17 weeks after, employees are entitled to 18 weeks of paid maternity leave. The pregnant employer may take two weeks of leave prior to the birth, or all following the birth.

According to Colombian labor law, various advantages and payments are required to guarantee the well-being and security of workers. The Colombian social security system, which provides health insurance, pensions, and other benefits, requires employers to make contributions. Based on the salary of the employees, these contributions are computed.

First of all, employers are required to offer their workers health insurance coverage. This is possible either through the public health system or through private insurance companies. This guarantees that workers have access to medical care. Furthermore, to assist employees in saving for retirement, employers are required to make contributions to their pension plans. To provide retirement benefits, the Colombian government developed the obligatory “Sistema General de Pensiones”.

A smooth expansion process and the avoidance of legal complications depend on compliance with Colombian labor legislation. Therefore, businesses should ensure to comply regulations to avoid risk serious repercussions. In order to maintain compliance and successfully handle any legal complexity, it is advised for expanding enterprises to engage with local specialists and obtain legal guidance.

Understand the Colombian Labor Law by Engaging the Right PEO (Professional Employer Organization)

Professional Employer Organizations (PEOs) constitute helpful partners for businesses looking to grow in Latin America. PEOs specialize at managing responsibilities related to hr solutions, ensuring legal compliance, and offering qualified advise on regional labor laws. Therefore, by partnering with a reliable PEO, businesses can lower risks and ensure a successful soft landing.

Ongresso is your reliable partner in Latin America. With our expertise and resources we enable your company to enhance efficiency and attain sustained growth.

In conclusion, a thorough knowledge of Colombia’s labor regulations is essential for businesses looking into expansion potential there. Businesses may build good working relationships with their employees, preserve compliance, and find long-term success in this dynamic and expanding industry by respecting and adhering to the legal standards.