By Globalization Partners
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With seemingly endless stretches of Amazon rainforest, the world’s tallest palm trees, and hundreds of beaches, Colombia is undoubtedly a beautiful country. But it’s more than that. Colombia is also a smart destination for companies looking to expand their business. If you’re planning to hire someone in Colombia or fully staff a new office in the country, we have some tips for hiring in Colombia, based on the local laws and cultural climate.
What to Know Before Hiring in Colombia
Before you begin hiring in Colombia, you should understand the country’s employment laws. It’s important to note that, overall, the regulations Colombia has in place favor the employee. Let’s look at some aspects of employment in Colombia that you should know before you start hiring.
You may encounter some linguistic differences when you do business in Colombia. Colombia has a diverse population that speaks more than 100 languages in total. That said, over 99 percent of Colombians speak Spanish, the official language of Colombia. Depending on which part of the country they are from, Colombians speak different Spanish dialects, but if you can speak any form of Latin American Spanish, you’ll likely be able to communicate with Colombian employees.
A very small minority of Colombians speak English, so companies that are used to operating in English should plan to use a translator if they do not have company members who are bilingual in English and Spanish.
2. Working hours and compensation
Colombia has a 48-hour workweek. These hours could be spread across six eight-hour days, or could be condensed to a five-day workweek. Sunday is designated as a rest day. The national wage in Colombia is stated as a monthly minimum wage. The country’s current national minimum wage is 908,526 Colombian pesos (COP), which equates to about 262.70 U.S. dollars per month.
Beyond the standard 48-hour workweek, employees can work up to 12 hours of overtime each week. When employees work overtime during the day, they are entitled to a 25 percent increase over their normal wages. When they work any hours between 10 p.m. and 6 a.m., they are entitled to a 75 percent increase over their normal daytime wages. If an employee works hours that aren’t considered overtime during the night, they still get a premium of 35 percent of their normal daytime pay.
3. Vacation time and holidays
After a year of service, employees in Colombia are entitled to 15 days of paid vacation time. They must use at least six of these days during the year, and any unused days can roll over to the following year.
In addition to vacation time, employees are also entitled to holidays off. In Colombia, this is a significant amount of time since the country has 18 national holidays, a dozen of which are Catholic holidays. This is an exceptionally high number of holidays compared to most other countries. If you need an employee to work on a national holiday, you must pay them 1.5 times their normal wages.
4. Taxes, social security, and pension scheme
Employers must withhold a portion of their employees’ paychecks to go to taxes, social security, and pension. The income tax rate is progressive and caps off at 33 percent.
In Colombia, social security includes healthcare, occupational risk, and a family welfare fund. Both employers and employees pay into the healthcare component, while employers cover occupational risk and family welfare. Employers and employees also share the responsibility of contributing to the employees’ pensions — employers pay an equivalent of 12 percent of an employee’s salary, and employees contribute 4 percent of their own salaries.
5. Required bonus
Like many other Latin American countries, Colombia legally mandates a bonus equal to one month’s salary, though employers are only required to pay this bonus to employees who are under an ordinary salary scheme. While some countries designate this as a 13th-month or end-of-year bonus, in Colombia, employers pay out this bonus in two installments during the year — employees receive half of the bonus in June and the other half in December.
Employers can award other bonuses to their employees, but anything related to an employee’s performance is simply considered part of their salary.
6. Health insurance
Employers do not have to offer their employees health insurance, because the Colombian government provides citizens with a universal health insurance scheme that is intended to be comprehensive.
However, many employers offer their employees additional health coverage through private medical plans. A prepaid medical plan can be a nice perk to make your benefits package more attractive to top talent.
The Cost of Hiring an Employee in Colombia
Recruiting employees always comes at a cost. These expenses highlight the importance of hiring top talent and establishing employee retention strategies. When hiring for the first time in Colombia, you may need to budget for the following costs:
- Business establishment: If you’re expanding to Colombia and don’t plan to partner with a professional employment organization (PEO), also known as an employer of record (EOR), you need to legally establish your company in the country. This involves many logistics and costs, including a registration fee.
- Hiring agency or committee: Companies generally must decide whether they want to hire through an agency or handle recruiting internally. Either way, this involves a cost since an internal hiring committee will still need to be paid for hours spent on hiring tasks.
- Job boards: Posting your job ad on online job boards, or publishing it in newspapers may add to your recruiting costs.
- Pre-hire checks: Background checks and other screening procedures can increase your hiring costs. Background checks are allowed in Colombia as long as they are not used discriminatorily, but you cannot withdraw a job offer due to the results of a background check. Therefore, you must conduct these checks for anyone you are considering before extending a job offer.
- Translator: If no one in your company is bilingual, you’ll need to hire a translator to facilitate communication between you and your Colombian applicants and employees. You may also need a translator’s help to compose documents like employment contracts in Spanish.
- Travel costs: When you’re hiring in a new country, especially if that country is far away from your current location, you also need to budget for travel expenses. If you’re only hiring remote employees in Colombia, travel may not be necessary. But in most instances, you should plan on flights, accommodations, and other expenses for your hiring committee or any executives who will visit the country in person.
- Legal assistance: Colombia has strict laws in place to protect and benefit employees. To fully understand these laws and ensure your hiring practices and employment terms are compliant, you may need legal counsel from a Colombian firm. This assistance can help you avoid any potential lawsuits or fines related to noncompliance.
What Does a Company Need to Hire Employees in Colombia?
You can’t start hiring someone in Colombia without first establishing your company in the country and fulfilling the necessary legal requirements. The exception is if you work with an EOR that can save you from all of these logistics. If you want to be the official employer of record, however, there are a few factors to consider.
On the ease of doing business index, Colombia ranks 67th. This means Colombia isn’t known for its easy business laws. You’ll need to research these laws thoroughly to ensure you comply with all current regulations and requirements, and be prepared for the setup process to take months to complete. You will need:
- Business structure: First, you need to determine what type of business entity you want to establish in Colombia. It could be a simplified shares company, a corporation, or an international company branch. Each type of business structure comes with its own establishment process and requirements.
- Legal documents: The exact legal documents you’ll need will vary depending on your company structure. For instance, to establish a branch, you’ll need a certificate of incorporation and a resolution from your company headquarters authorizing the opening of your Colombian branch, along with information about the branch. Other documents you should create include a Power of Attorney document and your company bylaws.
- Chamber of Commerce registration: When you establish a business presence in Colombia, you must register with the country’s Chamber of Commerce. You’ll have to submit your legal documents and shareholder information. Fortunately, if you have all the documentation you need, this registration can be fairly quick.
- Tax identification number: You must receive a tax ID number (NIT) from the National Directorate of Taxes and Customs (DIAN). In some cases, your registration with the Chamber of Commerce will automatically generate your NIT. If it does not, you’ll need to visit the DIAN office to obtain your NIT.
- Social security registrations: You also need to register your company with social security entities. This includes the Health Insurance Entity (EPS), Administrator of Professional Risks (ARL), Pension Fund Entity (AFP), and the Welfare Entity (CCF).
Steps to Hiring in Colombia
Once you have everything you need to begin hiring, you’ll work through a series of standard hiring steps to recruit the best workers for your company. Use our country-specific tips to navigate these basic employee selection and hiring steps:
1. Get the word out
You’re probably used to using job boards to advertise job vacancies. However, you may not be used to including the salary within the ad, which is important to Colombian job seekers in most cases. While this method is often effective, hiring practices in Colombia tend to focus heavily on recommendations. If you have connections in the country, you can use them to find qualified candidates. Start by advertising jobs and then ask successful hires if they have friends who may want to apply to join your team. You can also recruit from universities, especially considering Colombia boasts some of the best universities in Latin America.
2. Identify top applicants
If you’re evaluating applications in-house, you may need a translator to help your hiring manager or team understand the content of applicants’ resumes and other materials. Once you know which applicants you would like to interview, you may want to ask them to agree to a background check. Make sure you know the results of the background check before you extend any job offers.
3. Conduct interviews
Confirm with interviewees that they will be able to make your scheduled time a day before their interview. If you’re scheduling remote, virtual interviews, then you should consider the time difference between your home city and Colombia Time (COT). During the interview, you can engage in friendly conversation, but be careful to keep the focus on the applicant’s qualifications and steer clear of topics that may be considered discriminatory, such as the person’s age or religious beliefs.
4. Make job offers
When you’ve identified your top candidates, you can extend a job offer. Written contracts aren’t required in Colombia, but it’s still wise to create one. Make sure it’s clear whether it’s a fixed-term contract, a contract for a set task, a short-term contract, or an indefinite-length contract. You should also clearly state the proposed salary in Colombian pesos.
5. Onboard new employees
Once candidates have accepted and signed your job offer, you can begin the onboarding process. This will involve some legal paperwork, such as registering with all of the required social security entities. Onboarding should also involve reviewing contract terms, as well as providing new hires with everything they need to confidently and effectively begin working in their new roles.
Skip Straight to Hiring New Employees in Colombia With Globalization Partners as Your EOR
We hope our guide to hiring employees in Colombia is enough to get you started. However, as you can see, the process of establishing yourself as an employer in another country can be costly, time-consuming, and complicated. If you’re ready to start hiring employees now, consider partnering with Globalization Partners as your global EOR. With a presence in Colombia, we will take care of the logistics concerning legal compliance, payroll, and more, so you can focus on managing your new team and making your Colombian operations a success. To learn more about how we can help expand your company’s presence to Columbia, view our GlobalPedia page.