Compensation and benefits management in Colombia can be complex without the right preparation and local expertise. Employers are required to give employees several standard benefits. Other supplementary benefits are not mandated by law but are expected by employees and can attract top candidates to your open positions. You can choose to learn the regulations related to Colombia benefits management on your own, or you can work with an Employer of Record (EOR) like G-P to stay compliant and save valuable time and resources.
Colombia compensation laws
Colombia compensation laws state employees should be paid monthly. However, more casual employees can get paid bi-weekly. While the minimum wage in Colombia is currently COP 1,160,000 monthly, the country changes its legal minimum wage every year.
The law also outlines overtime stipulations. For example, most employees in Colombia work the maximum working hours per week, which is in a progressive reduction over the next few years through 2026 until the maximum 42 hours per week is reached. Employers can agree on flexible working days to adapt to employees’ particular needs. Employees who work over the maximum weekly working hours are entitled to 25% over the hourly rate for overtime hours during the day and an additional 75% at night per each overtime hour.
Nighttime work, even if it is not overtime, is paid with a 35% surcharge over the hourly rate, in proportion to every nighttime working hour of the shift.
Employers cannot request employees to work overtime until the Labor Ministry has issued an authorization for the specific role or job position of the employee.
Guaranteed benefits in Colombia
Colombia recognizes 18 public holidays during which employees get time off. Employers are also required to give a minimum of 15 paid days of annual leave after 1 year of employment. In addition to paid time off, employees get a semestral bonus known as a prima de servicios. The bonus equals 15 days of salary paid to employees twice a year — once on the last day of June, then again within the first 20 days of December.
Parents are also entitled to certain parental leave benefits. Parental leave for maternity and adoption for female employees in Colombia is granted for 18 weeks. Pregnant employees are entitled to 1 week before childbirth and 17 weeks after. For medical reasons, the employee can have 2 weeks before childbirth, which means that the maternity leave will last 16 weeks after childbirth.
Adoptive parents and spouses in charge of the newborn in case of sickness or death of the other spouse are also entitled to maternity and paternity leave.
Male employees are entitled to 2 weeks of paid leave for a child’s birth or adoption, which can be extended 1 more week and up to 5 weeks, subject to the government’s decree about unemployment national rates.
Shared parental leave states that the last 6 weeks of the maternity leave can be split and availed either by the mother or by the father (in which case, these weeks of leave are in addition to the paternity leave) upon agreement by the working mother and the working father.
Colombia benefits management
A successful Colombia benefits management plan requires more than guaranteed benefits. Employers and employees can also agree on additional benefits such as food, clothing, or other bonuses. Employees who make up to twice the minimum wage, doing on-site work, get transportation assistance of COP 140,606 (2023) and a supply of clothing and footwear based on the type of work they do.
Although the country has a universal health insurance plan, it’s not uncommon for employers to provide additional health insurance benefits. Employees can choose between the Contributory Regime (CR) or the Subsidized Regime (SR). Any extra benefits come from the employer.
Colombia competitive benefits planning
When establishing a business in a different country, having the right resources to meet employees’ needs is critical. Employers must ensure they’re offering a benefits plan that’s competitive and personally valuable for each employee. Employers must navigate several essential factors of their benefits strategy, from managing local employees’ expectations and meeting legal requirements to addressing budget constraints.
Colombia employee benefits plans
The benefits plan should engage with local candidates competitively. Consider market standards and regulations in the region.
Employers are responsible for meeting the legally required minimums for benefits. However, employers can also go beyond them to offer practical perks. Some of the more common supplemental benefits for employees in Colombia include:
- Life insurance benefits to protect employees against economic stability due to sudden illness or death.
- Supplemental health insurance along with state-sponsored healthcare provisions.
- Bonuses to help cover day-to-day expenses, such as cards to assist with gas or grocery costs.
- Support for employees to pursue higher education costs.
- Monthly allowances.
Requirements for employee benefits planning in Colombia
National labor laws stipulate that several fundamental benefits are provided to employees. The following provisions are legally mandatory:
- Social security contributions
- Paid holiday and annual leave
- Paid parental leave
- Paid leave for sickness, liability, and workplace injuries
- Mourning, burial, and compassionate leave
- Voting leave
- Trade union leave
Employees who earn less than two times the minimum wage, doing on-site work, are also entitled to additional benefits, including monthly transportation allowances and working dress and a pair of shoes every four months.
Designing an employee benefits plan
As a company builds its benefits program, it’ll want to develop a strategy that helps balance employees’ needs and the company budget. The following steps can be helpful in the planning stages.
1. Define your company’s objectives.
As you begin the development process, you must consider your available resources and how you want to use them. Identify your company’s goals for your benefits program. For example, if one of your objectives is to build a strong core team that will stay with you as your company grows, you might opt to provide more benefits. Take time to consult key stakeholders and evaluate your priorities.
2. Complete a needs assessment.
Gain a holistic picture of regional market standards, employee needs, and industry expectations with a comprehensive needs assessment. You may consider conducting research through local employee interviews, questionnaires, and legal compliance investigations.
Next, complete a comparative benefits analysis to determine how your business can make the most of its available resources. With in-depth market data, you’ll be able to more effectively address fundamental employee requirements and position your company competitively in the market.
3. Build an employee compensation and benefits plan.
Once you have an accurate needs assessment and comprehensive gap analysis, you can use the data you’ve gathered to inform your benefits program development. As you prioritize benefits and allocate funding, ensure you consider employee contributions, administration costs, outsourcing needs, and any cost containment features.
Average cost of benefits per employee
Your expenses for administering employee benefits will depend on several key factors, including your industry, your employees’ unique requirements, and local economic conditions. Since there is so much variation from one company to the next, the average cost of benefits in the country may not be a useful metric.
How to calculate employee benefits
Labor laws in Colombia require these percentages of income to cover mandatory benefits:
- Employee pension fund: 12% of income
- Health: 8.5% of income
- Professional Risks (ARL): Between 0.522% and 6.990% of income, based on the risk profile of the professional
- Payroll Taxes (SENA, ICBF, Family Compensation Fund): Between 4% and 9% of income
How are employee benefits taxed in Colombia?
Employers are responsible for withholding taxes from supplemental benefits on a Pay As You Earn (PAYE) basis. Most supplementary benefits, such as bonuses, monetary offerings, and other perks, are considered taxable.
Employee health benefits plans
Colombia offers state-sponsored healthcare that all employees should be able to access. However, it’s common for employers to provide additional private insurance options that cover more services and offer better opportunities for fast, quality care.
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