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 generally be paid monthly, although semi-monthly payroll is also common if agreed or set by policy. Bi-weekly pay may be permissible for casual or short-term employees if it fits the wage structure and agreement, but daily-wage workers are generally paid weekly. The minimum wage is a monthly legal minimum wage and is typically updated every year. The exact amount depends on the year being referenced.

The law also outlines overtime stipulations. For example, ordinary working hours are being progressively reduced from the former 48-hour weekly limit. The maximum ordinary workweek will reach 42 hours per week by 2026. Employers can agree on flexible working days to adapt to employees’ particular needs. Employees who work beyond the applicable ordinary working day or week are entitled to overtime premiums. Daytime overtime is paid with a 25% surcharge over the ordinary hourly wage, and nighttime overtime with a 75% surcharge. Daytime work runs from 6:00 a.m. to 9:00 p.m.; nighttime work runs from 9:00 p.m. to 6:00 a.m.

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 generally need prior authorization from the Labor Ministry before requiring overtime. The authorization is typically tied to the employer, workplace, and overtime arrangement, not only to a specific role or job position.

Guaranteed benefits in Colombia

Colombia recognizes 18 national public holidays, when employees are generally entitled to time off. Many are observed on the following Monday under holiday-shifting rules. Employers are also required to give a minimum of 15 paid working 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 30 days of salary per year, paid in two installments. Employees receive 15 days of salary by June 30 and another 15 days 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 is generally granted for 18 weeks. Pregnant employees are usually entitled to 1 week before childbirth and 17 weeks after. In some cases, the prenatal portion may be adjusted based on medical certification or the employee’s situation. 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. This may increase by 1 additional week for each percentage-point decrease in the national unemployment rate, up to 5 weeks total, when the statutory trigger is formally applicable.

Shared parental leave allows parents to split the eligible portion of maternity leave. The father may take up to the last 6 weeks, in addition to paternity leave, if both parents agree and statutory conditions are met.

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 earned up to twice the monthly legal minimum wage and worked on-site, or otherwise needed to commute, received transportation assistance of COP 140,606 in 2023. The eligibility threshold was COP 2,320,000 per month.

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
  • Pensions

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 contribution base income
  • Health: generally 8.5% of the employee’s contribution base income. Employers are often exempt below 10 monthly minimum wages.
  • Professional Risks (ARL): Between 0.522% and 6.960% of the employee’s contribution base salary, based on the assigned occupational risk class
  • 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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