Employer of Record (EOR) in Colombia

In Colombia, employer of record (EOR) products and services are essential for ensuring compliance with the country's complex employment regulations and Colombian labor laws. They offer comprehensive services to ensure that hiring, employment, and termination processes meet local legal requirements. AI-powered EOR services include everything from legal employment contracts and managing payroll taxes to ensuring compliance in business operations.

By tapping into the expertise of an Employer of Record Colombia, companies can confidently navigate diverse regulatory requirements, minimizing legal risks.  Support from EOR Colombia minimizes compliance issues, enabling companies to concentrate on core operations, and freeing them from the complexities of local legal and tax requirements. EOR Colombia offers solutions tailored to the Colombian market, helping companies adhere to Colombia's unique labor laws.

Hiring in Colombia

Navigating Colombia's employee-centric labor laws requires local expertise and a deep understanding of Colombian employment practices. Written employment contracts are a critical best practice to define the terms of employment clearly. Wrongful termination claims can lead to significant liabilities for employers, making it essential to have in-country legal and HR support to ensure full compliance. An EOR provides this built-in expertise, mitigating risks from the start.

Employment contracts in Colombia

While verbal contracts are recognized, a strong, written employment contract in Spanish is the professional standard in Colombia. It serves as essential proof of the employment relationship and its terms. Key clauses, including probationary periods and fixed-term durations, are only valid if they are in writing. An offer letter and employment contract must always state the salary and any compensation in Colombian Pesos (COP), ensuring compliance with Colombian laws.

For remote employees, the employment contract must include specific clauses outlining the remote work arrangement, as mandated by Colombian law. Employers are required to provide necessary work tools and a connectivity allowance to cover internet and energy costs for remote staff.

Working hours in Colombia

As of July 15, 2025, the standard workweek in Colombia is 44 hours. This is part of a gradual reduction from 48 hours to 42 hours by 2026, as mandated by Law 2101 of 2021. The maximum daily working hours are 9. Overtime requires prior authorization from the Ministry of Labor.

Overtime rates are calculated as follows:

• Daytime Overtime: 25% surcharge over the regular hourly rate.

• Nighttime, Sunday, or Holiday Overtime: 75% surcharge over the regular hourly rate.

• Standard night work (9 p.m. to 6 a.m.): 35% surcharge over the regular hourly rate, even if not overtime.

Public holidays in Colombia

Colombia observes 18 national public holidays, during which employees are entitled to a paid day off, in line with Colombian labor laws. These holidays include:

• New Year's Day (Jan 1)

• Epiphany (Jan 6*)

• Saint Joseph's Day (Mar 19*)

• Maundy Thursday

• Good Friday

• Labor Day (May 1)

• Ascension of Jesus*

• Corpus Christi*

• Sacred Heart*

• Saint Peter and Saint Paul (Jun 29*)

• Declaration of Independence (Jul 20)

• Battle of Boyacá (Aug 7)

• Assumption of Mary (Aug 15*)

• Columbus Day (Oct 12*)

• All Saints' Day (Nov 1*)

• Independence of Cartagena (Nov 11*)

• Immaculate Conception (Dec 8)

• Christmas Day (Dec 25)

*Many religious holidays are moved to the following Monday if they do not fall on a Monday.

Annual leave in Colombia

Employees are entitled to 15 paid business days of vacation for each year of service. Handling leave accrual and payouts is a standard feature of an AI-powered EOR service, supporting Colombian businesses with labor law compliance.

Sick leave in Colombia

In case of a non-occupational illness, the payment responsibility is split:

• Days 1-2: Employer pays 100% of the employee's salary.

• Days 3-90: The Health Promoting Entity (EPS) covers payment at 66.67% of the employee's salary.

• Days 91-180: The EPS continues coverage at 50% of the salary.

For work-related injuries or illnesses, the Occupational Risks Administrator (ARL) covers 100% of the salary from the day after the incident. An EOR manages these claims and ensures employees are paid correctly and on time, navigating the complex reimbursement process with Colombian social security entities.

Parental leave in Colombia

Parental leave is one of the notable benefits provided under Colombian labor laws.

• Maternity leave: Pregnant employees receive 18 weeks of paid leave, fully covered by the social security system. Typically, this is taken 1 week before the due date and 17 weeks after birth.

• Paternity leave: Fathers are entitled to 2 weeks of paid leave. This can be extended based on national unemployment rate reductions.

• Shared and flexible leave: Parents can opt for shared parental leave or exchange leave periods for part-time work, providing flexibility.

Statutory benefits and contributions in Colombia

In addition to salary, employers are responsible for several mandatory benefits and contributions. We recommend budgeting approximately 45%-55% on top of the gross salary for these total employer costs.

• Service bonus (prima de servicios): This mandatory bonus equals 30 days of salary per year, paid in two installments: half at the end of June and half within the first 20 days of December.

• Severance fund (cesantías): Employers must deposit one month's salary per year of service (or proportional) into a fund of the employee's choice before February 15 of the following year. This serves as unemployment insurance.

• Interest on cesantías: Employers must pay the employee 12% annual interest on their accrued Cesantías balance, paid directly to the employee by January 31 each year.

• Transportation/connectivity allowance: Employees earning up to two times the minimum monthly wage are entitled to a statutory allowance. As of 2025, this is COP 175,000 per month. This is provided as a transportation allowance for on-site workers and a connectivity allowance for remote workers.

Termination and severance in Colombia

Probationary periods must be in writing. The maximum is 2 months for indefinite-term contracts and cannot exceed one-fifth of the term for fixed-term contracts of less than 1 year.

Termination with just cause is possible but carries a high legal risk. It requires a formal internal hearing process and substantial evidence. Most dismissals result in a labor lawsuit if not handled correctly. Using an EOR ensures that all termination procedures are compliant with local law, minimizing legal exposure.

For termination without just cause, employers must pay severance:

• Indefinite-Term Contracts:

• • For salaries below 10x minimum wage: 30 days' salary for the first year of service, plus 20 days for each additional year.

• • For salaries at or above 10x minimum wage: 20 days' salary for the first year, plus 15 days for each additional year.

• Fixed-Term Contracts: Severance is the value of the salary for the remainder of the contract term.

Payroll and taxes in Colombia

Employers are responsible for withholding and remitting taxes and social security contributions. An EOR handles all calculations and payments for payroll to ensure compliance with Colombian regulations.

Employer & employee contributions:

• Health (salud): 12.5% of salary (8.5% employer, 4% employee).

• Pension (pensión): 16% of salary (12% employer, 4% employee).

• Occupational risk (ARL): 0.522% to 6.96% of salary, paid entirely by the employer. The rate depends on the risk level of the employee's role.

• Parafiscal Contributions (family welfare): 9% of salary, paid entirely by the employer (for Family Compensation Fund, ICBF, and SENA).

• Income tax: Employee income tax is withheld at progressive rates from 0% to 39%, based on income brackets defined in Tax Value Units (UVT), which are updated annually by the tax authority (DIAN).

Why choose G-P as your EOR in Colombia?

G-P EOR is the award-winning, AI-powered SaaS platform that empowers ambitious companies to build global teams. Onboard, manage, and pay top talent in over 180 countries in minutes, bypassing the typical time, cost, and complexity of local entity setup. G-P EOR is the preferred partner for leading HCM, PEO, and payroll platforms. Bring your workforce data together in one place to maintain existing workflows while guaranteeing consistent and accurate data across your integrated systems.

Request a proposal today to learn more.