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, are only valid if they are agreed expressly and in writing. If a probationary period is not in writing, the employment relationship is generally treated as having no probationary period. An offer letter and employment contract should state salary and compensation in Colombian pesos (COP) as the operative amount. Any foreign-currency reference should be secondary and should not affect payroll, benefits, social security, tax reporting, or minimum-wage compliance.

For remote employees, the employment contract or applicable remote-work documentation should set out the arrangement required by Colombian law. Employers generally must provide or reimburse necessary work tools, and eligible employees who work remotely usually receive a connectivity allowance instead of the transportation allowance.

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 ordinary daily working time is generally 8 hours. Weekly limits are being phased down under Law 2101 of 2021, so schedules should follow the applicable weekly cap.

Overtime rates are calculated as follows:

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

• Nighttime, Sunday, or Holiday Overtime: 75% surcharge for ordinary Sunday or holiday work. Daytime overtime on those days is 100%, and night overtime is 150%.

• Standard night work (9 p.m. to 6 a.m.): 35% surcharge over the ordinary daytime hourly rate, even if not overtime. Higher or additional premiums may apply for overtime, Sundays, or public holidays.

Public holidays in Colombia

Colombia observes 18 national public holidays each year. Employees are generally entitled to a paid day off for these holidays under 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 working days of vacation after one 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 the statutory sick-pay rate for common illness, unless a policy, contract, or CBA provides more.

• Days 3-90: The Health Promoting Entity (EPS) covers payment at 66.67% of the employee's salary or base contribution income. The payment should not fall below the applicable legal minimum wage threshold.

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

For work-related injuries or illnesses, the Occupational Risks Administrator (ARL) generally pays the temporary disability benefit from the day after the incident. The benefit is usually 100% of the employee’s base salary or contribution income, if the incapacity is medically certified and recognized as work-related. 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 generally receive 18 weeks of paid maternity leave. It is typically paid through the social security health system, subject to contribution and eligibility rules.

• Paternity leave: Fathers or recognized partners are entitled to 2 weeks of paid paternity leave. The entitlement may increase up to 5 weeks if national unemployment falls under the statutory formula.

• 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: 15 days by June 30 and 15 days within the first 20 days of December. It is prorated if the employee has not worked the full period.

• Severance fund (cesantías): Employers must deposit one month's salary per year of service (or proportional) into a fund of the employee's choice by February 14 of the following year. This serves as unemployment insurance.

• Interest on cesantías: Employers must pay 12% annual interest on the accrued Cesantías balance directly to the employee by January 31. If the employee worked less than a full year, the amount is prorated based on days worked.

• Transportation/connectivity allowance: Employees earning up to two times the minimum monthly wage are entitled to a statutory transport allowance if they are not provided transportation and need to commute. For 2025, this is COP 200,000 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, prorated for partial years. This applies to indefinite-term contracts.

• • For salaries at or above 10x minimum wage: 20 days' salary for the first year, plus 15 days for each additional year or proportional fraction. This applies to indefinite-term contracts.

• Fixed-Term Contracts: Severance is generally the salary owed for the remainder of the contract term. A statutory minimum or protected-status rules may also apply.

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 the contribution base salary (8.5% employer, 4% employee). Some employers may be exempt from the employer share for eligible lower-paid employees.

• Pension (pensión): 16% of the employee’s pension contribution base salary (12% employer, 4% employee). Higher-income employees may owe additional employee-side solidarity fund deductions.

• Occupational risk (ARL): Paid entirely by the employer for employees. The rate depends on the employer’s assigned occupational risk class. The rate depends on the risk level of the employee's role.

• Parafiscal Contributions: 9% of payroll, generally paid by the employer. This usually includes ICBF at 3%, SENA at 2%, and the Family Compensation Fund at 4%. Certain exemptions may apply.

• 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.

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