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Payroll in CoColombia.






Country Capital



Colombian peso (COP)

Colombia is known for the Sierra Nevada de Santa Marta as well as the Andes range and the capital, Bogota. Although it is a growing area to do business, Colombia employment laws strongly favor employees. When you establish Colombia payroll, you’ll need to have a strong understanding of these laws before you hire employees, add them to the payroll, and start operating your subsidiary.

Colombia types of compensation

Labor law in Colombia stipulates a 47-hour workweek. This will be reduced over the next years to a 42-hour workweek. However, compensation type and structure should be stated in the work contract. The most common types of compensation are:

  • Ordinary salary: fixed amount.
  • Variable salary: performance-based salary.
  • Integrated salary: usually assigned higher roles and includes legal benefits and eventual overtime pay.

Depending on the compensation structure, the employees may be entitled to overtime pay (except those receiving an integrated salary), in which cases the following rates apply:

  • Overtime during the day: 125% of hourly rate
  • Overtime during the night: 175% of hourly rate
  • Nighttime surcharge: 35% of hourly rate
  • Sunday (holiday) surcharge: 75% of hourly rate

Legal benefits in Colombia

Colombia-based employees are entitled to 3 basic benefits that together are known as the Prestaciones Sociales. They include:

  • Legal services bonus (prima legal de servicios): Equivalent to 15 days of salary payable in 2 different periods throughout the year – 15 days in December and 15 days in June. It is paid based on worked days during the semester in which calculation takes place.
  • Vacations: Every worker is entitled to a 15-day vacation period per year; any outstanding balance should be paid upon termination.
  • Unemployment aid: Mandatory pay that is credited to a fund of the employee’s choosing. It is equal to a month’s salary for every year of service and proportional; any outstanding balance should be paid upon termination.

Taxation rules in Colombia

Colombia has a variety of taxation rules you need to follow when establishing payroll. For example, employers are required to make social security payments that include:

  • Health: Employers pay 8.5% of this portion of social security while employees pay 4%.
  • Occupational risk: The employer must fully pay this risk, which is between 0.522% and 6.96% of the employees’ salary.
  • Family welfare fund: Employers must contribute 9% of their monthly payroll to the family welfare fund.

Employers also need to contribute 12% of an employee’s salary to a pension program. On top of that, Colombia has a progressive income tax system expressed in Tax Value Units (UVT). Employees with a taxable income over 2,300 UVT will hit the maximum tax rate of 39%.

Colombia payroll options

Four main options are available to establish Colombia payroll. Not every Colombia payroll option is right for your subsidiary, so it’s essential to weigh the pros and cons of each:

  • Local Colombia payroll outsourcing: You can work with a payroll outsourcing company located in Colombia. This option takes the burden of payroll off your shoulders, but as the employer, you are still liable for mistakes.
  • Internal: Operating a sizeable internal payroll is easier for large companies with a commitment to Colombia. It requires establishing an entire HR team for your company in Colombia.
  • Employer of record: Finally, you can choose to use an employer of record in Colombia. G-P simplifies global payroll with accurate and legally compliant payment options through the industry’s leading platform.

How to establish a payroll in Colombia

Before establishing a Colombia payroll, companies need some personal information from employees such as their passports, proof of health insurance coverage, and bank statements. Employees also have tax registration requirements before employers can add them to the payroll. Employees need employment contracts, social security registration, public health coverage registration, severance fund registration, and workers insurance.

Entitlement and termination terms

Before employees start working, it’s best practice to draft a strong employment contract with all entitlement and termination terms. An employment contract can be terminated by either the employee or the employer even without proven just cause. Severance pay is compulsory in Colombia, and employees with a contract for an indefinite term must receive:

  • Employees receiving a monthly salary that is less than 10 minimum salaries: (a) 30 days of salary for the first year or less and (b) 20 days for each subsequent year (or proportional).
  • Employees with 10 minimum salaries per month or more: (a) 20 days of salary for the first year or less and (b) 15 days of salary for each subsequent year of services (or proportional).

Streamline global payroll management with G-P.

G-P streamlines each step of the payroll management process with our market-leading Global Growth Platform™. Pay your team with confidence anywhere in the world in 150 currencies with our 99% on-time automated payroll system — all with just a few clicks. Our products also integrate with leading HCM solutions, syncing employee payroll data across platforms automatically to create one reliable, convenient source of truth for HR teams.

Contact us to learn more about how we can support you.


THIS CONTENT IS FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSTITUTE LEGAL OR TAX ADVICE. You should always consult with and rely on your own legal and/or tax advisor(s). G-P does not provide legal or tax advice. The information is general and not tailored to a specific company or workforce and does not reflect G-P’s product delivery in any given jurisdiction. G-P makes no representations or warranties concerning the accuracy, completeness, or timeliness of this information and shall have no liability arising out of or in connection with it, including any loss caused by use of, or reliance on, the information.

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