Employment laws in Colombia

What makes Colombia stand out for hiring in Latin America? A few things. The talent pool is mostly young and educated. Labor costs stay competitive compared to major regional markets like Brazil or Chile. And the economy keeps growing. But Colombia is intricate when it comes to workers’ rights. 

The foundation of all employment relationships is laid out in the Código Sustantivo del Trabajo (Substantive Labor Code), commonly known as the CST. It outlines the rules on employment contracts in Colombia, compensation for working hours in Colombia, mandatory benefits, and lawful termination of employment. 

The employment law in Colombia is also dynamic: the recent labor reform introduced changes to employment contracts, working hours, and leave policies. 

For companies expanding into Colombia, labor law compliance may become a challenge. This guide walks through the provisions that matter most, from hiring and contracts to termination and severance. 

Further, businesses that want to engage talent compliantly without the overhead of setting up a local entity can use Payoneer Workforce Management, which offers comprehensive support across 160+ countries.

Key employment laws in Colombia

Private-sector employment is covered under the Substantive Labor Code (CST), and the Colombian Ministry of Labor (Ministerio del Trabajo) enforces it. 

Here’s what falls under the labor laws in Colombia:

• Employment contracts, including indefinite-term, fixed-term, and project-based agreements
• Working hours in Colombia, overtime compensation, and mandatory rest days
• Minimum wage, social security contributions, and mandatory benefits
• Employee rights in Colombia, including leave entitlements and anti-discrimination protections
• Termination rules, notice periods, and severance pay obligations

The CST applies to everyone working in Colombian territory, regardless of nationality. A foreign worker with valid work authorization typically gets the same protections as a Colombian national. Independent contractors, on the other hand, fall under civil and commercial law and not the CST.

Contract employment laws in Colombia

The labor law in Colombia allows verbal agreements, but a bilingual written contract, in English and Spanish, is recommended. An employer of record in Colombia can help employers put together agreements as per local regulations.

Types of employment contracts in Colombia

1. Indefinite-term contract: This is the general rule for all employment contracts in Colombia. There is no predetermined end date. The contract continues until terminated by either party following lawful procedures. It offers the highest level of job stability.
2. Fixed-term (Definite duration) contract: This contract type specifies a start and end date. However, these contracts are limited to a maximum total duration of four years, including renewals. They must be in writing and describe the specific task or service. After four years, the contract automatically converts to an indefinite-term agreement.
3. Project-based contract: This contract is tied to the completion of a specific project or task. It ends when the project is completed. The contract must clearly define the scope and deliverables.

Essential contract terms

Every employment contract in Colombia should typically spell out:

• Full identification of both parties (employer and employee)
• Type of contract—indefinite, fixed-term, or project-based
• Job title, role, and responsibilities
• Work location
• Salary and compensation structure
• Working hours and schedule
• Start date of employment
• Duration or end date (for fixed-term and project-based contracts)

Statutory employment rights in Colombia

Employee rights in Colombia cover wages, hours, leave, and social security. Below are the key statutory entitlements every employer should be aware of.

Minimum wage

The minimum monthly wage in Colombia is COP 1.623.500. This represents an increase of over 9% from the 2024 level of COP 1,300,000. 

For a full breakdown of salary components, deductions, and social security contributions, see the Colombia payroll guide.

Working hours in Colombia

Colombia is gradually reducing its standard workweek. The maximum weekly limit is 44 hours. This will further reduce to 42 hours per week starting July 16, 2026. 

The reduction in working hours in Colombia does not allow employers to reduce wages. Working hours can be distributed across five or six days, with at least one mandatory weekly rest day.

Overtime laws in Colombia

Under the overtime laws in Colombia, employees cannot work more than two hours of overtime per day. 

The overtime pay rates are as follows:

Mandatory benefits and leave

Labor laws in Colombia mandate the following benefits for all employees.

The universal health system is called Sistema General de Seguridad Social en Salud (SGSSS). It covers basic medical care, specialized care, maternity leave, sick leave etc.,

It is further classified into:

1) Entidades Promotoras de Salud (EPS): Public health insurance companies that manage and deliver healthcare services, funded through member premiums and government contributions.

2) Subsidios: Government-funded health coverage for low‑income individuals and families who meet specific income and asset criteria.

Employees should have a mandatory enrollment either in an EPS program or a Subsidio plan.

Employers must enroll all employees in the integral social security system. This includes:

• The health insurance (EPS) – 12.5% of salary
• Pension contributions
• professional risk insurance
• Vacation accrual – 4.17% of the monthly gross pay

Total employer contributions amount to approximately 20-25% of the employee’s salary. For a detailed employment cost breakdown, use our employee cost calculator.

• 13th-month pay (Prima de Servicios): All employees are entitled to a mandatory service bonus equal to one month’s salary per year. It is paid in two installments: the first by June 30 and the second by December 20.
• Annual leave: Employees are entitled to 15 working days of paid vacation per year after completing 12 months of service. Employees must take at least 6 consecutive days per year.
• Public holidays: Colombia recognizes 18 paid public holidays per year, one of the highest counts in Latin America.
• Sick leave: Employees can take up to 180 days of sick leave for non-occupational illness. The employer covers the first three days. From day four onward, the social security system reimburses the employer.
• Maternity leave: Employees who give birth are entitled to 18 weeks of fully paid leave. At least one week must be taken before the due date. In cases of multiple or premature births, an additional two weeks are granted. The social security system covers this benefit.
• Paternity leave: Employees who become parents are entitled to two weeks (14 calendar days) of fully paid paternity leave. This benefit is funded by the health insurance provider (EPS). Shared parental leave allows parents to distribute the last six weeks of maternity leave between them.
• Other leave entitlements: Colombian law also provides for five days of bereavement leave, a half-day of voting leave, and paid leave for medical appointments, judicial proceedings, and school-related obligations.

Colombia’s employment law on termination

Termination laws in Colombia are structured to protect employees from arbitrary dismissal. At-will employment does not exist. Employers can terminate a contract, but the method and reason determine whether severance pay is owed.

Grounds for termination

An employment contract in Colombia may end through:

• Mutual agreement between the employer and employee
• Expiration of a fixed-term contract (with 30 days’ prior notice of non-renewal)
• Completion of the specific project or task
• Termination with just cause (as defined in Article 62 of the CST)
• Termination without just cause (requires severance payment)

Just cause termination

Article 62 of the CST lists specific grounds for just cause termination, including serious misconduct, repeated breaches of contract, fraud, violence in the workplace, and disclosure of confidential information. When just cause exists, no severance is owed. However, the employer must follow a disciplinary process. 

Employers must provide at least a few days’ notice before initiating disciplinary proceedings and allow the employee to respond. If there is no proper justification from the employee, it may lead to immediate dismissal.

In case of poor performance, Article 2.2.1.1.3 of Decree 1072 of 2015 (Article 2 of Decree 1373 of 1966) outlines the process.

The employer must send two written requests eight days apart, then share a comparative performance chart and allow eight days for a written defense. If still unsatisfied, they must issue a written notice within eight days.

Notice period in Colombia

There is no general statutory notice period in Colombia for indefinite-term contracts. The employer can terminate the contract at any time, with or without cause, subject to severance obligations. 

For fixed-term contracts, the employer must provide 30 days’ written notice before the contract’s expiration if they choose not to renew it. If no notice is given, the contract automatically renews for the same term.

Severance pay in Colombia

When an employer terminates an indefinite-term contract without cause, severance pay in Colombia (indemnización) is mandatory. The amount depends on the employee’s salary level and length of service:

Salary level	Severance calculation
Less than 10x minimum monthly wage	30 days’ salary for the first year + 20 days per additional year
10x minimum monthly wage or more	20 days’ salary for the first year + 15 days per additional year

For fixed-term contracts terminated early without cause, severance equals the salary due for the remaining contract period. For project-based contracts, severance is calculated based on the remaining duration, with a minimum of 15 days’ salary.

Employees terminated with just cause are not entitled to severance. However, all terminated employees must receive their final salary, prorated vacation, cesantías, prima de servicios, and any other accrued benefits. 

Special termination protections

Certain employees have reinforced job stability under Colombian law. These include pregnant employees, employees with disabilities, and union representatives. 

Terminating these employees requires prior authorization from the labor inspector or a labor judge. Collective dismissals (affecting a significant number of workers) also require prior approval from the Ministry of Labor.

Navigate employment laws in Colombia with Payoneer Workforce Management

Colombia’s employment framework is well-structured but detailed. From mandatory social security contributions and cesantías deposits to the evolving contract rules, staying informed about labor law compliance in Colombia requires local expertise.

It is considered beneficial to partner with a trusted workforce management platform when building and managing teams in Colombia. 

Payoneer Workforce Management helps businesses onboard talent, run local payroll, manage employment contracts, and stay compliant with local labor regulations, without setting up a legal entity. 

Whether you need Employer of Record (EOR) services to engage full-time employees, Agent of Record (AOR) solutions to manage international contractors, or a Contractor Management System for seamless contractor payments, Payoneer Workforce Management can help you streamline the process.

Expand in 160+ countries. Onboard talent quickly with localized contracts. Pay employees securely and stay compliant with local employment laws. 

Book a free demo today.

FAQs

1. What types of employment contracts exist in Colombia?

Indefinite-term is the default- no end date, strongest protections. Fixed-term contracts have a hard cap at four years (renewals count) and need to be in writing. Project-based contracts wrap up when the work is done. Typically, any type of contract should be documented in writing.

2. What is the current minimum wage in Colombia?

The minimum wage in Colombia is COP 1.623.500 per month. 

3. What are the working hours in Colombia?

The current working hours are 44 hours a week. This will be lowered to 42 hours a week in July 2026. The maximum overtime is 2 hours a day.

4. Is severance pay mandatory in Colombia?

Only when you’re ending the contract without just cause. The payout varies based on salary bracket and how long the person has worked for you. Terminate with documented just cause following the right disciplinary steps, and severance doesn’t apply.

5. Do foreign employers need to comply with Colombian labor laws?

Yes. If the work happens on Colombian soil, the CST applies. That means proper contracts, social security enrollment, payroll compliance, and every rule around working hours in Colombia and termination laws in Colombia.