Hire and manage employees in Colombia

Employer of Record (EOR) vs. entity

First things first: Decide between setting up a legal entity or hiring employees through an Employer of Record (EOR). Your decision will likely rest on your company’s size, available resources, and expansion plans. 

• Legal entity in Colombia. Setting this up is complex. You’ll need documents translated into Spanish, registration with local authorities, a local bank account, and expert advice to ensure you maintain compliance with the Colombian labor code.
• Colombian EOR. An EOR is a third party that acts as an employer in a country on your behalf—meaning you don’t need to worry about the hassle of setting up a separate entity. EORs handle all the legal obligations for complying with local payroll, tax, and labor laws. They can also offload administrative work like onboarding and managing employees, calculating and withholding tax, and running payroll.

Pros and cons of an EOR vs. setting up your own legal entity

Let’s say you choose to go with an EOR. You can begin hiring employees by collecting their legal information (including name, date of birth, address, social security system registration, and bank account information) as well as enrollment in public health insurance and a severance fund. 

To understand all the steps to hiring an employee through an EOR in Colombia—and learn how Rippling can help you hire and onboard Colombian employees in 90 seconds—check out our guide. 

Classifying Colombia workers: employees vs. contractors

It’s no secret that misclassifying your workers can lead to legal consequences—regardless of where you hire. In Colombia specifically, the Pension and Social Securities Unit (Unidad De Gestión Pensional y Parafiscal) has started cracking down on foreign businesses hiring Colombian contractors to ensure they aren't misclassifying their workers. 

Here are some of the ways Colombian law differentiates between contractors and employees:

Read our worker classification guide to learn more about classifying your Colombian employees (or contractors) correctly. 

Work permits for Colombia employees

Before you make your first Colombian hire, it’s crucial to ensure they’re legally allowed to work in Colombia. Anyone who isn’t a Colombian citizen—and doesn’t have permanent residency—will need to apply for a work visa in order to work in the country. 

Some exceptions apply: Citizens of MERCOSUR countries may qualify for special visa benefits. MERCOSUR member countries include Argentina, Brazil, Paraguay, and Uruguay. Bolivia, Chile, Colombia, Ecuador, Guyana, Peru, and Suriname are considered associate members.

Here are the most common visas in Colombia (in accordance with their 2022 updates): 

• Visitor "V" type visa: This visa is for visitors planning a short stay in Colombia without working.
• Migrant "M" type visa: The M visa is for anyone planing to live and work in Colombia temporarily. This visa is the most common, and is usually issued to those who invest in Colombia, receive a job offer from a Colombian business, or marry a Colombian citizen. M visas are typically valid for three years.
• Resident "R" type visa: For those planning to establish themselves in Colombia permanently, they’ll need an R visa. M type visa holders become eligible for R type visas after five years in the country.
• Technical visa: Technical visas are for foreign workers who provide specialized technical assistance for less than 180 days in a 365-day period.
• Digital nomad visa: The digital nomad visa is one of the newer visa types in Colombia, allowing individuals who are employed by foreign companies to live in Colombia for up to two years.

For a complete walkthrough on Colombian work visas, and how to apply, see our guide to work visas in Colombia.

New hire onboarding checklist

So, you’ve verified that your employee can legally work in Colombia. Now, you’re ready to move forward in the onboarding process. This is your opportunity to set your new employee up for long-term success. But, in order to do so, you’ll need a 90-day onboarding plan. Here’s an outline of some things you’ll want to include in those 90 days: 

Before their first day

• Complete a background check. 
• Send an offer letter in Spanish (more on that in the next section).
• Enroll them in benefits.
• Add them to payroll. 
• Set up their app accounts and devices.
• Schedule their orientation.
• Assign them an onboarding buddy.

On Day 1

• Make sure their workspace is set up. 
• Send a “welcome to the team” email. 
• Give them an agenda. 
• Have a get-to-know-you event. 
• Show them around the office.

During their first 90 days

• Schedule training. 
• Assign work and help them set goals. 
• Schedule regular check-ins. 
• Seek their feedback on how to improve the experience

Looking for the full list of onboarding musts? Read our guide on new hire onboarding in Colombia.

What to include in an offer letter in Colombia

An offer letter can seal the deal on your new hire, so it’s important to get it right. In Colombia, however, it isn’t required to have a written employment contract—verbal agreements are just as valid (in most cases).

Still, it can be helpful for you (and your worker) to put your agreement in writing. Here are some things you’ll want to include in an offer letter: 

• Position, job title, and start date 
• Contract term 
• Probationary period 
• Conditions of employment 
• Background check 
• Pay and benefits 
• Leave policies
• Termination policies
• Non-compete and non-solicit agreements

Our guide gives you a full breakdown of drafting legally compliant offer letters in Colombia.

NDAs and confidentiality agreements in Colombia

Non-disclosure agreements (NDAs) in Colombia are legally enforceable since Colombian law recognizes freedom of contract. But, the effectiveness of your NDA will depend on how well it’s drafted and the information that’s being protected. In Colombia, the following types of information can generally be covered by an NDA: 

• Manufacturing processes
• Formulas
• Designs
• Technology
• Financial information
• Customer information
• Employee information
• Intellectual property rights, including patents, trademarks, copyrights, etc.

Learn more about the different types of NDAs and their benefits in our guide to NDAs in Colombia.

Running background checks on Colombia employees

You’re likely excited about onboarding your new Colombian employee. We get it! With that said, be sure not to skip the background check portion of the hiring process. 

Background checks are not only allowed in Colombia but some are legally required—like immigration checks and education screenings. Here’s a full list of the most (and less) common background checks:

Keep in mind, you need a candidate’s explicit consent before running any background screenings. 

For all the details on running background checks in Colombia—and common mistakes to avoid—read our primer. 

Paying employees in Colombia

Once you’ve decided whether to hire Colombian employees through an EOR or establish your own entity, the next step is selecting a payroll solution. There are generally two options for international payroll solutions: global payroll processors and global payroll aggregators.

With a payroll solution in hand, you’re ready for the following steps: 

• Classify your employees correctly—are they contractors, full-time, or part-time? 
• Capture their information including name, date of birth, postal address, passport, bank statements, and proof of valid health insurance.
• Input the payment amount in Colombian pesos (COP). It’s illegal to run payroll in any other currency. 
• Calculate and withhold the correct payroll deductions. 
• Run payroll. 

As an employer hiring in Colombia, you’re responsible for the following payroll deductions:

Our step-by-step guide walks you through running international payroll for employees in Colombia.

Mandatory employee benefits in Colombia

Mandatory benefits in Colombia work differently than in other countries. Most countries require employers to offer employees certain benefits, like social security and healthcare. In Colombia, you can pay your employees in lieu of providing mandatory benefits, known as an “integral salary.” You can only do this if you and your employee sign a written agreement—which doesn’t apply to paid leave. 

For employees who choose to receive all of their statutory benefits, here are the ones that are required: 

• Social security contributions. Employers must contribute to the Colombian social security system as part of their income tax. 
• Short- and long-term disability. On short-term disability, employees can receive two-thirds of their salary for up to 90 days. After that, they’re eligible for 50% of their salary for an additional 90 days, with a possible 180-day extension. Long-term disability pay is dependent on factors such as age and how/where the disability occurred.
• Healthcare. Public healthcare is legally required and provided by the Empresa Promotora de Salud (EPS). Both employers and employees pay into the EPS. 
• Annual leave. Employees are entitled to 15 paid vacation days for each year of service after their first year. Leave is prorated for employees who have yet to work a full year.
• Sick leave. Employees receive 100% of their salary for the first two days of sick leave, paid by their employer. From the third day up to the 90th, they receive two-thirds of their salary from the social security system. From 91-180 days, they get 50% of their salary, also provided by social security.
• Parental leave. Pregnant employees and mothers who adopt children are entitled to 18 weeks of maternity leave. Fathers receive two weeks of paid paternity leave. The parents can also choose to split the last six weeks of maternity leave.
• Public holidays. There are 18 statutory holidays in Colombia. Employees receive paid time off on these days. If a holiday falls on a weekend, they'll usually get a replacement holiday instead.
• Overtime pay. Employees can work up to 12 hours of overtime a week. Overtime should be paid at 125% of their usual wages. Overnight overtime or overtime on Sundays or holidays is paid at 175%. 
• 13th-month salary. 13-month salary payments are mandatory in Colombia, typically paid in two installments.
• Severance pay. If you terminate an employee without just cause, they are entitled to severance pay. The amount is dependent on their earnings and duration of employment. 

Check out our statutory benefits guide for the full list of mandatory benefits (and supplementary ones) in Colombia.

Managing remote employees’ computers and apps

In the age of remote work, managing employee devices around the world presents a new challenge: Shipping devices and configuring them all has to be done from afar. So, what’s the best way to handle your employees’ equipment? 

Rippling can set up and secure employees’ accounts, with all the access and permissions they need. Additionally, you get a single place to set up, manage, and disable all employee apps—like Google Workspace. Read our guide to learn more about securing and managing employee devices.

Protecting company IP in Colombia

Your intellectual property can be your competitive advantage when protected correctly. But, understanding IP law in Colombia can be complex. You need to comprehend the different types of IP, the governing laws (Colombia belongs to many international treaties), and who has ownership over the intellectual property.

To get you started, here are the types of IP recognized in Colombia: 

• Trademarks 
• Patents
• Designs
• Copyrights

Each of the above-mentioned types requires registration with the appropriate agency (there are several), except for copyrights. No formal registration is required to protect a copyright in Colombia, though you can register works with the National Copyright Directorate (DNDA) for added protection. 

Our primer covers all of the basics to IP rights and ownership in Colombia.

Complying with Colombia labor laws

The further along you get in the hiring process, the more pieces you have to keep track of—often at the same time. Navigating Colombian labor and employment laws adds a layer of complexity to the process. Remaining compliant with local laws is crucial and failure to do so can result in harsh legal consequences. 

Learn more about the most important laws to beware of when hiring in Colombia, including: 

• Written employment contracts aren’t required (usually). You only need a written employment agreement in specific circumstances, including if the contract is fixed-term, there’s a probationary period, the employee is receiving an integral salary, or the employee is receiving non-salary payments. 
• Working hours are strictly regulated. According to Colombia’s Labor Code, employees can only work up to 47 hours a week. Sunday is a mandatory rest day, but employees can negotiate a different rest day instead. 
• Employees can receive an integral salary. If the employee and employer agree to this, the employee can receive an integral salary in lieu of many of their statutory benefits. This does not apply to paid leave. 

Terminating employees in Colombia

In Colombia, you can typically terminate an employee at any time and for any reason. But, if you do terminate an employee without just cause, you’ll be required to pay them severance. Moreover, notice periods aren’t required in Colombia, especially for employees on indefinite-term contracts. There are a few exceptions, however: 

• 15 days of notice is required if an employee is terminated for reasons such as bad performance, failure to comply with obligations, addiction, inability to perform job-related tasks, chronic disease, and so on. 
• 30 days of notice is required if an employee is on a fixed-term contract that will not be renewed upon expiration. 

Employees on indefinite-term agreements are entitled to severance pay depending on their tenure and salary:

Read our full guide on termination requirements in Colombia to ensure you stay compliant with local regulations. 

Disclaimer: Rippling and its affiliates do not provide tax, legal, or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal, or accounting advice. You should consult your own tax, legal, and accounting advisors before engaging in any related activities or transactions.