Have questions? Ask us!

How to Hire Employees in Colombia: A Complete Guide for Overseas Employers

With one of the fastest-growing economies in South America, Colombia is home to many skilled workers who may fit your company’s need for remote talent.  Although the educational system is sound, English is not as widely spoken as it is in Europe for example, so that has to be taken into consideration when recruiting for some positions.

Colombia is also popular with expats, who may be available to fill specialized roles, and could help bridge any language barriers if they have lived in the country long term. 

Every country has its own work culture, customs and labor regulations that will affect the success of hiring abroad, and Colombia is no different.  This guide will give you the essential items for hiring either residents or expats in Colombia.

What you need to know before hiring in Colombia

Before you take the step of recruiting and hiring Colombian or expat employees, you will want a full understanding of the specifics of Colombian employment and labor laws.  This will allow you to select the best hiring method, and to remain in compliance throughout the employment relationship.

Employment in Colombia

Employment Contracts

Employment contracts are only required for fixed-term employment, but contracts are recommended for every hire, and must conform to Colombian laws and be drafted in Spanish.  Fixed-term contracts cannot be longer than three years initially, but they can be extended.

Labor Laws

There is an array of labor laws in Colombia designed to protect employee rights and provide entitlements, which include:

  • Paid annual leave (15 days), maternity leave (18 weeks) and paternity leave (8 days)
  • Indefinite paid sick leave (with certification) but employers can get reimbursed by social security after the third day
  • 30-day notice requirement for termination
  • Severance pay of one month’s salary for each year of service
  • There are mandatory labor harassment and data privacy policies
  • Non-competition and non-solicitation clauses are unenforceable

Even if some of these rules are more employee-friendly than in your home country, Colombia’s laws will apply to local workers regardless of the location of the employer.

Work Permits

Expat workers will need a work visa with a Colombian entity as a sponsor.  Work visa criteria will depend on the technical and skill level of the employee, and an acceptable ratio of Colombians/foreigners in the position. 

Visitor visas with a work permit are valid for two years, but they can be extended indefinitely.  Typically, work visas have to be applied for outside the country, unless the sponsor does it through the Ministry of Foreign Affairs.

Subscribe to get more insights like this.

Payroll and Taxes in Colombia

Average Salary

The salary levels are lower in Colombia than in some countries, as evidenced by a monthly minimum wage of US$257.  Here are some examples of average monthly salaries for common remote professional positions:

  • Accounting/Finance: 4,830,000 COP per month  (US$1278)
  • Information Technology: 4,710,000 COP per month  (US$1246)
  • Customer Service: 3,210,000 COP per month  (US$849)
  • Marketing: 5,260,000 COP per month  (US$1392)

Considering the salary levels, Colombia can be a very cost-effective country to hire remote workers or staff local operations.  Keep in mind that expats will not likely accept Colombia level salaries, but due to the low cost of living, they should be open to compensation below that of their home country.

Payroll and Social Security Contributions

There are required contributions for both employer and employee that cover pension and healthcare funds, and payroll tax for the employer only.  Bonuses and other non-salary payments are not subject to payroll tax.  Expats do not have to contribute if they are covered under a pension system in their home country.

ContributionsTotal RateEmployerEmployee
Pension16%12%4%
Health12.5%8.5%4%
Payroll Tax4-9%4-9%0

 

Tax Rates

Tax rates for residents in Colombia range from 0-39% depending on their compensation level.  Non-residents, which would include some expats, pay a flat 35% on all income.  Common expat allowances like housing and child education are taxable, but an employer supplied vehicle is not.

Tax Residency

The tax residency threshold is 183 days during a rolling 365-day period, or 183 days during the current fiscal year.  The days counted are non-continuous, and days spent prior or after any work activity are also counted.

How to hire your employees in Colombia

Now that you understand the structure of Colombian employment, you have to decide how you are going to hire your worker.  You have a few options:

Set up your own entity in Colombia

Companies with a business commitment to Colombia, or who plan to hire multiple employees, may want to set up their own entity or branch office.  This does give your company control over the entire employment and payroll process, but it would certainly require you to engage legal and accounting specialists to assist you.

Even then, the bureaucratic and regulatory process is time-consuming and can be daunting, except for those multinationals with experience in setting up foreign subsidiaries.

Outsource employment to an employer of record

A more cost-efficient and easier method of hiring is to outsource employment to a GEO service that uses a local employer of record (EOR).  The EOR is already set up in Colombia, and can quickly hire and run a legal, compliant payroll for your employee.  The EOR becomes the de facto local employer, and they have the expertise to ensure full compliance while giving your employee local support.

Hire them as a contractor instead

Perhaps the simplest approach is to hire workers as contractors, and that is possible when you only have short term projects or part-time work to offer.  However, any full-time, long term engagements will start to look like formal employment, and you could find your worker re-classified as an employee using Colombian criteria for the contractor vs employee relationship.

Shield GEO Solution

Shield GEO offers its clients expert, verified employers of record in multiple global locations.  Our GEO solution combines regionally situated account managers with in-country resources so that your employees are hired, onboarded, and placed on payroll following host country regulations.

We can handle every aspect of hiring your employees in Colombia, including providing the employment contract, calculating benefits and contributions, tax withholding, visa sponsorship, and issuing accurate payslips.  This allows you to concentrate on managing your employee’s daily work schedule and deliverables, while we focus solely on employment administration.  We make international employment simple.

 Need more information about employing in a new country? Learn more about:

 

 

Looking to hire an employee in Colombia? Get in touch.

Related Articles