Officially known as the Republic of Colombia, this South American nation is home to over 52 million people. The country is divided into 32 departments, the largest of which is the capital city of Bogotá, where much of Colombia’s commerce and economic activity takes place. Colombia is perhaps best known as one of the world’s most prolific coffee producers. Other major exports include petroleum, coal, cut flowers, bananas, and precious stones (particularly emeralds). 

In addition to its booming economy, ranked #42 in the world, Colombia is known for its rich biodiversity, warm and inviting culture, and unique natural landscapes. While Colombia’s global image suffered back in the 1980s due to a dangerous drug trade, the country has since rebounded and is making a name for itself as an international trade hub. With a large, affordable, and hardworking population and a steadily growing economy, Colombia stands out as an excellent place to hire your newest employees. 

Why Expand Your Business to Colombia

Strategic Advantages of the Colombian Market

The fourth-largest economy in Latin America, Colombia offers investors a variety of strategic advantages. The International Monetary Fund reports Colombia’s GDP at over $400 billion. Although the country’s economy suffered during the COVID-19 pandemic, it has bounced back stronger than ever with a 2.4% annual growth rate. The country is home to numerous skilled workers, many of whom have some English proficiency. Plus, the literacy rate in Colombia is high, clocking in at 96%.  However, the unemployment rate remains around 10%, meaning that many of these talented individuals are underutilized and searching for their next job. 

Colombia’s currency is the Colombian Peso (COP), and the exchange rate favors the US dollar: 1,000 Colombian pesos is equal to just 25 cents in the United States. This means that hiring Colombian workers can be very affordable. The minimum monthly salary in Colombia is just 1,452,000 COP, which is equivalent to about 365 USD. 

Importance of Being Aware of Colombian Labor Laws

Enriching your team with Colombian talent offers endless possibilities for many international companies. However, as you proceed with hiring in Colombia, it’s crucial to understand the country’s labor laws and regulations and ensure you are compliant with these rules. Originally drafted in 1950, the official Colombian Labor Code is written in Spanish – but don’t worry! If you are not a fluent Spanish speaker, you can still access translations online or translate through advanced browsers like Google Chrome. 

The Colombian Labor Code is intended to define the relationship between employers and employees, keeping in mind economic coordination and social balance. It defines important considerations like mandatory benefits, social insurance contributions, anti-discrimination requirements, and more. Essentially, this law is a one-stop shop for all of your legal questions about hiring in Colombia. While the code was originally written in 1950, subsequent amendments have brought this legislation into the modern world. 

Being aware of these legal requirements is essential for anyone hoping to avoid potential legal problems and build a positive reputation as an employer in Colombia. Vetting your current employment practices against these new regulations is a good place to start.  

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Step 1: Define Your Hiring Needs

Before you begin the hiring process in Colombia, it is crucial to think about the big picture of what your company hopes to achieve through doing business in Latin America. Are you hoping to establish a small team tasked with managing local operations, or are you looking to initiate a larger-scale hiring process? Knowing the answers to these questions will help guide your Colombian recruitment strategy. 

Once you have an idea of your overall agenda, you can start to think more specifically about the roles that you need to fill. What skills do these roles require? How many employees will you need? What specific qualifications and experience are relevant or necessary for each distinct position? Determining these criteria in advance will help you find the right candidates and ensure that the roles you are hiring for correspond with your organization’s overall goals in Colombia.

Step 2: Familiarize Yourself with Compliance Requirements

Understanding the labor laws, tax obligations, and mandatory benefits offered in Colombia is essential when you are doing business in this Latin American nation. First off, you will need to familiarize yourself with Colombia’s Labor Code. It’s also pertinent to understand Colombia’s social insurance schemes. Employers in Colombia pay a net 29.5% of a worker’s salary toward social programs, and employees contribute an additional 8% of their salaries toward these programs. Colombia’s General System of Comprehensive Social Security was founded in 1993 and has four main components: pensions, public healthcare, social assistance, and workplace injury/illness insurance. The country’s labor laws make it imperative for both employees and employers to contribute to these areas. 

Before doing business in Colombia, it is also necessary to understand how the country handles taxes. Colombia’s individual income tax system uses a progressive scale based on TUs, or taxable units, each of which is equivalent to 49,799 Colombian Pesos as of 2025. Anyone who makes less than 1,090 TUs (54,280,910 COP, or $13,527) per year is exempt from paying personal income tax. The scale goes up to 39% for those who make more than 31,000 TUs (154,376,900 COP, or $38,473) per year. As for corporate income tax, the general rate is 35%, although there are some tax incentives in place to stimulate economic activity that can lower the tax burden for certain corporations. 

Step 3: Choose Your Hiring Method

The next step in hiring employees in Colombia involves deciding on the best hiring method for your needs. Will you establish a legal entity in Colombia, use an Employer of Record (EOR), or hire independent contractors? Each option comes with pros and cons. 

Establishing a Legal Entity

Establishing your business in Colombia offers perhaps the most flexible arrangement and independence, but carries the highest administrative burden. While Colombia has relatively liberal regulations when it comes to establishing businesses, it is still a time-consuming process that can be avoided by choosing an alternative method.  

Registering a business in Colombia can be a lengthy process, and there are many compliance hoops to jump through. To start a business in Colombia, you must first obtain a tax ID, or a unique number that helps the country recognize your business for tax collection and reporting. Depending on the structure of your business, you might register it as a simplified joint capital stock company (sociedad por acciones simplificada, or SAS) or a simplified joint capital stock corporation (sociedad anónima, or SA). The processes of incorporating and reporting for these types of business differ, but both require you to file your annual returns and financial statements with the government. Compliance with all of these regulations can be challenging, especially if you are not familiar with local laws. These administrative tasks can also be costly. 

Using an Employer of Record (EOR)

Using an Employer of Record in Colombia makes employment easy. Instead of worrying about local compliance, you will hand off the administrative burden of hiring to the EOR, who will serve as the legal employer for your Colombian employees. An EOR in Colombia is already familiar with the country’s labor laws and regulations and will ensure that you are complying with these rules in terms of both taxes and employment codes. Basically, the EOR handles all HR functions, helping you save time, money, and effort. The EOR will take charge of burdens like payroll, taxes, benefits administration, contracts, dismissals and terminations, compliance, and even recruitment in Colombia. 

There are limited cons when it comes to using an EOR in Colombia. The only potential drawback is a less direct relationship with employees during the hiring process. However, when you are hiring in a foreign country, this can end up being a benefit. 

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Hiring Independent Contractors

If you do not have the desire or financial means to set up a company in Colombia, you can hire independent contractors, also known as freelancers. Your freelance employees come with a reduced administrative burden, as you do not need to provide social security or healthcare benefits for them. They typically work on flexible or changeable schedules and may also work for other employers. 

Because freelance employees in Colombia often work for multiple companies and manage their own schedules, you will be able to exert less control over what they do. Freelance employees may also charge higher hourly fees than permanent employees. If you try to treat them like a regular employee, you can also risk receiving penalties for misclassification.

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Step 4: Develop a Recruitment Strategy

Hiring the right employee for your job is not just about speed – it’s also about compliance. To successfully hire employees while remaining compliant with Colombia’s labor laws, you need to develop a recruitment strategy that reflects local regulations and norms. The first step? Writing an effective job description that is aligned with local market expectations. More than 99.5% of Colombians speak Spanish, and this is the language most often used in business settings. You’ll also want to ensure the job description accounts for Colombian anti-discrimination codes. 

Now that you have written an excellent job description, you also need to think about where to post your job. You may be familiar with global job boards like LinkedIn, Indeed, and Glassdoor. While Indeed and LinkedIn are used in Colombia, regional job boards like Computrabajo (the most popular job search site in Latin America), Elempleo, and Jobomas are even more popular.

Want to learn more about effective recruitment methods? Check out our research on strategies for successful hiring, which provides tips for drawing in top-tier candidates.

Our best tip? Work with a Colombian recruitment agency or partner with an EOR experienced in Colombia’s job market. These organizations have the local expertise you need to find candidates who are perfect for your unique roles. An experienced EOR can also help you navigate expectations on standard salaries, employment trends, and benefits that will attract potential employees in Colombia. 

Step 5: Conduct Interviews and Assessments

Once you have identified some potential candidates for your position, you’ll want to conduct interviews that adhere to cultural norms. Colombian society is highly family-centric, and there is also a large emphasis on respect, warmth, and hospitality. Personal relationships and trust are the key to successful business dealings in Colombia. Face-to-face meetings are typically expected before accepting a job or conducting a transaction. Additionally, networking and social events are common here. 

When you are looking for the perfect candidate in Columbia, you will want to make sure that you structure interviews appropriately and assess candidates fairly. Additionally, including written or practical assessments can help you better evaluate a candidate’s readiness to hit the ground running in their new position. 

Step 6: Know the Legal Limitations of Background Checks

While most types of background checks are legal in Colombia, it’s important to adhere to human rights and data privacy laws. Additionally, consent is key – before running a background check on a prospective employee, you will need to get their explicit consent to do so. Colombia has strong anti-discrimination laws, so it’s also important to remember that background checks cannot be used to discriminate against potential hires based on race, gender, or political views. 

Why would you want to perform a background check before hiring a Colombian employee? In many parts of the world, background checks are standard procedure in the hiring process. You will be able to confirm that a candidate’s career and educational experience are what they claim, and you can also look into someone’s criminal history to determine whether or not they are a good fit for your company. 

However, keep in mind that there are some background check areas that are off limits in Colombia when it comes to hiring. For instance, employers cannot ask about HIV/AIDS status, pregnancy, or union membership when hiring in Colombia. Additionally, candidates must have access to the results of their background check(s). 

Step 7: Draft Employment Contracts

Employment contracts in Colombia can be either written or verbal. However, written contracts are highly recommended for legal protection and validity. Contracts are officially considered “employment contracts” if they specify (i) the work to be completed, (ii) the subordination of an employee to an employer, and (iii) the payment to be received.

That said, there are a number of other recommended inclusions to make your employment contract in Colombia effective and attractive: 

  • Names of both parties and their contact information
  • Job description, which should include a clear explanation of the employee’s role and responsibilities 
  • Remuneration, or the fee/salary to be paid, and the frequency with which it will be paid
  • Working hours, including when and where the employee must report to work
  • Date of commencement and termination for fixed-term contracts
  • Other terms and conditions, such as leave entitlements, notice periods, supplementary benefits, and more 

Step 8: Register with Authorities and Set Up Payroll

Before any of your employees begin work, it’s important to complete a few registration steps with the Colombian authorities. 

  • Gain a tax ID number from the Colombian government so that you can pay corporate taxes and properly withhold personal taxes from employees
  • Register employees with the Colombian Social Security system and set up automatic benefit payments to reduce monthly administrative hassle
  • Explore payroll options to ensure your employees will be paid accurately and on time each month (or other pay cycle)
  • Put systems in place for ongoing monitoring and reporting, including maintaining records and keeping track of relevant documents

When you work with an EOR or PEO in Colombia, employee management gets a whole lot easier. You won’t have to worry about these pesky administrative tasks, and your chosen service provider will be able to handle these considerations with ease.

Step 9: Onboard Your New Employees

Onboarding your new employees effectively will help them smoothly integrate into your company’s unique culture. Forbes reports that a strong onboarding strategy will increase employee engagement and retention rates, which will in turn impact customer satisfaction. With that in mind, it’s crucial to design an onboarding process that includes the following:

  • Provide the necessary training and resources
  • Introduce the new team member to peers and key stakeholders
  • Explain company policies, procedures, and expectations
  • Immerse the new hire in the company culture and discuss company values
  • Set clear objectives and goals for the new hire’s role

Key Employment Laws and Regulations

Colombian Labor Code

Colombia’s Labor Code was initially signed into law in 1950, but it has undergone significant changes in the 75 years since to ensure that its stipulations adhere to modern standards. The country’s labor laws aim to foster fair and equal employment practices. They protect against discrimination and harassment, ensure workplace safety, and set guidelines for appropriate compensation. In recent years, the law has been targeted with reforms, so it is important to stay up-to-date on local news and reporting to ensure that you are complying with the most recent version of the law. 

The Colombian Labor Code includes stipulations about maximum working hours, overtime compensation, leave entitlements, rest periods, and more. Here are some of the recent changes to Colombia’s labor laws that are worth noting: 

  • Law 2101 (2021): Working hours in Colombia are being gradually reduced, going down to 44 hours per week in July 2025 and down again to 42 hours per week in July 2026. 
  • Law 2381 (2024): Focused on pension reform, this law ensures that senior citizens in Colombia have access to social protections. 
  • 2025 Labor Reform: Colombia’s congress recently passed sweeping changes in a 70-article law that largely focuses on strengthening workers’ rights and modernizing relationships between employers and labor unions, as reported by KPMG. 

Social Security Regulations

Beginning in 1993, Colombia has offered its residents a mandatory social security scheme with coverage for old age pensions, public healthcare, family benefits, occupational risks, and more. This law mandates contributions from both employees and employers. 

Employers contribute about 30% of an employee’s salary on average, which consists of 12% for the pension fund, 8.5% for medical coverage, and a variable amount for “labor risk,” which varies based on the job. Employees typically pay around 8% of their salaries toward social security, half toward medical coverage and half toward the pension fund. These payments are separate from personal income tax, which employers are also responsible for withholding. 

Types of Employment Contracts

Understanding the three main types of employment contracts in Colombia is important when hiring in the country.

Indefinite-Term Employment Contracts

These are the most popular kinds of employment contracts in Colombia. Indefinite-term contracts do not have a fixed end date. They continue on until they are terminated by either party, according to the terms laid out in the initial contract. 

Fixed-Term Employment Contracts

For positions with a specific duration, a fixed-term employment contract might be used. These contracts cannot exceed three years, but they can be renewed after the initial term expires. 

Specific Task Employment Contracts

For a clearly defined project or task, a third type of contract can be used in Colombia. Instead of defining the scope of the contract through time elapsed, employers might define the scope of the contract to encompass a specific task. When that task is complete, the contract ends.

Working Hours and Overtime

Standard Working Hours

Colombia’s recent labor law reforms have altered the country’s standard working hours. These hours are set to decrease incrementally in the coming years according to this schedule: 

  • July 2024: 46 hours per week
  • July 2025: 44 hours per week
  • July 2026: 42 hours per week

As for daily hours, Colombia offers more flexibility. Employees typically work between 4 and 9 hours per day. If they go over the weekly limit on working hours, then they must be compensated at an overtime payment rate. 

Overtime Regulations

Overtime hours in Colombia are compensated at 125% of the employee’s normal rate of pay. If an employee works more than the maximum working hours in Colombia (44 hours per week, as of July 2025), then they are eligible for overtime pay. 

Leave Entitlements

Each year, employees in Colombia can take paid leave for vacation, family responsibilities, or other reasons. These leave entitlements are assessed in addition to the country’s 18 paid bank holidays, during which employees cannot be obligated to work. 

Annual Leave

After working for one year with the same company, employees receive 15 days of paid leave for vacation each year. 

Sick Leave

Payment for sick leave in Colombia depends on the nature of the illness or injury. If an employee is hurt at work, they are entitled to 100% of their salary for as long as they cannot work, and this is covered by the country’s social security system.

For non-work-related injuries or illnesses, employers must cover the first 2 days of paid sick leave at 100% of the employee’s normal salary. After 2 days, the social security system covers the rest of the leave at a reduced percentage of the employee’s salary. 

Maternity and Paternity Leave

New mothers in Colombia receive 18 weeks of maternity leave, which is compensated at 100% of their most recent salary. Generally, one week is taken before the baby is born, and 17 weeks are taken after. New fathers receive 2 weeks of paid paternity leave.

Both maternity and paternity leave compensation is covered by the country’s social security system. 

Termination and Severance

Notice Periods

Notice periods are not universally mandated in Colombia, although some employment contracts may specify them.

For fixed-term contracts, a 30-day notice period is required should the contract be terminated before the specified end date. For indefinite-term contracts, there is no universal notice period required.

However, providing a 30-day notice period for either termination or resignation is generally considered polite in Colombia. 

Severance Pay

Not all employees in Colombia are eligible for severance pay; only those who work in high-value industries or the construction industry are required to receive severance (this provision was negotiated by the construction workers’ union). Typically, severance pay in Colombia is accrued at 3 days’ pay for every month worked with the same company. 

Mandatory Contributions

Social Security Contributions

Both employers and employees contribute to the social security system in Colombia, which covers public healthcare, old-age pensions, family allowances, social assistance, and occupational risk insurance. Employer contributions average about 30% of an employee’s salary, while employee contributions average about 8% of their salary. 

13th Month Pay

According to Article 305 of the Colombian Labor Code, 13th-month pay is mandatory in Colombia. This bonus is equivalent to one month’s pay and, in Colombia, is typically given in two equal parts. The first portion must be paid by June 30 of a given year, while the second portion must be paid by December 20 of a given year. 

Optional Benefits

In addition to the mandatory benefits for employees in Colombia, employers often offer other benefits to attract and retain top talent. Here are some of the most common offerings: 

  • Performance bonuses
  • Extra maternity or paternity leave
  • Monetary allowances for childcare
  • Additional paid vacation time each year
  • Health-related perks like gym memberships or on-site fitness studios
  • Employee of the month programs with rewards
  • Additional healthcare coverage, such as dental insurance

How to Hire Employees in Colombia — Our Take

When you are hiring employees in Colombia – or any foreign country, for that matter – you will have to work with a complex set of legal requirements, including labor laws, mandatory contributions, and employee protections set in stone by civic codes. Being familiar with these regulations and ensuring you are complying with the country’s legal considerations is crucial for avoiding lawsuits and building a positive reputation in Colombia. 

If juggling these requirements on your own sounds daunting, working with an Employer of Record (EOR) in Colombia can simplify the process, saving you time, money, and effort.