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Decrypting Colombia's Labor Environment

Author:TMF Group
Profession:TMF Group

With a mixture of emerging and booming economies, political uncertainty and extreme contrasts in business customs, the Americas can never be categorized as one homogeneous whole.

Colombia provides a gateway for companies to expand into Central and South American states. But when you operate in multiple countries and start to hire your employees, you must be aware to be fully compliant with the local labor regulations as well as your internal HR and payroll policies. Here we take a look at how HR & Payroll works in Colombia.

Social security system

Colombia has a mandatory social security system, which provides benefits for retirement, healthcare, and labor risks. Both the employers and the employees are required to make contributions towards social security. Total payroll contributions: Employer: up to 31% of salary, including the payroll taxes Employee: up to 10% of salary Hiring/Retrenchment Issues

Employment contracts can be verbal or written, as well as of fixed or indefinite duration. Employers can also enter into collective bargaining agreements with employees. Employers may require employees to serve a trial period, not exceeding 2 months. The employer and the employee can both terminate the employment contract without notice. Employees dismissed without a lawful cause are entitled to a severance payment ranging from 15 days for employees under indefinite term contract, depending on their salary and tenure of service. Employees under a definite contract have the right to receive compensation according to the time it takes to finish the agreed period. Foreign Personnel

Foreigners are required to hold a valid work visa to live and work in Colombia. Entry of foreigners with technical, professional or intellectual qualifications and experience that can contribute to the development of economic, scientific, cultural or educational activities that benefit Colombia is facilitated. In general, the foreigners have to comply the same obligations like the Colombian workers in relation with the HR& Payroll matters Work Permits

Decree 834, 2013 issued by the Ministry of Foreign Affairs must be reviewed to determine which visa or permit must be obtained. This law consolidates visas in the following categories: Business (NE), Temporary (TE) and Resident (RE)...

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