Hire and manage employees in Colombia
Table of contents
Key takeaways
Colombia’s Law 2466 of 2025 made indefinite-term contracts the default. Fixed-term contracts are now restricted to specific circumstances and capped at a total of 4 years. Employers must give 5 days’ notice before initiating disciplinary proceedings.
The 2026 minimum wage is COP 1,750,905 per month, plus a transportation allowance of COP 249,095 per month for qualifying workers.
The maximum workweek reduced to 44 hours from July 15, 2025, and will reduce further to 42 hours from July 15, 2026. Sunday and holiday work surcharges will increase from 75% to 100% gradually.
Employers must pay a prima de servicios (13th-month bonus) equivalent to one month’s salary, paid in two installments: half by June 30 and half by December 20.
Total employer costs typically run 35 to 40% above base salary when mandatory contributions are included: health (EPS) 8.5%, pension (AFP) 12%, ARL 0.522 to 6.96%, CCF 4%, SENA 2%, and ICBF 3%.
Terminating an employee without just cause requires paying an indemnity plus full severance liquidation including cesantías, accrued vacation, and prima de servicios.
Foreign companies can hire Colombian employees without a local entity using an Employer of Record (EOR). An EOR handles RUT registration, payroll, social security contributions, mandatory benefits, and compliance with the 2025 labor reform.
Employer of Record (EOR) vs. setting up an entity in Colombia
First things first: decide between setting up a legal entity or hiring employees through an Employer of Record (EOR). Your two main options are:
Legal entity in Colombia. Setting this up is complex. You’ll need documents translated into Spanish, registration with local authorities (DIAN, chamber of commerce), a local bank account, and ongoing compliance with Colombian tax and labor laws. This typically takes 4 to 8 weeks.
Colombian EOR. An EOR is a third party that acts as the employer in Colombia on your behalf. You don’t need to set up an entity, and the EOR handles payroll, benefits, contracts, and compliance with Colombian labor law, including the sweeping 2025 labor reform (Law 2466).
Read our guide to understand the pros and cons of each approach in Colombia.
Classifying Colombian workers: Employees vs. contractors
Misclassifying workers in Colombia carries serious legal and financial consequences. Colombian labor authorities distinguish employees from contractors based on three factors: personal service delivery, economic dependence, and subordination. If all three are present, the worker is legally an employee regardless of what the contract says. Review our worker classification guide to ensure you’re staying compliant.
Work permits for Colombian employees
Colombian citizens and permanent residents can work without additional authorization. Foreign nationals generally need a visa. Check our guide on Colombian work permits.
New hire onboarding checklist
A successful onboarding process starts before day one and continues through the first 90 days. Check our guide for a full checklist.
Before their first day
Complete a background check.
Send an offer letter and employment contract.
Make sure their workspace is set up.
Enroll them in mandatory social benefits (SGSSS, pension, ARL).
On day one and beyond
Schedule training sessions.
Set 30, 60, and 90-day goals.
Schedule regular check-ins and provide ongoing feedback.
What to include in an offer letter in Colombia
While offer letters are not required by law in Colombia, they are strongly recommended before the formal employment contract. Under Law 2466 of 2025, indefinite-term contracts are now the default. Fixed-term contracts are only permitted in specific circumstances and are capped at 4 years total. Key items to include: job title and duties, compensation, start date, benefits, working hours, and any applicable probation period. Read our guide on crafting legally sound offer letters in Colombia.
NDAs and confidentiality agreements in Colombia
NDAs in Colombia are legally enforceable since Colombian law recognizes freedom of contract. They are commonly used to protect trade secrets, IP, business strategies, and client data. NDAs should comply with Colombian data protection law (Ley 1581 de 2012). Read our guide on NDAs in Colombia.
Running background checks on Colombian employees
Background checks are allowed in Colombia with employee consent and must comply with Colombia’s data protection laws. Common checks include criminal records, employment history, credit history where relevant, and professional credentials. Read our primer on background checks in Colombia.
Paying employees in Colombia
As of January 2026, Colombia’s minimum wage is COP 1,750,905 per month, plus a transportation allowance of COP 249,095 for qualifying workers. Total employer costs typically run 35 to 40% above base salary. Employer contributions include: health (EPS) 8.5%, pension (AFP) 12%, ARL 0.522 to 6.96%, CCF 4%, SENA 2%, and ICBF 3%. See our step-by-step guide on paying Colombian employees.
Mandatory employee benefits in Colombia
Mandatory benefits in Colombia include:
Prima de servicios (13th-month bonus): One month’s salary, paid in two installments (June 30 and December 20).
Cesantías: One month’s salary per year of service, deposited to a fund plus 12% annual interest.
15 business days of paid annual vacation after the first year.
Social security contributions: Health (EPS), pension (AFP), and workplace risk insurance (ARL).
CCF, SENA, and ICBF contributions totaling 9% of payroll.
Check out our statutory benefits guide for more information.
Managing remote employees’ computers and apps
Rippling lets you ship, configure, and manage devices for Colombian employees remotely, and instantly provision or deprovision access to all their apps. Learn more in our guide on managing remote employee devices.
Protecting company IP in Colombia
Colombia’s IP framework is governed by Decision 486 of the Andean Community, covering trademarks, patents, and trade secrets. Copyright protection is automatic upon creation. NDAs and IP assignment clauses in employment contracts are essential for protecting proprietary information. Read our primer on IP ownership in Colombia.
Complying with Colombian labor laws
Colombia’s 2025 labor reform (Law 2466) brought major changes: indefinite-term contracts are now the default; fixed-term contracts are capped at 4 years; the workweek reduced to 44 hours from July 15, 2025 (dropping to 42 hours from July 15, 2026); Sunday and holiday surcharges increase from 75% to 100%; night hours extend to 7 PM to 6 AM with a 35% surcharge. Learn more about the most important laws employers need to know in Colombia.
Terminating employees in Colombia
In Colombia, you can generally terminate an employee at any time, but termination without just cause requires paying an indemnity in addition to the full severance liquidation. For indefinite contracts, the indemnity is 30 days’ salary for the first year (for employees earning up to 1x minimum wage), plus 20 days per additional year. For higher earners: 20 days for the first year, plus 15 days per additional year. Read our full guide on terminating employees in Colombia.
Frequently asked questions about hiring in Colombia
What changed in Colombia's labor law with the 2025 reform?
Colombia's Labor Reform (Law 2466, signed June 25, 2025) introduced sweeping changes. Key updates include: indefinite-term contracts are now the default—fixed-term and project-based contracts are restricted to specific conditions and a maximum of 4 years total; working hours were reduced to 44 hours/week from July 15, 2025, and will further reduce to 42 hours/week from July 15, 2026; Sunday and public holiday surcharges will increase from 75% to 100% gradually; night work hours expanded to 7 PM–6 AM (with a 35% surcharge); companies must now hire a minimum number of employees with disabilities based on company size; and employers must give at least 5 days' notice before initiating disciplinary procedures against employees.
What is the minimum wage in Colombia in 2026?
As of January 2026, Colombia's monthly minimum wage is COP 1,750,905 (approximately USD 420), a significant increase from the 2025 level. Workers who need transportation assistance also receive a mandatory transportation allowance of COP 249,095/month, bringing the total effective minimum income to approximately COP 2,000,000 per month. When mandatory benefits like prima de servicios, cesantías, vacation provisions, and employer social contributions are included, total annualized employment costs run approximately 35–40% above base salary.
What mandatory benefits must employers provide in Colombia?
Colombian employers are required to pay several mandatory benefits: Prima de servicios (13th-month bonus equivalent to one month's salary, paid in two installments—half by June 30, half by December 20); Cesantías (one month's salary per year of service deposited to a fund, plus 12% annual interest); 15 business days of paid annual vacation; and a severance fund contribution. Employer social security contributions include: health insurance (EPS) at 8.5%, pension fund (AFP) at 12%, workplace risk insurance (ARL) at 0.522–6.96%, family compensation fund (CCF) at 4%, SENA at 2%, and ICBF at 3%.
Can I use fixed-term contracts in Colombia?
Yes, but with significant restrictions under Law 2466 of 2025. Fixed-term contracts are now only permitted in specific circumstances—they can no longer be used as the default. Indefinite-term contracts are now the presumed standard. When fixed-term contracts are valid, they are capped at a maximum cumulative duration of 4 years (including renewals). After 4 years, if the employment relationship continues, it converts to an indefinite-term contract. Project-based contracts are also restricted to genuine project work. Using fixed-term contracts inappropriately can expose employers to claims of unjust dismissal.
What are the rules for terminating an employee in Colombia?
Colombia generally allows termination at any time, but the consequences depend on whether it's with or without just cause. Termination without just cause (sin justa causa) requires the employer to pay an indemnity in addition to all liquidation payments. The indemnity for indefinite contracts is: 30 days' salary for employees earning up to 1x the minimum wage (for the first year), plus 20 additional days per year thereafter; for higher earners, 20 days' salary for the first year plus 15 days per additional year. All terminated employees are entitled to severance liquidation including cesantías, vacation, and prima de servicios. Employers must also now give 5 days' notice before initiating disciplinary proceedings.
Can I hire employees in Colombia without setting up a local entity?
Yes. Using an Employer of Record (EOR) like Rippling, you can hire Colombian employees without registering a local legal entity. The EOR acts as the legal employer under Colombian law, handling RUT registration, payroll, social security contributions, mandatory benefit administration, and compliance with the Substantive Labor Code and 2025 reform requirements. Setting up a Colombian entity (SAS or Ltda.) is an alternative that gives you direct legal presence, but requires DIAN registration, chamber of commerce filing, and significant ongoing compliance—taking 4–8 weeks to establish.
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.
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