Velocity Global’s Colombia PEO (Professional Employer Organization) solution accelerates your growth into Colombia by creating a quick and compliant expansion experience. International PEO simplifies the employee onboarding without the need for entity establishment. By acting as your Employer of Record, Velocity Global handles all employee onboarding, payroll, compliance, risk mitigation, and benefits, so you can focus on what matters most – your business.
Whether you need one employee to establish a presence in Colombia or an entire team to support long-term initiatives in the country, our International PEO solution allows you to retain complete employee oversight while we take care of all the hiring logistics.
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Colombia Fast Facts
Population: Colombia ranks 29th globally, with 50 million citizens.
Economy: At 323.80 billion USD (nominal GDP), Colombia has the third-largest economy in South America, right behind Brazil and Argentina.
Top Sectors: Mining is one of Colombia’s most important industries, closely followed by textiles and clothing. Agriculture is also a large part of the economy and construction, iron and steel products, and metalworking.
Employees required to work on a holiday are entitled to an overtime rate at 75% above their basic pay.
Employees are entitled to 18 statutory holidays:
- New Year’s Day
- St. Joseph’s Day*
- Holy Thursday (date varies)
- Good Friday (date varies)
- Labor Day
- Ascension of Jesus (date varies)*
- Corpus Christi (date varies)
- Sacred Heart (date varies)*
- St. Peter and St. Paul*
- Independence Day
- Battle of Boyacá
- Assumption of Mary*
- Columbus Day*
- All Saints’ Day*
- Independence of Cartagena*
- Feast of the Immaculate Conception
Hiring Considerations in Colombia
If you are considering expanding into Latin America, Colombia is one of the most attractive economies. As a signatory to 13 commercial agreements, Colombia is not only friendly to foreign investment but has access to a market of 1.5 billion consumers. However, establishing an entity in Colombia presents unique challenges, as the country has complex tax, accounting, and regulatory laws.
Benefits of hiring in Colombia:
- As a Pacific Alliance member, Colombia works alongside Chile, Mexico, and Peru to freely move goods, services, capital, and people. Together, the group totals 50% of Latin America’s foreign trade and 45% of total foreign investment in the region and represents 50% of the GDP.
- The International Monetary Fund (IMF) predicts continued and favorable growth for Colombia, expecting the economy to continue export growth and infrastructure investment.
- Foreign Direct Investment to Colombia increased to 14.5 billion USD in 2019, showing that Colombia’s investor confidence is strong. The country’s political stability, along with a free market economy and free trade agreements with the United States and the European Union, make it a strategic location to do business.
- There are many young, qualified professionals in Colombia. With a literacy rate of 95% and a smartphone adoption rate of 69%, it’s easier to hire motivated, skilled, technologically-savvy, and entrepreneurial workers.
- The Colombian government has invested heavily in technology. The government recently introduced the Ministry of Science, Technology, and Innovation and established government-supported groups promoting entrepreneurship and innovation.
Challenges when expanding into Colombia:
- The drug trade is still part of Colombian life, and while violence associated with drug trade has decreased, it is still an issue in the country.
- Colombia is on the United States Trade Representative’s “watch list” because of its inadequate copyright legislation and lack of enforcement.
- Corruption and poor infrastructure are an obstacle in Colombia. A lack of necessary tax income from the country’s corporations resulted in underinvestment in infrastructure. According to the Doing Business Report, Colombia ranks #148 for paying taxes and #177 for enforcing contracts.
- Colombia earns a high rank for lack of transparency and corruption. Bribery is still a common part of doing business in certain sectors.
Cultural nuances and must-knows for doing business in Colombia:
- Bring a translator when doing business in the country if you aren’t fluent in Spanish. Regional dialects and colloquialisms can be confusing, and any language barrier can impede the progress of business deals.
- Establish a personal connection with candidates. Start the interview with a long, firm handshake and strong eye contact. It is culturally appropriate to give a woman a kiss on the right cheek.
- Engage in small talk to kick-off meetings. If you are visiting Colombia, offer some first impressions of the country, or ask colleagues how they are.
- End the interview in the same way you started it: a firm handshake or a kiss on the right cheek.
- Be patient when conducting business in the country. Colombians aren’t as rigid about timeliness and schedules, so don’t be surprised if it takes longer to confirm an interview or schedule change.
- Negotiate contracts, employment offers, or business deals in more formal settings, like an office instead of a cafe or restaurant.
Employment Contracts in Colombia
Minimum wages and salaries:
The minimum wage in Colombia is 828,000 Colombian pesos per month, or about USD $260.
The maximum probationary period in Colombia is two months for undefined term contracts and fixed-term contracts between one and three years. For a fixed-term contract lasting less than one year, the probationary period can’t exceed one-fifth of the agreed term.
Colombians are legally entitled to a 13-month salary – a bonus equivalent to one month’s salary – paid in two installments. The first is due on the last of June, and the second within the first 20 days of December.
Termination and severance considerations:
Either party may terminate an employment agreement at any time, with or without just cause. In the case of just cause, the employer is not legally obliged to pay an indemnity. However, the employer’s burden is to provide evidence of just cause, which can be difficult, and the risk of a labor lawsuit is high.
Without just cause, severance pay equal to one month’s salary for every year of employment is mandatory. Other outstanding and compulsory payments include accrued but unused vacation time and the prorated 13-month salary.
Paid Time Off & Benefits
Expectant mothers in Colombia are entitled to 18 weeks of paid maternity leave. Pay matches the employee’s salary at the initiation of their leave term. In the scenario of a variable salary, the amount is calculated by averaging the previous year’s salary.
Maternity leave begins one week before childbirth and continues for 17 weeks after. If medical reasons require additional rest before childbirth, the mother may take two weeks before giving birth and 16 weeks after. Adoptive parents and fathers in charge of newborn care are also entitled to maternity leave.
New fathers are entitled to eight working days of paid paternity leave.
Vacation and annual leave:
- Employees are entitled to 15 paid working days of annual leave for each year of service.
- Employees must take a minimum of six annual leave days per year.
- Vacation time can accumulate for up to two years, based on agreement.
For the first two days of work missed due to illness, employees receive two-thirds of their salary. For additional days after that, employees continue to receive the same amount; however, the social security system pays their leave for up to 180 days.
- Bereavement Leave totals five days of paid leave for the death of an immediate or extended family member.
- Personal Leave totals five days’ paid leave to attend to “serious” personal matters.
Average workweek hours:
- Colombians work eight hours per day and 48 hours per week.
- Flexible schedules may be arranged upon mutual agreement to complete their time over six days, from Monday to Saturday.
- Sunday is a compulsory rest day.
- Employees cannot work more than two extra hours each day or 12 additional hours each week.
- Employees earn an additional 25% of their salary for each extra hour worked.
- This increases to an additional 75% on Sundays or holidays.
Choose Velocity Global
Establishing your business presence in Colombia is an exciting step. Take the leap into your new market with an experienced partner in global expansion. Velocity Global’s International PEO solution handles all the compliance, risk-mitigation, and payroll so you can quickly grow in your new market.
Whether your expansion into Colombia entails a short-term project or a long-term presence, Velocity Global helps you navigate global expansion complexities while saving you up to 60% compared to entity establishment.
Accelerate your time-to-market by partnering with an expert. If you would like to learn more about Velocity Global’s seamless approach to global expansion, get in touch today.