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Colombia at a Glance
- Currency: Colombian Peso, COP (COL$)
- Population: 49.06 million
- Economy/GDP: $683.94 billion (32nd largest)
- Top Sectors: Textiles, food processing, oil, mining, construction, shipbuilding, and automobile manufacturing.
- Ease of Doing Business: Ranks 67 in the world, according to the World Bank’s latest Doing Business report from 2019
- Languages: The official and most widely spoken language in Colombia is Spanish. There are 65 Amerindian languages in the country. Colombia has a low proficiency in English as it’s ranked 81st in speaking English as a second language, according to Education First’s English Proficiency Index, which analyzes data from 2.2 million non-native English speakers in 100 countries.
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Grow Your Team in Colombia
Establishing your business in Colombia is an exciting and challenging endeavor. Take the step of expanding in Colombia with an experienced partner in global expansion. Velocity Global’s Employer of Record in Colombia handles all the compliance, risk-mitigation, and payroll so you can quickly grow in Colombia without the hassle and stress.
Whether your development in Colombia entails a short-term project or a long-term presence, Velocity Global helps you navigate global expansion complexities while saving you time and money in entity establishment.
Accelerate your international business growth with a trusted expert. If you would like to learn more about Velocity Global’s seamless approach and Employer of Record in Colombia, get in touch today.
Benefits of hiring in Colombia
- Colombia has one of the most attractive economies in Latin America for foreign investment. The country is a signatory to 17 commercial agreements and it’s friendly to global trade with access to a market of 1.5 billion consumers. Additionally, Colombia has ports on both the Pacific and Atlantic Oceans, ensuring it as a strategic business location.
- Colombia is a founding member of the powerful Latin American trading bloc, Alianza del Pacifíco (the Pacific Alliance) which includes Chile, Peru, and Mexico. The bloc represents 50% of Latin America’s foreign trade and 45% of total foreign direct investment in the region.
- Due to political stability and consistent economic growth, more than 700 multinational companies introduced Colombian investment programs.
- Colombians are known for being innovative and having an entrepreneurial spirit. According to the World Bank, the country has a literacy rate of 96%. It’s easy to hire motivated and skilled workers in Colombia. With the help of an employer of record in Colombia, it can be even easier to hire and onboard new workers at your company.
- The Colombian government introduced the Ministry of Science, Technology, and Innovation in 2009 to heavily invest in educating and training its population to be competitive in the job market.
Challenges of hiring in Colombia
- Colombia continues to remain the top producer and exporter of cocaine in the world. While violence associated with the drug trade has declined, the issue’s prevalence persists and it affects the country’s economy.
- Due to its insufficient copyright legislation and lack of enforcement, Colombia is placed on the United States Trade Representative’s 2022 watch list.
- According to Transparency International, Colombia ranks high in corruption and lack of transparency. Bribery is a common business practice in particular sectors.
Cultural nuances and must-knows of doing business in Colombia
- Colombians are punctual when it comes to business endeavors. Arriving on time is important to make a good first impression, as punctuality expresses respect.
- When doing business in Colombia it’s recognized as polite etiquette to address colleagues with gendered and professional titles until they initiate a change to first name basis.
- Establishing a personal connection with colleagues is important and expected, as personal relationships are a large part of Colombian business culture.
- Patience is required while doing business in Colombia, where building trust in relationships takes time. Trust is a strong indicator of the strength of a Colombian business relationship.
- Avoid stereotypical topics such as violence and drug cartels. Colombians can find it tiring or even annoying when asked to explain a historical and complex conflict that is difficult to summarize for those with little background knowledge. Most are repulsed by Colombia’s struggles and seek to redeem the country’s reputation.
- Make an effort to highlight positive attributes of the country, such as its literature, art, and welcoming energy.
Wages and Salaries in Colombia
Minimum wage and salaries in Colombia
- President Iván Duque Márquez announced and ratified Colombia’s minimum wage for 2022 in December 2021. The wage was set to COL$1,000,000 monthly (USD$231.72), with a transportation allowance of COL$117,000 (USD$27.11). The minimum wage in Colombia is set every year by the national government and enforced by the Ministry of Labor.
Probation period in Colombia
- The maximum probationary period in Colombia is two months for indefinite term contracts and one-fifth of the contract’s duration for fixed-term contracts.
Bonus payment in Colombia
- A 13th month salary is prescribed by Colombian labor law. The 13th salary is equivalent to one month’s salary, paid in two installments: one half of the payment in June and the other half in December.
Onboarding in Colombia
- In Colombia, an employment agreement or contract is not mandatory by law. However, the following terms are required to be written, if applicable:
- Probation period
- Fixed-term contract
- Integral salary (benefits included in the salary)
- Non-salary payments
- If fixed-term employment agreements are not agreed in writing, it is implied that the agreement is for an indefinite term.
Termination and notice period in Colombia
- In Colombia, both the employer and employee can terminate the labor agreement at any time, without just cause or prior notice. The terminator is responsible for paying an indemnification. However, if the contract is terminated with just cause, the terminator is not obliged to pay an indemnification.
- Notice of termination is required as follows:
- 30 days prior to dismissal with a fixed-term contract to avoid its automatic renewal
- 15 days prior to dismissal when the cause for termination includes poor performance or acquiring a pension
- Alternatively, the employer may pay an employee their equivalent days of salary instead of giving a notice period.
- Unless there is just cause for termination, employees have the right to severance pay. It is calculated according to years of service, term of the employment agreement, and salary.
Leave Entitlements in Colombia
Annual leave in Colombia
- Colombian labor law guarantees employees annual paid leave of 15 days for each year of service, after one year of service. Employees must use at least six annual leave days a year. They can carry over any untaken vacation to the following year, based on an agreement with the company.
Parental and maternity leave in Colombia
- Pregnant employees in Colombia are entitled to 18 weeks of paid maternity leave, with a mandatory leave period for the first week prior to the due date. For multiple births, maternity leave is 20 weeks.
- The employer directly pays the employee but employers are reimbursed by Colombia’s social security system.
- Employees are entitled to 15 days of paternity leave, fully paid by the employer.
- The last six weeks of maternity leave can be shared with a partner, under agreement of the employer. This allows employees to share their leave by opting for part-time or remote work arrangements. The part-time leave is paid by the government while the part-time work is paid by the employer.
Sick leave in Colombia
- The Colombian labor code designates unlimited sick leave based on a medical report confirmation for the number of days prescribed by a doctor. For the first two days of sick leave, employees receive two-thirds of their salary from the employer. Thereafter, the General Health Social Security System (Sistema General de Seguridad Social (SGSS) is responsible for paying the same percentage of the employee’s salary.
Regional and national holidays in Colombia
- Colombia has 18 public holidays in a calendar year, which are not included in the minimum paid leave entitlement and they are taken in addition to annual leave. The following are national holidays recognized by Colombia:
- New Year’s Day (January 1)
- Epiphany (January, the specific day fluctuates each year)
- St. Joseph’s Day (March, the specific day fluctuates each year)
- Maundy Thursday (March or April, the specific day fluctuates each year)
- Good Friday (March or April, the specific day fluctuates each year)
- Labor Day (May 1)
- Ascension Day (May, the specific day fluctuates each year)
- Corpus Christi (June, the specific day fluctuates each year)
- Sacred Heart Day (June, the specific day fluctuates each year)
- Feast of St. Peter and St. Paul (June or July, the specific days fluctuate each year)
- Independence Day (July 20)
- Battle of Boyacá Day (August 7)
- Assumption Day (August, the specific day fluctuates each year)
- Columbus Day (October, the specific day fluctuates each year)
- All Saints’ Day (November, the specific day fluctuates each year)
- Independence of Cartagena (November, the specific day fluctuates each year)
- Immaculate Conception (December 8)
- Christmas Day (December 25)
Employment Benefits in Colombia
- Colombia’s government benefits programs are administered by the Departamento Nacional de Planeación, the National Planning Department. The Department was founded in 1993 and it’s responsible for providing social security services to Colombian society. The Department collects contributions from employers and employees to maintain the Colombian Social Security scheme, which maintains pensions, survivor benefits, short-term disability, long-term disability, healthcare, and paid leave entitlements.
Tax and Social Security in Colombia
- Individuals are considered Colombian tax residents if they stay in the country for more than 183 days within any given 365 consecutive-day term.
- Colombian tax residents face taxes on their worldwide income. Non-tax residents are taxed only on Colombia-source income.
Tax thresholds in Colombia
- Colombia has an income tax structure where an employee’s income is taxed in units. There are thresholds of units for each salary range. As of 2022, the Colombian tax value unit (UVT) is COL$38,004. Colombia’s 2022 income tax code provides for the following categories:
- Up to 1,090 UVT: 0%
- 1,091 UVT – 1,700 UVT: 19%
- 1,701 UVT – 4,100 UVT: 28%
- 4,101 UVT – 8,670 UVT: 33%
- 8,671 UVT – 18,970 UVT: 35%
- 18,971 UVT – 31,000 UVT: 37%
- Above 31,000 UVT: 39%
- The corporate income tax rate in Colombia is 35%.
Health insurance in Colombia
- Colombia’s healthcare quality is one of the best in the world, as its hospitals are ranked among the best in South America. Colombia’s healthcare system operates a public, universal health insurance plan called Entidades Promotoras de Salud (EPS). The EPS plan is available to all residents at a low, affordable cost. Colombia’s Ministry of Health and Social Protection is responsible for regulating the General Health Social Security System (Sistema General de Seguridad Social (SGSS), which provides the population with public health services.
Pension in Colombia
- Employees in Colombia are subject to different eligibility requirements for the state’s old-age retirement pension depending on their gender and age. The requirements are as follows:
- If they are women, employees must be at least 57 years old with at least 1,300 weeks of contributions.
- If they are men, employees must be at least 62 years old with at least 1,300 weeks of contributions.
- The old-age retirement pension is between 55% and 65% of an employee’s average monthly income, depending on the level of earnings. Additionally, employee’s receive 1.5% for every 50 weeks of contributions paid. The maximum monthly old-age pension is 80% of an employee’s average monthly income.
Payroll in Colombia
- Remove the challenges of running payroll in Colombia with an employer of record in Colombia.
Tax due dates in Colombia
- In Colombia, the tax year is the calendar year. Tax-filing season usually starts in August. The deadline is prompted by the last two digits of a taxpayer’s tax ID number. Tax filing season is established by the government’s official decree, typically published every December.
Payroll cycle in Colombia
- The payroll cycle in Colombia is generally monthly, where payments are made on the last working day of the month. In some industries, it is common to have a bi-weekly payroll cycle.
Average working hours in Colombia
- Working hours are bound to 48 hours per week for a maximum of six days a week, with eight hours per day.
Overtime in Colombia
- With authorization from Colombia’s Ministry of Labor, employees may work up to 12 hours of overtime per week, given they are allowed to rest on Saturday. Overtime worked during daytime hours is compensated at 25% more than the employee’s usual wage per hour. Overtime worked during nighttime hours is compensated at 75% more than the employee’s usual wage per hour.
Why Work in Colombia?
Colombia sits at the northwestern tip of South America, bordered by the Caribbean sea just above it. Peru and Ecuador are to the south, Venezuela and Brazil to the east, and the Pacific Ocean and Panama to the west. The country is nicknamed the gateway to South America because it connects the continent to Central and North America. Moreover, Colombia is home to the world’s second-largest population of Spanish speakers, only behind Mexico.
Colombia has cemented itself as an attractive economy in Latin America for direct foreign investment. It’s a signatory to a handful of powerful commercial agreements and trading blocs. With its maritime ports on both the Pacific and Atlantic Oceans, Colombia welcomes global trade and a market of 1.5 billion consumers. Hundreds of multinational businesses have established investment programs in Colombia due to its dependable economic growth and political security.
Those searching for reasons to work and live in Colombia can look forward to a low cost of living, warm people and culture, diverse topography, tasty traditional foods and specialty coffee. Colombians share cultural values with a heavy emphasis on family, hospitality, success, and affection.
Because of Colombia’s close proximity to the equator, its climate is generally tropical and without much change in season. Temperatures vary little throughout the year, where about 90% of the country is considered hot. However, there isn’t a uniform hot climate across the entirety of the country as chilly temperatures can be found in major cities such as Medillín and Bogotá. Through the country’s center runs the snow-covered volcanoes and mountains of the Andes, while the north and west regions are lined by beaches. Expansive grasslands called Los Llanos are in the east and dense forests of Colombia’s Amazon Basin fill the majority of the southern region.
Colombia offers its residents and visitors a rich culture and history. Colombia is world-famous for its distinctive coffee, cornmeal cakes called arepas, the friendliness of its people, exotic fruits, and diverse landscapes. Moreover, Colombia’s music and dance traditions are united in a carnival celebration, which each major city holds annually. The country is well-known for its natural beauty, biodiversity, and rich heritage. Colombia is home to some of the world’s oldest indigenous populations, roots dating back to 15,000 BCE.
Public transportation in Colombia is heavily reliant on the bus as it’s the most popular and quickest way to get around. The bus network has intercity buses running between major cities and local bus services in smaller towns, reaching remote villages in rural areas. Increased competition between domestic airlines has caused air travel to be slightly more expensive than bus but it is faster and more comfortable. Colombia’s location makes it a hub to simply travel around South America, Central America, and the Caribbean.
Colombia is revered for its welcoming community and culture. If you’re looking for a place to work and expand your business in Latin America, Colombia is worth giving a try.
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