Straddling the border between Central and South America, Colombia is one of the most biodiverse countries in the world. From the country’s high altitude sprawling capital Bogotá to the Caribbean island San Andres, Colombia offers some of the best natural resources in the world. The country is known for its robust education system, which makes it an appealing place to build out a local employment hub.
Before you hire full-time workers or contractors in Colombia, you should be aware of the mandatory end of employment practices to remain compliant when you need to lay off or terminate employees.
End of employment in Colombia includes justification for termination, required notice period, and compensation and severance payments (when applicable).
Colombian labor laws allow several grounds for termination of employment recognized under the country’s labor laws. The grounds for termination depend on the circumstances and the specific policy terms set forth in the employment contract, including:
Just Cause: Termination for just cause is a valid ground for ending an employment contract without providing severance pay or notice. It typically occurs when an employee engages in serious misconduct or breaches important contractual obligations. Examples of just cause for termination may include theft, fraud, repeated violations of company policies, insubordination, or acts of violence in the workplace.
Mutual Agreement: Employers and employees can mutually agree to terminate the employment contract. This typically involves the negotiation and signing of a termination agreement or settlement that outlines the decision and the conditions of the termination, including any severance pay or benefits.
Expiration of a Fixed-Term Contract: If an employment contract has a fixed term, such as a specific project or a temporary assignment, the contract will terminate automatically within the expiration of the agreed-upon term. In such cases, employers are not typically required to provide additional severance pay or notice.
Business Necessity: Employers may terminate employment contracts due to business reasons such as restructuring, downsizing, or financial difficulties. However, employers must comply with certain legal requirements, such as providing advance noticed or severance pay, depending on the circumstances and the number of employees affected.
Redundancy or Job Elimination: If an employee's position becomes redundant or is no longer required due to technological advancements, organizational restructuring, or other legitimate reasons, the employer may terminate the employment contract. In such cases, employers must make a severance payment for the layoff.
Typical grounds for an employee to be dismissed without severance pay or prior notice under Colombian Labor Code include: r:
Acts of violence or harassment
Disclosing trade secrets
Documented poor performance
Employee reaching retirement (in this case, they automatically receive pension through the country’s social security system)
Some employees are protected by law from dismissal, even with documented proof from the employer.
Protected employees include:
Those on paid maternity leave
Those on paternity leave
Those who have filed complaints against their employer for mistreatment/harassment
Those who have health conditions that require them to be on sick leave or other paid leave an for extended periods of time
Those who are pre-pension (less than 3 years until they reach pension age)
Those who belong to a union (a labor judge must authorize termination)
Employers are only required to give a notice period when they have decided to not renew a fixed-term contract. Employers need to give 30-days notice in cases of termination for fixed-term contracts. If the reason for dismissal is severe enough, employees may be terminated without notice or severance.
Once an employee reaches an age where they can receive pension, employers need to give the employee 15 days of prior notice before they take them off their payroll in Colombia.
Colombia does allow employers to pay salary in lieu of notice, and they are obligated to pay the remaining days of salary instead of giving notice.
In Colombia, the calculation and entitlement to severance pay can vary depending on the type of written employment contract. Here's a breakdown of how severance pay works for different types of contracts:
Indefinite-Term Contracts: For employees on indefinite-term contracts, severance pay is typically calculated based on the length of service and the employee's minimum monthly salary. The general rule is that an employee is entitled to 1 month's salary for their first year of service and 2 months salary payment for each additional year.
Fixed-Term Contracts: In the case of fixed-term contracts, which have a specific duration or end date, employees are generally entitled to receive severance payment at the end of the contract. Severance is equal to the rest of the minimum monthly wages they are owed for the year.
Termination by Mutual Agreement: When an employment contract is terminated by mutual agreement between the employer and employee, the severance pay is typically negotiated and specified in the termination agreement. The amount of severance pay depend on the specific terms agreed upon by both parties.
Just Cause Termination: If an employment contract is terminated for just cause due to serious misconduct or other valid reasons recognized by law, the employee may not be entitled to receive severance pay for their remaining monthly wages.
If you're having problems understanding how to handle end of employment, you may want to consider using a Colombian employer-of-record solution. An EOR can help you create the perfect severance package based on compliance standards in Colombia.
Companies planning to lay off a significant portion of their workforce usually need approval from the Ministry of Labor (usually takes two months but can take much longer).
In the case of collective dismissal (mass layoff), the Ministry of Labor absolutely must approve termination of employment contracts before the employer can inform employees of the layoff.
Size of company
Percentage of employees for layoffs
Via makes hiring talent around the world and building your global team seamless by helping you onboard workers in as little as 2-3 business days. With our easy-to-use platform, Via helps you manage local HR processes for direct employment such as work visas & permits, employee data privacy compliance, benefits, global payroll, background checks, and more. Our team of local labor lawyers and on-the-ground experts provide 24-hour local support and ensure that your company remains compliant while expanding abroad. As your employer-of-record/entity abroad, Via assumes responsibility for employment liability, so that you can focus on what matters: recruiting and managing your team.