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Minimum wage in Colombia
Colombia's payroll
Social security in Colombia
Employee benefits in Colombia
Compliant, seamless payroll and benefits in Colombia and beyond
Payroll in Colombia
Colombia has its own laws, rules, and customs when it comes to employee compensation. And if you want your expansion to succeed, you need to understand these regulations and cultural norms, as well as what Colombian talent is looking for.
That can be a lot to handle, especially if you’re unfamiliar with the Colombian market, which has complex labour laws and tax regulations. Non-compliance with these laws could lead to hefty fines and damage to your company’s reputations.
Payroll outsourcing in Colombia
That’s why more and more companies are turning to payroll outsourcing to ensure compliance and reduce the risk of legal issues. Outsourcing payroll can be more effective than maintaining an inhouse payroll team, as it reduces administrative costs and allows you to focus on other important aspects of the business.
If you choose to outsource your payroll in Colombia, make sure to partner with a reliable global payroll provider, such as CXC, that can provide access to expertise and resources that might not be available in-house.
In this guide, we will provide everything you need to know about compensation and benefits in Colombia, including the minimum wage, statutory benefits, social security, and other types of employee’s benefits you need to know.
Minimum wage in Colombia
Starting January 1, 2024, the minimum wage in Colombia is at 1,300,000 Colombian pesos (COP) per month. On top of that, there is a monthly transport subsidy, which brings the total to 1,462,000 COP per month, or around 308 USD.
The government regulates this amount and typically revises it annually, so employers must stay informed of any changes to maintain compliance.
Generally, international companies offer compensation more than the minimum wage, particularly for highly skilled or hard-to-fill positions. If you’d like to know the salary rates for highly skilled professionals or white-collar jobs in Colombia, feel free to reach out to our team for more information.
Colombia's payroll
Payroll cycle in Colombia
The payroll cycle in Colombia varies. Generally, it follows a monthly basis payroll cycle, with payments being released on the last working day of the month.
However, it is also common in some industries to have a bi-monthly payroll cycle, where employees receive their salaries on the 15th and the last day of each month.
Payroll taxes in Colombia
When it comes to taxes, employers are responsible for withholding payroll taxes and making contributions to social security on behalf of their employees. Payroll taxes include contributions to the general pension system, health insurance, and professional risks insurance.
Employers also contribute to family welfare funds, which support the Colombian Institute of Family Welfare (Instituto Colombiano de Bienestar Familiar).
The distribution of payroll taxes and contributions is typically:
- Health insurance: 12.5% of the employee’s monthly salary, with 8.5% paid by the employer and 4% paid by the employee.
- Pension contributions: 16% of the monthly salary, split between 12% from the employer and 4% from the employee.
- Professional risks (workmen’s compensation): Between 0.522% and 6.960%, depending on the company’s risk classification, paid solely by the employer.
- Family welfare fund (ICBF), SENA (National Learning Service), and family compensations: Companies also make a contribution to these social programs, which account for an additional 9% of the employee’s salary, covered entirely by the employer.
As an employer, you must ensure that payroll taxes are calculated and paid within the established time limits to remain compliant and avoid costly penalties.
13th-month salary in Colombia
There is a mandatory 13th-month salary payment in Colombia. This means that employers are required to provide a 13th-month salary to their employees.
The 13th-month salary, often referred to as the ‘Prima de Navidad’, is split into two payments: one by the end of the first half of June and the other by the first 20 days of December.
Social security in Colombia
Social security contributions in Colombia are a mandatory set of payments that both employers and employees make for the country’s social security system. This system covers pension, health insurance, and labour risks insurance.
Employees must be registered in the social security system. Employers are required to make the necessary monthly contributions on time. They are responsible for withholding the employee’s contribution from their wages and adding the employer’s share before making the collective payment to the national system.
On the other hand, if foreign employees are already covered by a pension system in their home country, they don’t have to enrol in or contribute to the Colombian pension system.
Social security rates in Colombia
Employers and employees must keep in mind the social security rates that they must follow:
- Pension system: The total contribution rate is at 16%, with 12% contributed by the employer and 4% by the employee.
- Health insurance contributions: This amounts to 12.5% of the monthly salary, shared between the employer at 8.5% and the employee at 4%.
Typically, employers contribute an average of 30% of the employee’s contributory base income, which varies according to the level of risk associated with the employee’s job, solely for labour risks insurance.
Social security benefits in Colombia
Social security contributions in Colombia provide several benefits to workers and their families, including:
- Retirement benefits: Social security contributions fund pension payments, ensuring financial support for individuals upon retirement.
- Health care: Contributions ensure access to public healthcare services, covering a range of medical needs including preventive care, medical treatments, and emergency services.
- Disability benefits: Social security offers protection by providing financial assistance to individuals who become disabled and are unable to work.
- Workplace injury benefits: The system covers labour risks, providing compensation and medical care in the event of workplace injuries or occupational diseases.
These contributions help maintain social welfare and provide security against various risks associated with loss of income due to age, health issues, or workplace injuries.
Employee benefits in Colombia
To create an attractive offer for your employees, you need to be aware of the statutory and non-statutory employee benefits in Colombia, such as the following:
Statutory employee benefits in Colombia
- Paid leave and holidays in Colombia
Employees are entitled to a minimum of 15 paid vacation days following a year of continued service. In addition, the country observes 18 national holidays for which employees receive paid leave. - Pensions in Colombia
The Colombian pension system mandates contributions by the employer equivalent to 12% and 4% by employees. This ensures that employees are supported financially upon retirement. - Healthcare in Colombia
There is a universal healthcare system to which employers contribute 8.5% and employees 4%. This promotes a healthier workforce with access to preventive and comprehensive medical care, which in turn can result in reduced absenteeism and increased productivity.
Workers’ compensation in Colombia
The system to cover professional risks varies from 0.522% to 6.96%, depending on the level of risk associated with the job. This ensures that those injured or sickened on the job receive the necessary support to recover, while employers maintain a safe and protective work environment.
Maternity/paternity leave in Colombia
For maternity, women receive 18 weeks of paid leave, while men receive eight (8) days of paternity leave.
Non-statutory benefits in Colombia
Employers in Colombia provide other types of benefits to attract and retain talent. The following benefits are not mandated by law, which means it’s upon the employer’s discretion to provide such benefits.
Health and wellness programs in Colombia
Employers in Colombia may provide programs that promote physical and mental well-being. This can include gym memberships, wellness workshops, health screenings, and access to mental health resources. Such initiatives help employees maintain a healthy lifestyle and reduce stress.
Flexible working hours in Colombia
Offering flexible working arrangements, such as remote work options or adjustable schedules, for employees in Colombia allows them to balance their personal and professional lives better. This flexibility can lead to increased job satisfaction and productivity.
Performance bonuses in Colombia
Many companies in Colombia provide financial incentives based on employee performance. These bonuses can reward individuals or teams for achieving specific goals, encouraging a high-performance culture, and motivating employees to excel.
Extra vacation days in Colombia
Some employers are generous enough to offer additional paid leave beyond the legally mandated vacation days. This can include personal days, mental health days, or extended holiday breaks, allowing employees more time to recharge and pursue personal interests.
Transportation allowance in Colombia
To assist with commuting costs, some employers in Colombia provide a transportation allowance or subsidised transportation options. This can help alleviate the financial burden of daily travel and improve employee attendance and punctuality.
Meal vouchers in Colombia
Most companies in Colombia offer this type of benefit that employees can use for lunches or groceries. This benefit not only supports employees’ nutritional needs but also enhances their overall well-being and satisfaction.
Education assistance in Colombia
Some employers in Colombia also offer tuition reimbursement for further education or training, funding for courses, or access to workshops and seminars, which can help employees advance their careers.
Life and accident insurance in Colombia
Aside from the statutory insurance, some companies in Colombia provide additional life and accident insurance to offer employees more peace of mind. This benefit ensures financial security for employees and their families in case of unforeseen circumstances.
Childcare assistance in Colombia
To support working parents, some companies offer childcare services or subsidies. This can include partnerships with local daycare centres or financial assistance for childcare expenses, making it easier for employees to manage their work-life balance.
Internet and mobile phone allowance in Colombia
Many companies in Colombia offer internet and mobile phone allowances as part of their non-statutory benefits. This is especially common for employees who work remotely or have roles that require regular communication and connectivity.
These allowances can help cover the costs of internet service and mobile phone plans, making it easier for employees to perform their duties effectively. Providing such benefits can also enhance employee satisfaction and productivity, as it supports their work-from-home or mobile work arrangements.
Compliant, seamless payroll and benefits in Colombia and beyond
Getting payroll and benefits right is not just a legal issue. Every country has its own customs, norms, and expectations about employee compensation. And if your operations aren’t in line with your workers’ expectations, they may not stick around for long.
Thankfully, we know what we’re doing. When you work with CXC to engage workers in Colombia, we’ll handle everything from tax withholding to employee bonuses on your behalf.
Want to find out more? Speak to our team today
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