There are many benefits for employers who choose to recruit remote workers from Colombia. It does, however, come with added costs and other challenges that you may not be used to when hiring domestically.
If you are an employer that is looking to hire employees from Colombia, you’re probably wondering how much it costs to hire a Colombian employee. . However, Hiring and managing international workers from any country is not black and white, and Colombia is no different. It requires a thorough understanding of the country’s complex labor and tax laws.
his article provides a comprehensive guide to how much it costs to hire an employee in Colombia, and what to expect from a financial perspective.
How Much Do Employers Need to Pay Colombian Workers?
As previously mentioned, Colombia’s labor laws are complex and have many requirements for employers. Therefore, the answer to this question will be multi-tiered.
Minimum Wage in Colombia
As of 2023, Colombia’s minimum wage is COP1.16 million per month, or USD $242.70. However, every January, the minimum wage in Colombia is adjusted by the government, so it’s important to stay up to date in order to remain compliant.
Overtime
In Colombia, the standard work week is 42 hours over a six-day period. However, workers are entitled to 12 hours of overtime work per week as long as they are paid 125% and given a rest day on Saturday.
Daytime Vs. Night Time Wages
In Colombia, workers must be paid a higher wage for working nighttime hours. This also applies to overtime work at night.Anytime an employee works between 10:00 pm and 6:00 am, they must be paid 35% higher than their regular daytime wage. If an employee is working overtime during these hours, they must be paid a 75% higher wage than their usual daytime rate.
Mandatory Bonuses
All Colombian employees are entitled to receive abonus called the Prima de Servicios that amounts to 30 days of pay. This bonus is known as the 13th salary and must be paid in two installments to all employees each year. The first installment must be paid on the last day of June and the second installment is paid by December 20th..
The Cost of Taxes and Benefits?
In Colombia, the payroll tax is determined by the salary and Tax Value Unit of the employee. Below we have listed the different tax brackets:
- 1,090 Tax Value Unit: No payroll tax
- 1,091 – 1,700 Tax Value Unit: 19% payroll tax
- 31,000 UVT: 35% payroll tax
As for benefits, it’s mandatory for all employees must receive the following, with the employer contributing 20% of the cost and employees, 8%:
- Paid vacation days
- Healthcare
- Pension
- Survivor benefits
- Short-term disability
- Long-term disability
Vacation Pay
Colombian labor law states that all employees are entitled to at least 15 paid vacation days by their employer.In addition to paid time off, Colombia has 18 paid public holidays, in which employees are not required to work, which include:
- January 1: New Year's Day
- January 9: Epiphany
- March 20: Saint Joseph's Day
- April 6: Maundy Thursday
- April 7: Good Friday
- May 1: Labour Day / May Day
- May 22: Ascension Day
- June 12: Corpus Christi
- June 19: Sacred Heart
- July 3: Feast of Saint Peter & Saint Paul
- July 20: Independence Day
- August 7: Battle of Boyacá Day
- August 21: Assumption of Mary
- October 16: Columbus Day
- November 6: All Saints' Day
- November 13: Independence of Cartagena
- December 8: Feast of the Immaculate Conception
- December 25: Christmas Day
Parental Leave
Paid parental leave in Colombia is required by law, with new mothers able to take 18 weeks of paid maternity leave. New fathers are also able to take 15 days of paid parental leave. While employers must pay their employees directly during this leave, they will be reimbursed by Colombian social security.
Other Financial Factors to Consider
Along with the many factors that go into paying Colombian employees that have been listed above, there are also many other financial considerations when hiring staff from another country.
Colombia’s Payroll Schedule
In Colombia, most employers pay workers monthly, with paychecks going out on the last day of every month. While you can choose to pay workers bi-weekly, however, it is the norm to complete payroll once a month.
You Must Have an Office in Colombia or Work With an Employer of Record
If your business is looking to hire employees in Colombia, you must either set up an office there or work with an Employer of Record.
An Employer of Record acts as a proxy for your business and will act as the official employer of your staff in Colombia. This is often the more desirable option as it means you can avoid setting up and running an office in Colombia which can be incredibly costly and stressful due to the complex labor laws in place.
Hire Colombian Employees Compliantly
Looking to hire employees in Colombia but have concerns about the complexities of paying and managing your team? Borderless can help.Borderless is an online platform and Employer of Record designed to help employers hire, manage, and pay contractors anywhere in the world with ease, including Colombia. Borderless helps facilitate payments, draw up employment contracts, provide compliant tax documents, and ensure your business complies with all of Colombia’s complicated labor and tax laws.
Our platform is set up to handle anything and everything you may need when managing a team of staff in Colombia, so you can focus on running your company and managing more important areas of the business.
Contact us today to learn more about Borderless or to book a demo.
Disclaimer
Borderless does not provide legal services or legal advice to anyone. This includes customers, contractors, employees, partners, and the general public. We are not lawyers or paralegals. Please read our full disclaimer here.
