Colombia provides a set of mandatory employee benefits designed to ensure the financial protection, health, and well-being of its workforce. These benefits are governed by the country’s labor laws, which require employers to comply with specific regulations. Understanding these obligations is essential for businesses operating in Colombia, especially those utilizing Employer of Record (EOR) or Professional Employer Organization (PEO) services, to ensure full compliance.
1. Social Security Contributions (Sistema de Seguridad Social)
Description: Social security in Colombia is a compulsory system that includes health, pension, and labor risk insurance. Both employers and employees contribute to these programs, ensuring coverage for illness, disability, retirement, and work-related accidents.
| Contribution Type | Employer Contribution | Employee Contribution |
|---|---|---|
| Health Insurance (EPS) | 8.5% of salary | 4% of salary |
| Pension Insurance (AFP) | 12% of salary | 4% of salary |
| Labor Risk Insurance (ARL) | Based on risk level | N/A |
Outcome: These contributions ensure that employees have access to healthcare services, pension plans for retirement, and coverage for work-related injuries.
2. Paid Annual Leave
Description: Employees in Colombia are entitled to paid annual leave, which accrues based on their length of service. Employees are entitled to 15 working days of paid vacation annually.
Outcome: Paid leave allows employees to take time off for rest and personal matters while maintaining income stability.
3. Maternity and Paternity Leave
Description: Colombian labor law grants maternity leave to female employees and paternity leave to male employees.
- Maternity Leave: Female employees are entitled to 18 weeks of paid maternity leave.
- Paternity Leave: Male employees are entitled to 8 working days of paid paternity leave.
Outcome: These leave policies ensure that employees can take care of their newborn children without financial strain.
4. Sick Leave
Description: Employees in Colombia are entitled to sick leave, which is paid after a 2-day waiting period. The duration and payment depend on the reason for the illness and whether the employee is enrolled in the social security system.
| Length of Service | Sick Leave Entitlement |
|---|---|
| First 2 days | Unpaid |
| After 2 days | Paid by EPS |
Outcome: Employees can take time off work due to illness with financial support, ensuring their health without the loss of income.
5. Severance Pay (Cesantías)
Description: Employees in Colombia are entitled to severance pay, which is accumulated during the course of employment. The severance pay is equivalent to one month’s salary for each year of service.
Outcome: Severance pay serves as a form of financial protection in case of job termination, allowing employees to manage during unemployment periods.
6. Public Holidays
Description: Colombia observes several national public holidays, and employees are entitled to paid leave on these days. If employees work on a public holiday, they are entitled to additional compensation.
Key holidays include:
- New Year’s Day
- Labor Day (May 1st)
- Independence Day (July 20th)
- Christmas Day (December 25th)
Outcome: Employees are guaranteed paid leave on public holidays, contributing to work-life balance.
7. Vacation Pay (Prima de Servicios)
Description: Colombian labor law mandates that employees receive vacation pay, or “prima de servicios,” which is typically paid out twice a year: in June and December. This is equivalent to one month’s salary per year, split into two payments.
Outcome: The vacation pay ensures that employees receive additional financial support during their vacation periods.
8. Extra Legal Benefits
Description: Many companies offer extra-legal benefits such as transportation allowances, food allowances, and bonuses. While not mandatory by law, these benefits are common in the Colombian labor market and are often part of compensation packages.
Outcome: These additional benefits improve employee satisfaction and help attract and retain talent.
Managing Benefits with EOR/PEO Services
Using EOR/PEO services like GlobainePEO can simplify the management of mandatory employee benefits in Colombia. These services handle payroll, social security contributions, leave management, and other HR functions, ensuring that businesses remain compliant with Colombian labor laws while focusing on growth and expansion.
Final Thoughts
Mandatory employee benefits in Colombia not only provide financial protection and healthcare but also contribute to a positive work environment. Employers who understand and comply with these legal obligations will foster employee loyalty and satisfaction while avoiding penalties. By partnering with EOR/PEO services, businesses can ensure seamless compliance and focus on their core operations with confidence, knowing that their employees are receiving the benefits they are entitled to.
GlobainePEO – Your Trusted Partner in Colombia
At GlobainePEO, we simplify Colombia’s employee benefits management, ensuring full compliance with local labor laws. We oversee essential benefits like health insurance, pension contributions, severance pay, and maternity/paternity leave, allowing you to focus on business growth while we protect your employees’ welfare and legal rights. Let us manage your employee benefits in Colombia with confidence.