Colombian Labor Legislation Overview
Looming over all employment relationships in Colombia, Labor Law is a highly protective and detailed area of national legislation. The objectives of Colombian Labor Law are to protect the dignity of workers, guarantee fair wages, and promote social justice. They are also directed at guaranteeing worker’s minimum rights and protecting the weakest party against the strongest party (often the employer). This is why labor law is said to be "ius cogens" (meaning that unilateral modification of the law is null and void) and a "ius praesumptum" (meaning any understanding between parties of lower hierarchy may be modified according to the law if unfair).
Colombian labor regulation applies to private labor contracts and fills the gaps found in general labor regulation. The aforementioned protectionism has been translated into additional obligations that employers must follow , including but not limited to certain working hours restrictions, fairness in dismissals, severance pay, mandatory vacations, mandatory rest hours, and maternity/paternity leave. The following are some of the most important types of labor contracts and related obligations:
Colombian Labor Law also provides for the following obligations for the employer:
Independent contractors are not qualified employees for Labor Law purposes, as they are not subject to the direction of a superior in order to generate any obligation or right under an employment relationship. Therefore, independent contractors are only hired for their services and do not enjoy the protection of the Labor Law.
Rights and Protections of Employees
The Colombian government’s active role in improving employee rights and protections is reflected in a number of laws and organizations. The fundamental rights of Colombian workers (that is, employees) are guaranteed by the Colombian Constitution, and detailed under the Code Labour. This section summarizes some of the most important rights provided to employees, including work hours and vacation requirements, pay and overtime provisions, sick leave benefits, and statutory benefits for maternity leave and death.
Colombian law limits the workweek to 48 hours, divided into Monday through Saturday, with no more than nine consecutive hours on any given day (except in situations where health and safety are at risk). Daytime shifts generally run from 6 a.m. to 10 p.m., while nighttime shifts extend from 10 p.m. to 6 a.m. More than half of Colombian regions must comply with daytime shift requirements, which aim to reduce crime at night. Workers are entitled to three weeks of paid vacation each year.
The Colombian government sets a monthly minimum wage for all workers, with further determination depending on the city in which the worker is employed. Daily wages are divided into work shifts, which vary by jurisdiction depending on the nature of the work team, as well as the work schedule. Workers receive double the minimum wage for all overtime hours, and receive 100 percent more than the normal wage for any work rendered on a recognized holiday. A worker who is unable to take paid vacations may make an economic claim for the payment of unused vacations (these claims may be filed for up to three years).
Employers are responsible for paying 66 percent of the worker’s regular salary for up to 180 days when the worker contracts an illness that prevents him or her from working. These payments are made by the Pension Institute, Social Security Health Company or their insurance companies when the association does not have its own autonomous fund.
Pregnant workers are entitled to 18 weeks of paid leave, beginning six weeks before the birth of the child and ending 12 weeks afterward. In the case of premature births, workers are entitled to 18 weeks of leave, with the employer responsible for paying the remaining 4 weeks of leave. After the expiration of maternity leave, workers may choose to take an additional 8 weeks of unpaid leave.
Colombian employers are required to pay workers’ dependents the equivalent of 30 days of salary upon the worker’s death. If a worker dies while working in the company, the employer is also financially responsible for arranging the worker’s burial.
Employers´ Responsibilities in Colombia
Colombian employers are legally responsible for including very specific terms in a labor contract, including job functions, salary, paid benefits, and work schedules. It’s important to clearly lay out in the contract the employee’s duties and responsibilities, the terms of and reasons for termination, and the location(s) where the employee will be assigned to work.
Employment contracts are not required to be in written form in Colombia, but Colombian employers that choose not to provide a written contract can face significant risks. For one, failure to provide a foreign employee with a written contract can result in a presumption that the employee is a permanent employee (thus entitling the employee to higher severance payments). In addition, Colombian employers that use employment contracts without understanding the legal requirements may issue invalid contracts.
An employer is required under Colombian law to provide and maintain a safe working environment for its employees. The employer must carry out risk assessments and preventative measures, to protect employees from occupational hazards.
Colombian law requires that employers register their employees with a social security plan, which provides health, maternity, workplace disability, unemployment, and pension benefits. Employers have nine (9) days after hiring employees to register those employees with the plan and begin paying contributions. By analyzing an employer’s composition of employees, a foreign employer should be able to determine the amount that will need to be contributed to the plan.
Companies with 10 or more employees must appoint at least one health and safety representative. This individual provides guidance on occupational risks, shares information about the policies in place to mitigate risks, and monitors and analyzes potential new risks.
Labor Shutdowns and Collective Agreements
Colombia’s Constitution and Labor Code collectively dictate the framework for strikes and collective bargaining. Among the most important Constitution provisions are articles 55 and 56. Article 55 states that "the social parties may freely agree, through collective bargaining, the rules of relations between them, without prejudice to the mandatory parts of the law." Article 56 refers to the rights of workers by stating as follows: "workers [may] organize themselves within a union, which shall be governed by the law." With regard to strikes, the Constitution provides that the State guarantees the right to peaceful assembly and requires that the exercise of such right (as well as the exercise of the right to strike and other legitimate activities) "shall be contrary to the law" or "of a nature that egresses its normal exercise." In accordance with the Constitution, the rules governing strikes are codified in the Labor Code.
The Constitution also states that labor disputes that cannot be settled at the plant level shall be handled in accordance with the procedures established in the Labor Code. Prefiling, the parties are required to try to settle the conflict at the collective bargaining stage, provided that the CEA has been in effect for at least six months. If the parties cannot reach an agreement, they must create a joint commission with equitable representation from both the union(s) and the employer. If an agreement is not possible, the parties must resort to arbitration within an additional period of 15 days before resorting to a lawful strike.
Termination and Severance Rules
Under Colombian law, the employment relationship may be terminated by any of the parties. Termination with cause is justified when it results from a serious breach of labor obligations or violation of constitutional, legal or unilateral orders of the employer in the exercise of its faculties. The law establishes certain causes that are considered valid for termination with cause.
With the exception of the executive level employment contracts (those stipulated for workers receiving remuneration for services provided in whose case a subjection commercial field exists), in which the employee’s termination is not required to be for a cause of just cause, in all other contracts, the termination without cause is allowed but in those cases, the termination expires with the obligation of the employer to pay the severance.
The termination of the contract must be notified to the employee orally or in writing, and if the resignation is notified verbally, it is indispensable that the corresponding minute is recorded and signed by both parties. If the notification is not registered, the dismissal will be null.
The labor law establishes certain formalities regarding the notice period required by the parties to terminate the employment . On the one hand, the employee who decides to resign must put it in writing and give advance notice of 15 days in the cases of indefinite duration contracts, for fixed term contracts, prior notice is not required in Colombia. In case the employee does not notify the resignation, it must pay the wages corresponding to the notice expired.
On the other hand, when the employer decides to dismiss the employee, it must notify the same (or "hint" the dismissal) to the employee or pay three days of their ordinary salary for the unspent notice period; the employer could choose to dismiss the employee immediately, but it must pay the rest of the notice. When the employer decides to dismiss the employee without cause, in addition to notice period, it should pay the employee a severance allowance.
In Colombian law, severance is defined as "the indemnity that the employer owes to the employee when the employment ends" – and it is governed by Article 65 and other articles of the Colombian Labor Code. The amount of the severance allowance will depend on the duration of the contract, as follows:
For these purposes, we say that the period of one year is understood as any period from 240 to 365 days; and the period of a few days is understood for any period of less than 240 days.
Recent Developments and Changes to the Law
Over the past few years, we have seen attention given to the labor market combined with significant labor reform under President Juan Manuel Santos’ administration. As a result, several reforms have been issued in a diverse number of areas in the labor market. In 2012, the Civil Code 1971 was amended to allow women to be hired for nighttime work, with certain exceptions. The use of sick days was regulated as well. Employers must now enable employees to take five sick days during their employment under a formal labor contract. The Salud-Pension Law established the right to medical attention, promoting equal opportunities, and expanding access and coverage of comprehensive health care and social security services. Colombian laws also require that employers increase job opportunities for people with disabilities and women victims of violence. The Colombian government issued a program to promote employment for victims of anti-union violence. Anti-discrimination provisions have been introduced to prevent discrimination in hiring and promotion practices. Sanctions have been established under the Labor Code for employers who refuse to hire a candidate because of race, sex, religion, political affiliations or disabilities. Current laws also prohibit forced overtime in the retail industry, which has a cumulative overtime limit of three hours a week. Unions and employees must receive information about the company’s commercial or production activities, which must be analyzed by the union before the company implements the changes. Employers are responsible for compensatory damages to employees entitled to health services if they fail to deliver required documents or correctly complete forms. Use of labor intermediaries is also being penalized. The Colombian Ministry of Health and Social Protection issued Resolution 592 dated 19 February 2013 regulating the payment of compensation for labor accidents. The reform was designed to modify "load carrier" transportation services and mixed transportation systems. Law 1581 of 18 October 2012 prohibits employers from requiring employees to carry their work materials to and from work. The Colombian Labor Code was modified to enable authorities, not only Municipalities but also estates (departamentos) more broadly, to classify holidays. New regulations allow declares the Colombian Labor Code has made "just cause possible" for employers who decide to fire an employee without giving notice. This is the result of a campaign against short-term labor contracts. It allows employers to use workers’ unions for the purposes of negotiating labor contracts. Long-term collective labor contracts have been considered special allowing employers enjoy benefits in aspects such as trimmings, compensation, unfair dismissal, and limits to termination of agreements set by mutual agreement of the the parties.
Frequent Labor Law Issues in the Workplace
While the Colombian labor market is regulated by numerous laws and administrative codes, both workers and businesses encounter several common legal challenges. Undeclared workers are an ongoing problem in Colombia’s labor market, benefiting none but businesses that seek to evade their duty to pay benefits and the state that suffers from the loss of this tax revenue. Workers that are not registered with social security agencies do not enjoy the benefit of statutory health plans, contributions into pension and severance funds, maternity pay or paid vacations. They receive no protection against unfair dismissal and are therefore vulnerable to a multitude of abuses. And worse, if they are injured on the job, they cannot seek compensation for damages from their employer. The International Labour Organization (ILO) estimates that, in 2013, 48% of the Colombian workforce was employed without a formal contract.
Although the situation surrounding undeclared workers is improving gradually, regulation and enforcement of existing labor laws remains a challenge. A major initiative in the fight against undeclared labor has been the creation of "grupos espejo" or mirror groups made up of members of Social Security Agencies (EPS, ARL, Cajas de Compensacion, AFP, etc.) to audit industries that are statistically more likely to employ such workers. Audit findings are typically made public through "operativos" or public notifications of sanctions, with the alleged offenders’ corporate names and tax identification numbers clearly detailed . As part of the same strategy, the National Inspectorate of Employment (Ministerio del Trabajo) has increased its team of inspectors and has significantly improved communication with tax authorities to share information on violators.
Another aspect of this strategy is the incentive system implemented by the EPS and ARLs that has been proven to reduce undeclared worker numbers. These systems grant companies lower contributions rates and other benefits for every worker that they insure with these agencies, which is why the number of workers on companies’ rosters tends to be understated and a source of conflict between employers and auditors. An EPS suggests to its clients that they publicly post their combined rates, showing the cost and relative weight of each social benefit they provide, in order to reduce the incentive not to declare workers.
Claims from workers that have been employed other than the statutory term of one year, but under continuous short-term contracts are very common. Turnover in these cases is not acceptable, and could lead a judge to convert short agreements into long-term contracts when there are indications that, instead of being merely causal, the dependence, continuity and subordinacy are present.
Finally, some situations can build on each other, as in the case of a company that hires workers under individual contracts, and one of its individual contract renewals is done collectively by including the same terms of the initial contract. In some cases this has been held to create a collective labor agreement by consent, with all of the effects that would normally stem from such an agreement having been entered into.