Article
3 min read
Author
Jemima Owen-Jones
Published
April 28, 2022
Last Update
July 23, 2024
Table of Contents
Expert speakers
Country overview
Why hire talent in Colombia?
Why companies might not hire talent in Colombia
How much does it cost to hire talent in Colombia?
How to (legally) hire in Colombia
Labor law in Colombia
Hire independent contractors in Colombia to reduce legal complications
Independent contractor labor laws in Colombia
How do I hire employees and contractors through Deel?
How do I pay contractors and employees with Deel?
Hire top talent in Colombia with Deel
Latin America saw a 286% increase in hiring from the region in 2021, and the trend is continuing in most LatAm countries.
Colombia is one of those countries: the labor market is improving and telecommunication professionals such as customer support agents are in high demand. Also, some experts have great faith in managerial talent from Colombia.
Many US-based companies have already recognized the benefits of hiring LatAm workers. Similar time zones and cost efficiency are great incentives for small businesses and startups to hire great talent from the region.
In this webinar, our experts discuss why and how to hire talent from Columbia, the fifth largest country in Latin America. Watch the webinar or read the recap to learn more.
In 2019, Colombia ranked as the third-largest workforce in Latin America, after Brazil and Mexico. Here are some reasons to search Columbia’s deep talent pool to fill your open roles.
Columbia is home to many talented individuals, including highly trained and experienced tech professionals.
Colombia’s National Learning Service (SENA) offers free programs and training for new, marketable skills like finances, administration, web design, and software development. The program is well-known across the region but undiscovered by big tech companies.
Also, two Colombian universities, Universidad Nacional de Colombia and Universidad de los Andes, rank among the top 15 universities on the continent.
The cost of living in Colombia is lower than in other countries, especially compared to the US, Canada, and most EU countries.
A company located outside of LatAm can hire a worker in Columbia for significantly less than the cost of a similar employee in the company’s home country. However, this opportunity may be temporary—the expansion of remote work will keep leveling the playing field for people worldwide, increasing compensation in historically underpaid parts of the world.
Colombia’s time zone makes it easy to collaborate with both the US and the EU.
Whether you’re on the west or east coast of the US, or even a western European country, you’ll have an overlap with your Colombian team. You won’t have to rely on asynchronous communication only, but can also schedule meetings during regular work hours.
Colombians are known as hard workers, resourceful, creative, and committed to their jobs.
People in Colombia are used to working in demanding conditions and dealing with crises, so they can think on their feet. This country’s culture is also warm and friendly, so Colombians make good teammates and contribute to pleasant environments.
Before you start interviewing candidates from Colombia, you may want to consider a few reasons why you may want to look at other countries first.
Many employees will certainly want to stay in Colombia for multiple reasons (low cost of living, proximity to their family). But some of them may want to live as nomads or move to another country.
The employee’s relocation may increase the cost of living and their compensation requirements. International travel can also create legal issues, like visa and residency complications.
If you work with English-speaking clients or require a specific level of English for day-to-day operations, you may have limited options in Colombia.
Colombia ranks 17 out of 20 Latin American countries in terms of English, with a global score of “low.”
The cost of hiring talent in Colombia depends on their role and type of employment. Some of the most commonly sought out roles are in:
Candidates from Colombia job hunting in foreign companies typically seek competitive salaries. Even if they stay in Colombia, they expect globally competitive compensation. Salary requirements rise if the candidate is bilingual or fluent in English.
A few examples of annual salary ranges for jobs in high demand (in USD):
You can use Deel’s salary calculator to learn about approximate costs for other roles in Colombia.
To hire employees in Colombia, you must create a compliant employment agreement.
To set up an employment agreement, you can either open a subsidiary or use employer of record (EOR) services.
A foreign subsidiary is a local legal entity, controlled by the parent company, established in a host country so you can legally hire and pay full-time employees.
Despite the flexible commercial law, you need to prepare a lot of paperwork and go through a time-consuming process to set up a subsidiary in Colombia. For tax and accounting purposes, your subsidiary acts as a separate legal entity. So you need to obtain a tax ID and register in the trade registry with Columbia’s Chamber of Commerce.
Also, legal representatives of the subsidiary must reside in Colombia. If they don’t have a Colombian ID, they must obtain the corresponding visa, whether they relocate or occasionally travel to Colombia.
An employer of record (EOR) is an organization that hires and pays full-time employees in other countries on your behalf—no need to set up a subsidiary. EORs provide a quicker and simpler way to hire remote employees around the globe.
Employer of record services include:
If you’re not sure whether you should outsource hiring to an EOR, read our employer of records pros and cons guide to determine whether it’s the right business decision for you at the moment.
Like in all other countries, employers need to comply with specific labor laws that protect employees and provide certain benefits. In Colombia, these benefits and the employees’ rights are based on the type of salary they receive.
Written agreements aren’t legally required, but lawyers highly recommend companies to sign them with their employees for protection purposes.
An EOR can help create compliant contracts in Columbia (or wherever you choose to hire). If you choose to hire without an EOR, we strongly recommend seeking legal counsel to help you create a compliant agreement.
Colombian employees can receive two types of wages: ordinary (benefits and contributions are paid separately) and integral (all-inclusive, with benefits included).
The minimum monthly ordinary wage in 2022 is around $260 (1,000,000 COP), while the minimum integral wage is around $3,380 (13,000,000 COP).
Every employee in Columbia is guaranteed the following benefits by federal law:
Most employers supply their employees based in Columbia with additional perks and benefits to attract top talent and improve employee retention. Those non-mandatory benefits include:
Employers with employees in Columbia must cover payroll taxes that fund social security programs in Columbia. Those costs (and the rate at which income is taxed) are as follows:
The Family Compensation Fund, Family Welfare, and SENA contribution percentages may depend on the employee’s salary and don’t apply to all employees (for example, employees with a salary lower than ten times the minimum wage). If the employee earns an integral salary, these contributions are paid based on 70% of the salary.
Employees in Colombia can work up to 48 hours per week, but no more than eight hours a day. They must have at least one day off per week. This threshold is expected to decrease to 42 hours per week by 2026.
Employees who work between 9 p.m. and 6 a.m. receive an additional 35% of their hourly rate.
Employees who work overtime can work up to two hours overtime per day. Overtime hours between 9 p.m.and 6 a.m. are paid an additional 75% of the hourly rate.
The probation period in Colombia can last up to two months, or ⅕ of the fixed term contract. During this period, either party may terminate the contract without prior notice or severance payment.
Employees are entitled to 18 weeks of maternity leave. One week of maternity leave is mandatory. Paternity leave is eight days. Congress recently approved six weeks of shared leave.
Learn more about parental leave policies around the world.
Employees need medical authorization to go on sick leave. The employer pays for the first and second day of the leave. Additional days off are reimbursed from the social security fund.
To terminate an employment agreement, you need to have an objective cause. If you terminate an employee with objective cause, you don’t pay indemnification to the employee. If you fire an employee without an objective cause, they’re entitled to severance pay.
Some terminations are restricted, like for employees on maternity or paternity leave, pre-pensioners, or employees with health conditions. To terminate such employees, you must seek third-party approval (for example, a labor judge or the Ministry of Labor).
You need to issue a written notice at least 15 days before the termination if you terminate an employee due to poor performance. If the reason for dismissal is misconduct, you don’t need prior notice.
Hiring international employees is complex because of the legal protections, taxes, and benefits. To reduce legal complications of hiring employees in Colombia, you can opt to hire independent contractors instead.
In Columbia, this kind of arrangement is called a “services agreement” (in contrast to an employment agreement). Services agreement refers to hiring contractors who have additional autonomy and receive compensation based on work delivered, not hours worked. This type of agreement is suitable for consultants or people with multiple engagements or clients.
Many foreign companies prefer hiring contractors because:
The younger workforce typically prefers working as contractors for several reasons:
Independent contractors in Colombia have a similar status as in the US and most European countries. They organize their own work and schedule and have the skills and expertise necessary to perform the work.
Here’s what employers and clients should know to ensure compliance with the local law.
If you classify your worker as a contractor but treat them like an employee, you run the risk of worker misclassification and may face penalties.
To ensure you contractor is really a contractor, consider these factors:
Note that clients are allowed to reimburse the contractor’s business expenses, maintain a long working relationship with them, and hire them for any type of business activity. These would all be concerns for misclassification in the US. But none of these factors will trigger employment status concerns according to Colombian law.
The Pension and Social Securities Unit of Colombia is extremely strict when it comes to foreign companies’ payroll obligations, so take classification matters seriously. In addition to facing legal and financial consequences, you may also get sued by your misclassified contractors.
If your company has a subsidiary in Colombia, you must report payments made to local contractors to the DIAN (National Directorate of Taxes and Customs).
However, if your foreign company hires and pays contractors from Colombia without a local presence, you don’t have to report the payments to the DIAN.
By default, independent contractors own any intellectual work they do for the client. This is different from the default law in the US. If your company wants to transfer the ownership of the intellectual property created by the contractor, you need to specify so in the written agreement.
Creating a compliant worker contract is easy with Deel. Once you’ve partnered with us, you’ll gain access to the Deel online dashboard. From here, you take the following steps:
That’s it! You have yourself an official reviewed and approved contract for hiring in Colombia.
Deel enables you to pay international workers effortlessly:
Deel makes global hiring faster and easier than ever.
As you’ve seen in the webinar, it doesn’t take more than three minutes to create a contract compliant with both your employment laws and local labor laws if you want to hire in Colombia.
With an easy-to-navigate user interface, mass payments feature, tax filing automations, self-service options, and multiple payment options, Deel is your go-to ally in building a global team.
Book a demo to see us in action and learn more about hiring employees and contractors in Colombia.
Disclaimer: This post is provided for informational purposes and should not be considered legal advice. Talk to a legal professional such as an employment lawyer for more info.
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