TL;DR, Hiring in Colombia
- Fully-loaded employer cost: ~50% on top of gross salary (Ley 50 benefits)
- Pension, health, ARL (workers' comp), parafiscales (SENA, ICBF, Cajas)
- 13th-month (prima de servicios) paid in 2 halves: June + December
- Severance auxiliary (cesantías) of 1 month's salary per year, deposited in February
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Statutory employer costs in Colombia
In Colombia, employers add roughly 47–55% on top of gross salary. Statutory contributions: 12% pension (employer share), 8.5% health (capped above 10 SMMLV), 0.5–6.9% ARL (workers' comp by risk class), plus 9% 'parafiscales' (SENA training 2%, ICBF child welfare 3%, Caja de Compensación 4%). Mandatory benefits add the prima de servicios (1 month/year) and cesantías severance fund (1 month/year + 12% interest).
| Contribution | Employer rate | Notes |
|---|---|---|
| Pension (employer) | 12% | Combined into Colpensiones or private fund. Solidarity surcharge 1% for high earners. |
| Health (EPS) | 8.5% | Exempt for employees earning <10 SMMLV at small employers under Ley 1607 |
| ARL (workers' comp) | 0.522–6.96% | Risk-class I (office) = 0.522%; risk-class V (mining) = 6.96% |
| SENA (training) | 2% | Parafiscal contribution |
| ICBF (child welfare) | 3% | Parafiscal contribution |
| Caja de Compensación Familiar | 4% | Family welfare fund, provides subsidies, recreation, healthcare access |
Mandatory employee benefits
Beyond statutory contributions, Colombia law requires the following benefits the employer must fund.
- Prima de servicios
- 1 month's salary per year, paid 50% by 30 June and 50% by 20 December.
- Cesantías (severance fund)
- 1 month's salary per year deposited into a cesantías fund by 14 February. Employer also pays 12% interest on the cesantías balance directly to the employee.
- Vacations
- 15 working days per year, after 1 year of service.
- Auxilio de transporte
- Transport allowance (~$200K COP/mo in 2025) for employees earning under 2 SMMLV.
Termination, notice and severance
Probation
2 months for permanent contracts; 1/5 of contract length for fixed-term (max 2 months).
Notice period
Indefinite-term contracts: 30 days for objective causes. Fixed-term: 30 days before expiry to avoid auto-renewal.
Severance
Without just cause: indemnización ranges from 20 to 45 days' salary per year of service, depending on salary tier and tenure. For employees earning <10 SMMLV with 1+ year tenure: 30 days first year + 20 days per additional year. Higher earners get 20 + 15.
Common compliance pitfalls
- Parafiscales (SENA + ICBF + Cajas = 9%) are sometimes confused with social security. They're separate and add meaningfully to employer cost.
- Salario integrado, for employees earning >10 SMMLV (~$13M COP/mo), employer can offer an 'integrated salary' that bundles benefits at 30% premium and excludes future indemnización on those bundled benefits. Common for executives.
- Cesantías retiradas, employees can withdraw cesantías for housing or education without leaving the job. Employer still owes the 12% interest on the prior year's balance.
- Colombian labor courts heavily favor employees. A 'mutual termination' with signed release can still be reopened by the worker for up to 3 years; pay severance correctly the first time.
Frequently asked questions
Sources
Statutory rates and rules verified against the following authorities. We update this page when rates change.