Conditions of Employment
The Colombian Labor Code establishes and regulates terms and conditions of employment, safety in the workplace, organized labor, and other related matters.
Working Hours, Holidays, and Vacations
The normal Colombian work day consists of a nine-and-one-half-hour day. The work week is normally forty-eight hours. These hours can be increased if overtime is recognized by the employer at set rates.
Employees are entitled to leave on holidays and to fifteen working days of paid vacation time per year.
Rate of Pay, Bonuses, and Additional Remuneration
The parties may freely negotiate employee remuneration as long as the Colombian minimum salary is paid. For 1997, the minimum monthly salary is $172,005. Employees earning up to two minimum salaries must also be paid a transportation allowance.
Employers must also take into account legal bonuses. Employees are entitled to a fifteen-day bonus in the middle and at the end of the year. Other bonuses or fringe benefits, such as a living allowance, a car allowance, and school tuition, can be freely agreed upon between the parties. An employer is not required to distribute profit-sharing payments to its employees.
An employer and employee may also enter into a labor contract under an integral salary system. For such a labor contract to be valid between the parties, the employee's remuneration must be at least ten minimum monthly salaries plus 30% that corresponds to fringe benefits. Thus, for 1997, the minimum integral salary is $2,236,065.
The employee must be affiliated with a social security program, either the government Social Security Institute (Instituto de Seguros Sociales-ISS) or a private entity authorized by the government.
The employee and the employer make social contributions for pensions and health and professional risk insurance. The employer must also contribute to a family welfare, apprenticeship service, and family compensation fund. The base for calculating social security contributions is made up of all the payments considered to be part of the salary agreed upon by the parties. Contribution rates are summarized in Table 5.01.
Contributions to Various Social Security Programs as a Percentage of Payroll
Type of Fund Employer Employee Total (%) (%) (%) Health Insurance 8 4 12 Pension 10.125 3.375 13.5(a) Family welfare, apprenticeship 9 - 9 service, and family compensation Professional risk Varies(b) - Varies(b)
With respect to pensions, employees can contribute either to the ISS's pension fund or to a private fund. Employees who choose the ISS's fund will receive a defined bonus, which cannot be higher than twenty minimum monthly salaries, as a pension. Employees who contribute to a private fund will receive a bonus in accordance with the money they have saved.
Foreign employees are not obligated to register with the social security authorities for pension benefits if they are covered by social security programs that provide similar benefits in their own countries. If a foreign employee does not register, both his or her own and the employer's normal contributions to the social security fund may be halved. Employers of foreign nationals cannot obtain any reduction of the 9% contribution to family welfare, apprenticeship service, and family compensation funds.
Employees who earn more than four minimum salaries must contribute an additional 1% of salary to pension funds.
Health and Safety Legislation
Colombian employers have a general responsibility to ensure the health and safety of all of their employees. For example, by law, they must ensure that all of their employees are covered by health and professional risk insurance.
Termination of Employment
Labor contracts may be terminated when the time period specified in the contract is completed, when a specific job is finished, by mutual agreement, by decision of one of the parties, or for other reasons not foreseen by the parties.
Notice of thirty days must be given when a party decides to terminate the labor contract. However, the employer can dismiss an employee without prior notice when legal cause is established. If no legal cause for the dismissal exists, the employer must pay an indemnity that varies depending on the length of service.
Workers are constitutionally protected. They are encouraged to associate and organize in defense of their rights and to form unions.
A minimum of twenty-five workers is required to form a union. An employer may not dismiss workers who decide to create a union or, once the union is registered with the Ministry of Labor, who hold important union positions.
Colombian labor law recognizes three types of unions: company unions, industry unions, and labor unions. The type of union formed depends on the particular needs of those organizing it.
Collective labor contracts are signed when a union is in existence. The principles and goals of the employees are identified in the collective contract. All individual labor agreements are governed by what is stated in the collective contract.
The process of entering into a collective labor contract has several stages, during which the contract terms are discussed and accepted. During the discussion stage, workers may ask the employer directly to accept certain conditions. If an agreement is not reached, mediation will take place. If mediation does not result in reconciliation, the workers may decide to pressure management, by means of a strike, to accept their terms. Strikes must be declared and carried out in accordance with the law.
Employment of Foreigners
A Colombian company may hire foreign employees, provided that legal requirements are complied with. For example, authorization may be required from the Ministry of Labor, and applications for appropriate types of visas may have to be submitted.
To hire a foreigner in Colombia, a company must observe proportionality requirements between national and foreign workers. These requirements are 80% nationals to 20% foreigners for ordinary functions and 90% to 10% for management positions. If these proportions are met, the Ministry of Labor will issue a proportionality certificate before the foreigner joins the Colombian company.
To work in Colombia, a foreigner must obtain a temporary work visa. The foreigner must obtain a business visa if he or she plans to do business there without receiving remuneration in Colombia.
A temporary work visa allows a foreigner to work while he or she is under a labor or service contract in Colombia. It is valid for one to three years, depending on the activity to be undertaken. The temporary work visa allows multiple entries into Colombia that are not limited to a minimum period of time, as is the case with the business visa. The temporary work visa can also be extended if the purpose for coming to Colombia is not accomplished. A foreign identification card must be obtained once a foreigner with a temporary work visa is in Colombia. The card, together with the passport, must be presented when the employee travels outside Colombia; it is also used for identification purposes while the foreigner is within the Colombian territory.
A business visa is issued to commercial or industrial executives who come to Colombia for business purposes. It is valid for up to three years and can be extended. The business visa allows foreigners to stay for six consecutive months for each entry. Individuals with business visas do not have to obtain foreign identification cards. They can identify themselves with their passports, which contain their business visas.
A company that hires an expatriate under a labor or service contract has to report the hiring to the Administrative Department of Security (Departamento Administrativo de Seguridad-DAS) within thirty calendar days following the initiation of the expatriate's activities with the company. Companies are not required to register the hiring of the expatriate if his or her temporary work visa is for a period equal to or less than one year. If the individual carries a foreign identification card, he or she must report to the DAS the termination of the corresponding agreement within a month following the date of its conclusion. Employees with foreign identification cards must communicate to the DAS any address changes within thirty calendar days after such changes.
The transgression of any of these regulations is penalized with fines imposed by the DAS. These fines range from one-half to five times the current monthly minimum salary.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
For further information contact Mario Andrade, Deloitte & Touche, Santafe de Bogota, Colombia on Tel: +57 1 256 1548, Fax: +57 1 256 1557