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Hiring in Colombia
Background check in Colombia
Hire employees in Colombia
Language used in Colombia
Payroll processing and setup in Colombia
Quickly and compliantly hire workers in Colombia
Employer of Record (EoR) in Colombia
Hiring in Colombia presents a strategic advantage and opportunity for international companies looking to expand their talent pool and foster growth. With its highly skilled professionals and rich talent pool, companies can enhance their workforce, which would help them achieve their business goals and objectives.
Whether for short-term or long-term engagements, Colombia has a growing number of professionals that you can tap into. The country is also fast becoming a hub for tech talent, particularly for roles that cover digital transformation and software development.
However, hiring talent in Colombia also means setting up an entity or subsidiary, which is typically costly and time-consuming. It is even more challenging if your company is unfamiliar with the local labour laws and regulations. Like other countries, Colombia has its own set of labour laws, tax regulations, and employment practices, which you need to consider. Non-compliance could lead to penalties, legal risks, or worse, damage to your reputation.
Employer of record services in Colombia
That’s why more and more companies looking to hire talent in Colombia are leveraging employer of record (EoR) services, such as CXC, to overcome these challenges. An EoR enables you to hire talent anywhere, including Colombia, without setting up a legal entity. This allows you to focus on other important aspects of your business while the EoR handles the admin and HR tasks associated with hiring internationally.
With a reliable EoR, you gain access to their in-depth knowledge of local laws. They manage legal compliance and ensure that employment contracts, work conditions, payroll, and taxes adhere strictly to local regulations.
Using an EoR is also a cost-effective solution compared to setting up your entity. It eliminates the need for legal fees associated with entity setup, reduces the cost of ongoing compliance, and minimises the risks of financial penalties from non-compliance.
In this guide, we’ll provide everything you need to know to hire compliantly in Colombia, including pre-employment background checks, payroll processing, hiring independent workers, how to leverage EoR services, and more. This way, you’ll be more confident in building your local team in Colombia to achieve your business goals.
Hiring in Colombia
Requirements to hire employees in Colombia
There are various requirements you need to keep in mind in order to compliantly hire talent in Colombia, including:
- Establish a legal entity: If you want to hire workers in Colombia, you need to set up a legal entity first. This process is often costly and time consuming. Alternatively, you can partner with an employer of record (EoR) provider, such as CXC, to hire employees in the country without the need to set up an entity. The EoR will take care of all the legal and administrative tasks associated with international hiring.
- Employment contracts: In Colombia, it is mandatory for the employer and employee to sign a written employment contract. The contract should be drafted in Spanish, Colombia’s official language and must articulate the terms of employment clearly. It should include details about the job title and description, duration of the contract (if applicable), salary and payment frequency, working hours, and terms regarding termination.
- Working hours and overtime: The typical working day in Colombia is 8 hours per day. As an employer, you must compensate employees for overtime at higher rates. In general, daytime overtime is paid at 1.25 times the regularly hourly rate for the first two hours, and 1.75 times for any additional hours; nighttime overtime rates increase to 1.35 times the regular pay.
- Work permits for foreign employees: If you are looking to hire a foreign national, you must make sure that they possess valid work permits and visas. The Ministry of Foreign Affairs holds the responsibility to verify that all foreign employees have the necessary documentation to legally work in Colombia.
How to hire workers in Colombia
To successfully hire talent in Colombia, you need to understand the local labour laws and regulations, as well as the employment practices. You have a few options to consider when hiring, such as:
Direct hiring
To do this, you need to have a legal entity in Colombia. This approach will require you to manage payroll, taxes, benefits, and compliance with the local labour laws, including contributions to pension funds, health insurance, etc.
Employer of Record (EoR)
If you don’t have a legal entity in the country, you can still hire talent compliantly through an Employer of Record. An Employer of Record can hire employees on your behalf. The EoR becomes the legal employer, handling payroll, taxes, benefits negotiation, and ensuring compliance with labour laws. This option is particularly useful for companies that wish to hire quickly and without the complexities of setting up a local entity.
How to hire contractors in Colombia
Another option is hiring workers as independent contractors, though this does not involve an employer-employee relationship and thus is subject to different rules and regulations.
You must also keep in mind that hiring independent contractors can pose legal and financial risks for your business, particularly when misclassification occurs.
Understanding employee status
Contractors are generally self-employed individuals or entities that provide services under terms specified in a contract, without being directly employed by the company. Clearly differentiating between an employee and a contractor is important to avoid misclassification.
Contractual agreements
When engaging with contractors, you must carefully draft contracts, outlining the scope of work, payment terms, duration, and confidentiality clauses. Most importantly, it should comply with Colombian labour laws and regulations to avoid potential disputes or misunderstandings.
Compliance with local laws and regulations.
Contractors in Colombia are responsible for their own income taxes and social security payments. However, depending on the nature of the work and duration of the contract, certain legal exceptions may apply.
Termination of contract
To mitigate any potential legal disputes, you must clearly define the conditions under which a contract might be terminated, and the responsibilities of both parties when the scenario happens.
Background check in Colombia
Conducting a pre-employee background check is allowed in Colombia, if it is conducted with explicit consent from the job applicant. Most of the companies in the country leverage specialised firms to conduct pre-employee background check.
Moreover, in Colombia, cancelling a job offer after conducting a background check is considered discriminatory as per local labour laws. There are also limitations on what employers can ask for or verify during the background check, including information about pregnancy, health, drug use, family situations, and political beliefs.
Types of pre-employment background check in Colombia
It is common for employers to verify things like the educational history and professional qualifications of the candidate to confirm the authenticity of degrees, diplomas, certifications, and the legitimacy of institutions attended. Employers also typically verify employment history to confirm the employment dates and position held.
Criminal pre-employment background check in Colombia
Employers can perform criminal pre-employment background check in Colombia, but they need to be conducted carefully and must adhere to the local labour laws. These checks are typically common and can be accessed through the Colombian National Police. Just like other types of pre-employment background check, this must be conducted with consent from the job applicant.
Requirements for foreign nationals working in Colombia
For employers, you need to ensure that foreign nationals have a temporary visa or permit to live and work in Colombia. There are several visas that foreign nationals can use to work legally in Colombia. These visas are:
- Migrant visa: This type of visa can last up to three (3) years. A migrant visa is intended for those who wish to stay in the country for an extended period due to reasons such as work, family reunification, or education. It is suitable for individuals who intend to work, do business, or reside permanently in Colombia. It grants its holder the possibility to engage in activities consistent with their status without requiring additional permits.
- Visitor visa with work permit: This type of visa can last up to 2 years. Often categorised under the V Visa, it is generally issued to individuals who intend to stay temporarily for specific activities that could be work-related, among other possibilities. This type of visa accommodates foreign nationals who are in Colombia for contracts, short-term assignments, or special business activities that don’t exceed the maximum duration set by the local regulations.
Both types of visas can be renewed indefinitely. After holding a migrant visa for five (5) years, one can apply for a residence visa. Generally, foreign nationals must submit their visa application to the Ministry of Foreign Affairs in Bogotá or a Colombian consulate abroad.
If applying in Colombia, applicants can use a representative to file the application. Other visa options may be available depending on what the foreign national will do in Colombia or their personal circumstances. The government also offers special permits for Venezuelan nationals to work in Colombia.
Meanwhile, some professions in Colombia, such as law, engineering, and accounting require special permits to practice in Colombia.
Hire employees in Colombia
Employee in Colombia
An employee is an individual who works under a contract for a company or employer in exchange for payment. Employees in Colombia can have several types of contracts, such as indefinite, fixed-term, or temporary agreements. This type of relationship involves the employer directing and supervising the employee’s work, and the employee agrees to follow the employer’s instructions.
They are also entitled to certain rights and benefits, such as minimum wage, social security, and paid leave, according to the local labour laws and regulations.
Independent contractor in Colombia
An independent contractor is an individual or legal entity that provides services or goods to another entity under terms specified in an independent contractor agreement. In Colombia, independent contractors can operate as self-employed individuals, sole proprietorships, or manage their own businesses.
To avoid misclassification, employers must understand the degree of autonomy independent contractors has. They typically maintain control over how their work is executed without the subordination typically present in traditional employer-employee relationships.
Agency worker in Colombia
An agency worker refers to an individual who is employed by a third-party agency or service provider rather than by the end-user of their service.
In this type of work, the agency is the employer of these workers. Agency workers can only be hired in three specific situations:
- For occasional or short-term tasks.
- To replace employees who are on vacation, maternity leave, or sick leave.
- To handle increased production needs, but only for a maximum of 6 months, which can be extended for another 6 months. After that, the employer must either end the worker’s contract or hire them directly.
If a company uses agency workers outside of these situations, it may be considered the employer and could face penalties, including fines of up to 5,000 times the minimum monthly wage.
Language used in Colombia
The primary language used in business settings is Spanish, the official language in Colombia. Spanish is spoken by most Colombians and is important for formal business dealings, communications, and contracts.
While there are no statutory requirements regarding language usage, Spanish is recommended to use for any employment documents. If the document is in English or other language, it must be translated into Spanish as prescribed by the Colombian authorities.
To ensure smooth business operations and relations, it’s highly recommended for businesses looking to do business in Colombia to have a solid understanding of the Spanish language.
In some business setups, English is spoken, particularly in multinational companies or in dealings with international clients.
Payroll processing and setup in Colombia
When setting up payroll in Colombia, companies must first establish a branch or subsidiary. They need to register properly with local tax authorities and open a corporate bank account to process payroll for both the employer and the employees. Social security contributions for health, pension, and labour risks are also required. Moreover, if the employees are part of a union, payroll taxes and union dues may also need to be withheld.
The payroll processing in Colombia can be complex, especially if your company is unfamiliar with the local labour laws and regulations. It typically involves calculating employee gross pay, withholding taxes based on the employee’s income, and deducting social security contributions, pensions, and health insurance.
For most companies looking to penetrate the Colombian market quickly and compliantly, they opt to partner with a reliable global payroll provider, such as CXC, to bypass these challenges. Outsourcing payroll to local experts can help mitigate risks and streamline payroll operations and ensure compliance with local labour laws and regulations. In addition, engaging with a reliable global payroll provider can give you access to local HR and payroll experts who can offer valuable insights into best practices and help you navigate the complex landscape of Colombian labour laws and regulations.
Quickly and compliantly hire workers in Colombia
Hiring workers in Colombia usually means setting up a legal entity, which can be expensive and time-consuming. As an employer, you can avoid this hassle by working with an Employer of Record (EoR), like CXC.
Through our EoR solution, you can confidently hire workers in Colombia, without worrying about compliance issues. We’ll handle everything from onboarding to payroll and benefits to employment contracts on your behalf — so all you have to think about is finding the right person for the job.
Speak to our team and learn how we can support your global expansion journey in more than 100 countries worldwide.
Compliantly hire employees anywhere with CXC
With our EoR solution, you can engage workers anywhere in the world, without putting your business at risk. No more worrying about local labour laws, tax legislation or payroll customs — we’ve got you covered.
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