As an employer in Colombia, it’s important to exercise caution when ending an employment relationship. Terminating employees without adequate grounds or failing to follow the standard procedure can result in hefty fines and damage to your reputation.
The Colombian Labour Code, particularly Article 62, outlines the fair causes for dismissal. It mandates that for a termination to be considered fair, the employer must provide written notice specifying the contractual or legal standard that was breached, or the facts justifying the termination.
In this guide, we will discuss everything you need to know about the end of employment in Colombia, including the notice period, post-termination clauses, severance pay, termination process, waivers, and more. This way, you can protect your workers and your business from any potential legal and financial risks.
The working notice period in Colombia for employment termination varies based on the type of employment contract and the reasons behind the termination.
For fixed-term employment contracts, the employer must provide a notice of termination at least 30 days before the contract’s expiration if they decide not to renew it. If a fixed-term contract is terminated before its expiry without just cause, the employer must pay compensation equivalent to the salary due for the remainder of the contract.
On the other hand, there is no statutory notice period for an indefinite-term employment contract. However, it is a common practice to provide 15 days’ notice period. This is also the case for employees under probationary contracts.
In cases where a dismissal under this contract is considered without just cause, employers must provide severance pay to the affected employee. Employers calculate this based on the duration of employment and salary.
In Colombia, severance pay is mandated by law. The calculation of severance pay depends on the nature of the employment contract, the duration of employment, and the reason for termination. For example, a severance pay calculation may take into account the length of service an employee has provided to a company.
So, if an employee earns less than 10 times the minimum monthly wage, they are entitled to severance pay of 30 days for their first year of work, plus 20 days for each additional year. If the employee earns more than 10 times the minimum wage, they receive 20 days of severance for the first year and 15 days for each additional year of service.
Meanwhile, the employer is not obligated to provide severance pay if an employee is terminated with just cause.
The probation period in Colombia is not required by law, but it is commonly used by employers to assess the compatibility and performance of new hires.
According to Article 78 of the Colombian Labour Code, the maximum probationary period for an indefinite contract is two months. On the other hand, the probationary period for a fixed-term contract can be up to one-fifth of the contract terms, not exceeding two months.
This allows both the employer and the employee to evaluate the employment relationship before committing to a long-term engagement.
When it comes to the termination process, Colombia follows the standard procedure based on the local labour laws.
As an employer, you need to have a just or sufficient cause to dismiss someone without notice. For example, fairgrounds that can be considered for dismissal are repeated or gross misconduct, failure to perform required duties, criminal behaviour, or misrepresentation.
Fair dismissals need to align with the just causes outlined in Article 62 of the Colombian Labour Code, such as:
These fair causes ensure that dismissals are justified and that the rights of workers are respected, balancing the interests of both employers and employees.
The notice of termination must be made in writing and sent to the appropriate government authorities. It should specify the legal and contractual standards that were breached or detail the circumstances justifying the termination. Employees should receive their final payment on their last day of work.
On the other hand, for terminations without cause, the employer must meet severance obligations. In such cases, there are no requirements for issuing a prior notice, but the employee is entitled to compensation or indemnification for the unilateral termination by the employer.
Non-compete clauses are permissible but are strictly regulated when it comes to their enforceability post-termination.
During active employment, employers can enforce agreements to prevent employees from participating in competing activities. However, if an employee leaves your company, you must meet certain conditions to enforce non-compete clauses.
If you’re considering adding a post-termination non-compete clause to your employee’s contract, you must be aware of the following:
Such agreements must be clearly stated and should serve a legitimate purpose to protect your business without imposing unfair limitations on your employees.
Customer non-solicitation clauses or agreements are generally not enforceable by law. This clause or agreement restricts a former employee from contacting the employer’s clients. It primarily acts as a preventive measure rather than a legally binding one.
While these clauses can be included in the contract, it only sets clear expectations and standards from employees. Using them for legal protection against competition from former employees might not be effective.
Similar to customer non-solicitation, post-termination employee non-solicitation clauses or agreements are not enforceable. Typically, employers add these clauses or agreements in employment contracts only to set clear expectations and discourage this kind of behaviour, rather than as a legal measure on which they can rely in court.
Waivers related to the termination of employment are only enforceable and advisable when executed through a labour settlement before a Labour Judge or the Ministry of Labour. This process ensures that any agreement between the employer and the employee is fair, legally sound, and mutually agreed upon.
However, employers must take note that employment rights during termination are protected under the local law. It is generally not possible for an employee to waive these rights voluntarily, which include rights to due process and fair dismissal reasons as outlined in the Colombian Labour Code.
Employers must cite one or more of the fair causes established in Article 62 of the Labour Code to consider fair dismissal.
Given these protections, employees cannot simply sign away their right to a fair termination process, even if they or the employer wish to do so.
During a transfer of a business in Colombia, there are certain implications that can impact your workforce. It’s essential to understand them to ensure compliance with the local labour laws and regulations.
Transfer of employment can only occur in the following ways:
When an employer substitution or contract transfer takes place, employees are assured of retaining their jobs and existing employment conditions, including their salaries, accrued seniority, benefits, and any other terms they previously enjoyed.
In the case of an employer substitution, the original employer shares liability with the new employer for any employment-related obligations that arose before the transfer. This includes, but is not limited to, unpaid salaries, severance, or other liabilities. Shared responsibility ensures a fair outcome for all parties and helps to safeguard employee interests during the transition.
An employer substitution is recognised by law when the following three criteria are met:
There are many different ways an employment contract can come to an end. But whatever the situation, you need to understand the rules that cover the end of employment in Colombia — or you could end up facing legal issues.
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