Employer of Record

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Employer of Record Services in Colombia

Colombia is a booming market of tech and services talent, with a labor framework that rewards precise administration.

Country fact sheet

Country Fact Sheet: Colombia

Colombia is the region's most active nearshore hiring market: a large, young, increasingly bilingual workforce, US Eastern time alignment, and mature service ecosystems in Bogotá, Medellín and Barranquilla. It is also a market in the middle of the deepest labor reform in decades — Ley 2466 de 2025 — which changed contract rules, working hours, shift definitions and surcharges. Getting payroll right in 2026 means tracking a moving calendar, which is precisely what an EOR absorbs.

Currency: Peso (COP)
Time zone: UTC−5, no DST
Working week: 42 hours (from Jul 2026)
Paid vacation: 15 business days

Country overview

Major industries & sectors

Technology and IT services — software engineering, data, cloud and product teams serving North America.
BPO, shared services and customer experience, one of the largest nearshore industries in the hemisphere.
Financial services and fintech, concentrated in Bogotá and Medellín.
Energy, mining and hydrocarbons; renewables in the Caribbean region.
Agro-industry (coffee, flowers, fruit), manufacturing and logistics.

Why now

Salary levels for senior technical profiles remain far below US benchmarks while English proficiency keeps improving.
Full working-day overlap with US Eastern time and short flight times to Miami, Houston and New York.
The US–Colombia Trade Promotion Agreement plus agreements with the EU, Canada, Mercosur and the Pacific Alliance.
The 2025 labor reform raises the cost of getting compliance wrong — an early advantage for employers who structure correctly from day one.

Benefits of doing business

Depth of talent

Tens of thousands of annual STEM and business graduates, with established engineering and customer-experience clusters in three major cities.

Time zone

UTC−5 year-round with no daylight saving: a full shared working day with US Eastern and Central teams.

Cost efficiency

Fully loaded employment cost for equivalent seniority remains materially below US and Western European levels, even after Colombia's statutory benefits.

Bilingual capability

Government and private programmes have built a substantial English-capable pool, particularly in the BPO and technology sectors.

Trade access

Preferential access to the US, EU, Canada and Pacific Alliance markets, useful for both service exports and goods.

Connectivity

El Dorado is one of Latin America's busiest cargo and passenger airports, with dense connectivity to North and South America.

Challenges of establishing a local entity

Incorporating a SAS requires registration with the Cámara de Comercio, a RUT/NIT with DIAN, corporate bank account opening and, in practice, several weeks of KYC on foreign shareholders.
Before the first hire the company must affiliate with an EPS (health), a pension fund, an ARL (occupational risk) and a caja de compensación familiar — each with its own enrolment process.
Payroll runs on a strict monthly rhythm: PILA contributions plus the electronic payroll document (nómina electrónica) reported to DIAN.
The statutory calendar is unforgiving: prima de servicios in June and December, cesantías deposited by 14 February, interest on cesantías by 31 January, and dotación three times a year for employees earning up to two minimum wages.
UGPP audits contribution bases retroactively and assesses interest and penalties where non-salary payments were mischaracterized — one of the most common and expensive findings for foreign-owned entities.
Ley 2466 de 2025 changed shift definitions, contract limits and surcharge percentages on a phased timetable through July 2027; payroll configuration must be updated each phase.

Criterion	Own legal entity	With Grupo IERG (EOR)
Time to first hire	Several weeks for incorporation, tax ID, bank account and social-security affiliations before onboarding is legally possible.	Days, under an employer already affiliated with EPS, pension, ARL and caja.
Reform tracking	Your team must re-configure payroll at each Ley 2466 phase (July 2026, July 2027).	Grupo IERG applies each phase automatically across all employees.
Contribution risk	The entity faces UGPP review of contribution bases and non-salary payments.	Contribution bases are structured and defended by the EOR as legal employer.
Statutory calendar	Prima, cesantías, interest and dotación managed in-house with hard legal deadlines.	Accrued monthly and paid on the statutory dates by Grupo IERG.
Exit	Liquidation, deregistration and final filings with each authority.	Notice period and a compliant settlement.

Employment & labor law summary

01Contracts and the 2025 reform+

Requirement	What the law requires
Default contract	Ley 2466 de 2025 reinforces the indefinite-term contract as the general rule for the company's core activities.
Fixed-term contracts	Still permitted but capped: they may not exceed four years in total, after which the relationship becomes indefinite.
Other modalities	Contracts for a specific work or task (obra o labor) remain available; the apprenticeship contract was converted into a genuine employment contract by the reform.
Probation	Up to two months in indefinite contracts; in fixed-term contracts it may not exceed one fifth of the agreed term.
Form	Fixed-term, probation and salary-integral clauses must be in writing to be enforceable.
Remote and teleworking	The reform expanded and regulated remote work and teleworking modalities, including connectivity allowances in lieu of transport allowance.

Important: Ley 2466 de 2025 was enacted on 25 June 2025 and several provisions phase in over time. We confirm the rules in force on each hire date rather than applying a single static ruleset.

02Working time, shifts and surcharges+

Requirement	What the law requires
Maximum week	The Ley 2101 de 2021 schedule reduces the ordinary week to 44 hours from July 2025 and 42 hours from July 2026, distributable over five or six days by agreement.
Daytime / night shift	From 25 December 2025 daytime work runs 6:00–19:00 and night work 19:00–6:00 (previously the cut-off was 21:00).
Night surcharge	35% over the ordinary daytime hourly rate.
Overtime	Daytime overtime +25%; night overtime +75%. Overtime is capped at 2 hours per day and 12 hours per week.
Sunday and holiday work	Surcharge phased upward by Ley 2466: 80% from 1 July 2025, 90% from 1 July 2026 and 100% from 1 July 2027.
Public holidays	18 paid public holidays per year, several of which move to the following Monday under the Ley Emiliani.

03Leave and family entitlements+

Requirement	What the law requires
Annual vacation	15 business days of paid leave per year of service, accrued proportionally.
Sick leave	The employer pays the first two days of common illness at 66.67% of salary; from day three the EPS pays the incapacity benefit.
Maternity leave	18 weeks of fully paid leave, funded through the EPS.
Paternity leave	2 weeks of fully paid leave, funded through the EPS.
Shared parental leave	Colombian law allows part of the maternity leave to be shared with the other parent, and flexible part-time parental leave, subject to statutory conditions.
Nursing breaks	Paid nursing time during the working day for the period established by law.

04Mandatory benefits and payroll costs+

Requirement	What the law requires
Prima de servicios	One month's salary per year, paid in two instalments — by 30 June and by 20 December.
Cesantías	One month's salary per year of service, deposited into the employee's severance fund by 14 February of the following year.
Interest on cesantías	12% annual interest on the cesantías balance, paid directly to the employee by 31 January.
Transport allowance	COP 249,095 per month for 2026 (Decreto 1470 de 2025) for employees earning up to two minimum wages; paid as a connectivity allowance for remote workers.
Dotación	Work clothing and footwear three times a year for employees earning up to two minimum wages.
Minimum wage	COP 1,750,905 per month for 2026. The figure is set by annual decree and we confirm the value in force at contracting.
Employer contributions	Pension 12%, health 8.5% (subject to the parafiscal exoneration regime), ARL 0.522%–6.96% by risk class, caja de compensación 4%, SENA 2% and ICBF 3%.
Employee contributions	4% pension and 4% health, plus the solidarity pension fund contribution for higher earners.

Important: Because of prima, cesantías, interest and vacation accruals, the fully loaded employer cost in Colombia typically runs around 45%–55% above gross salary depending on risk class and exoneration status.

05Registrations, reporting and termination+

Requirement	What the law requires
Before hiring	Employer registration and affiliation with EPS, a pension fund, ARL and a caja de compensación familiar; the ARL affiliation must be effective before the employee's first working day.
Monthly reporting	Contributions are paid through PILA (Planilla Integrada de Liquidación de Aportes) on the schedule set by the employer's NIT.
Electronic payroll	The nómina electrónica document must be generated and transmitted to DIAN for the payroll expense to be deductible.
Recordkeeping	Employment, payroll and social-security records must be retained and produced for Ministerio del Trabajo and UGPP review.
Termination with cause	Just causes are listed in the Código Sustantivo del Trabajo and require a documented disciplinary procedure with a hearing (descargos).
Termination without cause	Indefinite contracts: for employees earning under 10 minimum wages, 30 days' salary for the first year plus 20 days per additional year; for higher earners, 20 days plus 15 days per additional year. Fixed-term contracts: the salary remaining until the end of the term.
Protected employees	Pregnant workers, employees on sick leave, union officers and workers with health-related job stability require prior authorization or carry reinstatement risk.

Important: Fuero de estabilidad reforzada is the single largest litigation exposure in Colombia: dismissing an employee with health, maternity or union protection without Ministry authorization can void the termination and trigger reinstatement plus back pay.

Employer compliance checklist

1
Register the employer and affiliate with EPS, pension fund, ARL and caja de compensación familiar.
2
Confirm the ARL affiliation is active before the employee's first working day.
3
Issue a written contract reflecting the post-Ley 2466 rules (contract type, term limits, probation).
4
Configure working time for the current phase: 44 hours until July 2026, 42 hours thereafter.
5
Configure shift definitions (day 6:00–19:00) and surcharges, including the Sunday/holiday phase in force.
6
Set the salary structure and identify which payments are salary vs non-salary for contribution purposes.
7
Apply the transport or connectivity allowance where the employee earns up to two minimum wages.
8
File and pay contributions monthly through PILA by the deadline assigned to the employer's NIT.
9
Generate and transmit the electronic payroll document to DIAN each period.
10
Diarize prima (June/December), cesantías (14 February) and interest on cesantías (31 January).
11
Retain contracts, payslips and contribution records for Ministerio del Trabajo and UGPP review.

Why use an Employer of Record?

Hire in Colombia without a Cámara de Comercio incorporation, RUT, local bank account or social-security affiliations of your own.

Onboarding in days instead of the weeks an entity plus affiliations requires.

Contracts drafted against the current post-reform ruleset, including the four-year fixed-term cap.

PILA, electronic payroll to DIAN, withholding and all statutory deposits handled end to end.

Prima, cesantías, interest, vacation and dotación accrued monthly and paid on the legal dates.

Reduced UGPP exposure through correctly structured contribution bases, and terminations executed with the right procedure and indemnity.

Talk to an EOR expert

Primary sources: Código Sustantivo del Trabajo · Ley 2466 de 2025 (labor reform) and Ley 2101 de 2021 (working hours) · Decreto 1469 de 2025 (2026 minimum wage) and Decreto 1470 de 2025 (2026 transport allowance) · Ministerio del Trabajo; UGPP; DIAN (nómina electrónica) · PILA — Planilla Integrada de Liquidación de Aportes

Information reviewed February 2026. Figures indexed to minimum wage, tax units or annual decrees change periodically; we confirm the applicable values for each engagement. This page is general information, not legal or tax advice.

Services provided

End-to-end EOR services

We employ, pay and stay compliant on your behalf in every jurisdiction — no local entity or in-country HR operation required.

Employer of Record

We become the formal legal employer of your talent: we sign the local contract, answer to authorities and absorb the legal complexity. You keep full operational direction of the team.

Payroll & multi-currency payments

Salaries and deductions, tax withholding, on-time local-currency payments and consolidated reporting across multiple countries — one auditable operation.

International labor compliance

Minimum wage, statutory benefits, vacation and leave, social security and every piece of labor documentation each authority requires — kept current in each jurisdiction.

Localized employment contracts

Contracts drafted under each country's legal framework: language, currency, salary structure, benefits, probation period, termination causes and notice periods correct from day one.

Onboarding & offboarding

Onboarding — contract, registration and first payroll — resolved in business days. Terminations executed with correct settlements, notices and formal legal closure.

Global contractor payments

Where a full EOR solution isn't required, we support payments to independent contractors in additional international markets, with proper documentation and compliance.

Why work with Grupo IERG

Hiring in another country instantly activates a set of obligations — entity setup, registrations, contracts, payroll, benefits, terminations — that few companies are ready to absorb. Grupo IERG offers a third path between "don't hire" and "build a full structure": hire now, compliant from day one, backed by two decades of local operation in regulated Latin American markets.

FAQ

Frequently asked questions

What is an Employer of Record (EOR)?+

An Employer of Record is a company that acts as the legal employer of your staff in a given country. It signs the local contract, runs payroll, withholds taxes and contributions and answers to labor authorities, while your company keeps day-to-day direction of the work.

Do I need to open a legal entity to hire?+

No. With the EOR model you can onboard people without incorporating a local company, registering for local taxes or building an in-country administrative structure.

How long does onboarding take?+

Once the role terms are agreed and candidate documentation is received, onboarding is usually completed within business days: local contract, mandatory registrations and payroll enrollment.

Who carries the labor and compliance risk?+

Grupo IERG assumes the formal employer obligations (contract, payroll, contributions, documentation). Your company retains responsibility for business decisions and operational management of the team.

Is the EOR model right for every situation?+

It is not a substitute for your own entity when there are regulated activities, local licensing requirements or a large permanent operation. In those cases EOR is typically a bridge while entity setup is evaluated.

Representative experience

Grupo IERG's team has supported EOR, workforce administration, and contractor-payment programs involving companies and partners such as:

EOR clients